I beg to move, That the Bill be now read the Third time.
I begin by thanking those who have been involved in the Bill. Members of the Public Bill Committee, under the excellent co-chairmanship of the hon. Members for Halifax (Mrs Riordan) and for North Wiltshire (Mr Gray), did an outstanding job of ensuring that critical issues were debated in depth, and the considered amendments that were tabled allowed us to explore several issues in detail. I thank hon. Members on both sides of the House for their contributions over the past weeks and months—and, indeed, today. Members of the EFRA Committee scrutinised the draft Bill, and I was grateful for the continued engagement of current and former members of that Committee during our debates on the Bill, including on Report. The Bill leaves the House stronger as a result of the changes made to the draft Bill before the introduction of this legislation, and the amendments made in Committee and on Report.
The Bill addresses difficult challenges that we all accept that we are facing. Climate change and population growth will place our water resources under more pressure than ever before. At the same time, unfortunately, it is widely recognised that the future holds more frequent and severe weather events. We need to keep bills affordable while addressing those challenges, which means finding new approaches to encourage innovation and greater efficiency in the water industry. We also need an affordable solution to the problem of flood insurance for those at high risk of flooding.
The Bill is just one part of the action that the Government are taking to secure our vision of a sustainable and resilient water sector. It provides a framework for greater competition with the aim of driving more efficiency and innovation. Its measures will ensure a resilient future in which water is available to all at an affordable price, but not at the expense of the environment. It will ensure that there is choice and flexibility for customers and that bills are kept affordable, that there is more innovation in the water industry, and that there are opportunities for new businesses so that the industry continues to attract crucial investment. The Bill will not only protect and improve the environment, but contribute to the growth of our economy.
The Bill will deal with the availability and affordability of flood insurance for households at high risk of flooding, and in the longer term it will ensure a smooth transition to a free market. The most significant change made to the Bill during its passage through the House was the addition of its flood insurance clauses in Committee. I am greatly encouraged by the support for our proposed approach of ensuring that households at high risk of flooding may access affordable flood insurance.
I visited the south-west flooding incident room last week, and I would like to thank all those who are still working hard on the ground to support people following such distressing events. Hon. Members know that our preferred approach on flood insurance is to create an industry-led flood reinsurance scheme. Flood Re will carefully target benefits towards low-income households, who are the people most in need of support during the managed transition to risk-reflective prices. In developing the scheme, we have been mindful of the costs of the levy, which will be spread across all those holding household policies. We believe that our proposals get the balance right, and it also right that we should take powers on a fall-back obligation to ensure that there is certainty for householders.
Just as we want to ensure affordable flood insurance, we also want to make sure that water bills continue to be affordable for everyone, and that has been a recurring theme of the debate on this Bill. We want those who are struggling to pay to get help. All water and sewerage companies have developed packages to help customers with affordability problems, and they include customer assistance funds, support tariffs, debt advice and water efficiency measures. Most water companies are taking action to put social tariffs in place in 2015. The most important thing we can do is make sure that everyone’s bills are kept affordable. Let us not forget that this is a sector subject to price-cap regulation, which means that Ofwat scrutinises and challenges the business plan of all water companies to secure a fair deal for customers. By taking account of lower financing costs, Ofwat estimates that the next price review could significantly reduce pressure on bills from 2015 by between £120 million to £750 million a year. This Bill will contribute to the affordability of bills for all. Measures will exert a downward pressure on bills by encouraging greater competition to keep bills as low as possible.
Greater competition will drive more efficiency and innovation in the water sector. All customers and the environment will benefit from an industry that is incentivised to find the most efficient ways to meet future demand.
We are preparing to open the expanded retail market in 2017. Upstream reform will take place at a slower pace because of its increased complexity, which also means that we expect it to be introduced in parallel with longer-term abstraction reform.
In Committee and today, Members raised concerns about making legislation on upstream reform before the abstraction regime has been reformed. Let me assure Members again that we are confident that there are sufficient existing safeguards to prevent an unsustainable increase in abstraction in response to the implementation of upstream reform. We are tackling unsustainable abstraction now by varying and removing abstraction licences, but over the longer term we are committed to making the abstraction regime more flexible and resilient. A consultation on abstraction reform was launched on 17 December and we expect to legislate in the next Parliament.
Improving our approach to abstraction is critical, but it is only one part of our approach to ensuring the long-term resilience of our water resources. Today we amended the Bill to make it absolutely explicit that the new resilience duty is about ensuring the long-term resilience of both our water supply and sewerage services and the environment on which those services depend. I want to make it very clear that this is not about resilience of supply at the expense of our precious water resources. It is about ensuring that we all have enough water for the long term and that our environment does not suffer as a result.
I have no doubt that this Bill will continue to receive thorough scrutiny in another place. I look forward to following those discussions with interest. After that, I am looking forward to the implementation of the Bill. Experts are already working hard on the detailed work to develop new markets in water. The open water programme, which includes Government, regulators north and south of the border, water companies and customers, is developing the practical details of market implementation. It launched its market blueprint consultation last week.
We are also continuing to work with the Association of British Insurers, and I am grateful to it and the rest of the industry for their co-operation and hard work. I reiterate my thanks to all Members and all officials and staff who have aided in the preparation and passage of the Bill, and I commend it to the House.
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