February 1, 2013 / 4:51 PM / in 5 years

UPDATE 1-UK government drags heels on flood protection-MPs

* Call for more urgency in addressing flood issues

* Select Committee publishes report on draft water bill

* Says it may lead to higher bills, investor uncertainty

* Govt minister to look at recommendations closely

By Lorraine Turner

LONDON, Feb 1 (Reuters) - The UK government came under fire on Friday from a committee of members of Parliament for dragging its heels on flood protection, after 2012 went down as the second wettest year since records began and floods wreaked havoc across the country.

The Environment, Food and Rural Affairs Select Committee criticised the government’s approach to tackling flooding in a review of the government’s draft water bill which proposes market reform among water utilities.

“The government has been too slow to implement changes that would protect homes and businesses from the shattering effects of flooding,” said the committee’s chairwoman Anne McIntosh.

“New laws will increase competition in the retail water market and while we welcome those changes, government must get on with implementing changes that would reduce flooding, many of which were recommended nearly five years ago,” she added.

McIntosh noted that solutions existed to reduce the impact of flooding, which is set to be Britain’s biggest climate risk this century according to government-funded research last year.

“Successive governments have not had the mettle to put them (solutions) into practice,” McIntosh said in a statement.

The UK Environment Agency said this week that 1.3 million people were at risk of coastal flooding in England and Wales.

Damage is seen costing as much as 12 billion pounds ($18 billion) a year by the 2080s if nothing is done to adapt to extreme weather.

Water Minister Richard Benyon said in a statement on Friday that he would look at the recommendations closely.

“As unpredictable rainfall and population growth puts an increased pressure on our water supplies we need a water industry that is fit for the 21st century,” he said.


The government outlined plans last year to make it easier for water companies in England and Wales to merge, new players to enter the market and businesses to switch suppliers.

It said the reform of the water industry could save the economy 2 billion pounds ($3.2 billion) over the next 30 years.

However, the committee said the draft bill was too vague and recommends better protection for consumers to be included in the legislation proposals, particularly from the introduction of more competition for business customers.

The lack of detail could result in higher water bills for households as well as higher financing costs for water companies, such as United Utilities and Severn Trent .

“We want to see provisions in the legislation that protect consumers and we do not accept the government’s arguments that those protections would undermine investors’ confidence in the water industry,” said McIntosh.

Overseas infrastructure funds have snapped up investments in British water companies in recent years, lured by their reliable income streams.

But recent regulatory uncertainty may have taken the glow off the sector, with Britain’s water regulator Ofwat forced to make a u-turn in its proposals to make water company licences more flexible at the end of last year.

In response to the report on Friday, Ofwat agreed with the committee’s findings that all parties must come together again to work out how “upstream” competition can work in practice to maintain investor confidence in the sector.

Water UK, a body which represents the water companies, agreed that clarity was necessary to avoid any unintended consequences.

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