141.This section replaces the current section 2A of the WIA with a new power enabling the Secretary of State to publish a statement setting out strategic priorities and objectives for Ofwat in relation to appointment areas wholly or mainly in England. Currently, section 2A provides the power under which the Social and Environmental Guidance (SEG) to Ofwat is issued; Ofwat must have regard to this guidance. The new section 2A establishes that Ofwat must carry out its relevant functions in accordance with the statement published by the Secretary of State.
142.The section creates a new power allowing for the production of a single consolidated statement of the Government’s priorities for Ofwat. This will allow for future iterations of the current Strategic Policy Statement incorporating the SEG to be produced under a single power.
143.Subsection (3) requires the Secretary of State when producing the statement to have regard to Ofwat’s duties under section 2 of the WIA. These include, for example, duties to:
protect consumers;
have regard to the interests of vulnerable groups;
ensure that the functions of water and sewerage companies are performed properly and that the companies are able to finance those functions;
further the resilience objective;
contribute to the achievement of sustainable development.
144.The section also specifies that the Secretary of State must have regard to social and environmental matters. This duty will require the Secretary of State and the Welsh Ministers to set out strategic priorities and objectives for Ofwat on the matters previously covered by the Social and Environmental Guidance.
145.Subsections (4) to (8) set out requirements for consultation and parliamentary scrutiny of the statement.
146.The new section 2B sets out similar powers for the Welsh Ministers to publish a statement setting out strategic priorities and objectives for Ofwat in relation to appointment areas wholly or mainly in Wales.
147.The section provides for an amendment to section 192A of the WIA such that Ofwat will need to include in its forward work programme an explanation of how projects included in it reflect priorities and objectives published under section 2A or 2B.