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Commenting on today’s announcements by Ofwat, Dr Richard Wellings , Deputy Editorial Director at the Institute of Economic Affairs, said: 

“Rising water bills are having a devastating effect on low-income households. In some areas, poorer people are now spending more than ten per cent of their income on water, leaving less money for other essentials such as food and heating.”

“Over-regulation is the main factor driving up prices. Ever-increasing environmental and water quality standards, many resulting from EU directives, have forced companies to invest tens of billions in new infrastructure and pass on the cost to consumers.

“The government should take a new approach to the water sector that focuses on keeping bills down. It should end the obsession with ever-increasing water quality and environmental standards and exert pressure on EU policymakers to do likewise. Removing barriers to competition in the water industry would also help consumers.”

Notes to editors:

In August 2012, the IEA published Water: Supply, Prices, Scarcity and Regulation. The report, written by former water regulator Sir Ian Byatt (who set up Ofwat), argues that the focus on environmental enhancement, rather than limiting prices, has driven up costs for the consumer and limited supply.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.