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Flood and Water Management Bill

That is a helpful intervention, and I take my hon. Friend's point on board. In defining the review's terms of reference, it will be important not only to make them narrow, but to ensure that they encompass the changing situation in the water industry. We might well consider the aspect to which my hon. Friend refers. I cannot give her a cast-iron guarantee, but if we are going to think about a fundamental review, let us think about a fundamental review in all its aspects. As I have said, there is a strong justification for carrying out a review. When the water industry was first privatised, the role of the economic regulator was primarily to ensure that companies fulfilled their functions and extracted efficiencies from the industry. However, social and environmental issues such as climate change and the affordability of water have become much more important in the past 20 years, and water companies face new challenges over the sustainability of water supplies. That said, I hope that hon. Members will accept that the primary responsibility for work force planning and development sits with the water companies. As part of its 2009 review of water price limits, Ofwat required companies to develop a 25-year long-term strategic plan called a strategic direction statement, as well as a more detailed five-year business plan that included specific investment proposals for 2010-15. For the first time ever, that puts the period 2010-15 into a much longer-term context. The Government also have a role in supporting companies in looking to the long term. In particular, Energy and Utility Skills, the sector skills council, works with the water companies to identify the skills needs of the sector and to develop a strategic approach to addressing any gaps. It also develops vocational qualifications with water companies, and relevant skill-based training programmes with training providers. In July 2009, as part of the Government's re-licensing programme of all 25 sector skills councils, it was announced that EU Skills was not only successful in being re-licensed but judged to be "outstanding". However, it was also noted by the National Audit Office that engagement with the water sector was not as strong as that with the gas and power sectors, which also fall with EU Skills' remit. In my view, it is crucial that all parties work together to ensure that the water sector is able to meet future challenges. I urge water companies actively to work together with EU Skills—I will play my part as well—to identify where the skill gaps are and to work up strategies to address any shortfalls. In relation to putting new duties and responsibilities on to Ofwat, I emphasise that Ofwat's current duties already require it to contribute to sustainable development. The new duties proposed in new clauses 16 to 18, such as those on investment and training, employment, job security and skills, leakage control, and the sustainable management and use of water, would sit alongside Ofwat's other primary duties. While we recognise the importance of all the issues identified in the new clauses, not least skills and training, it would not be right for these topical issues to be placed alongside existing primary duties involving high-level and strategic concerns about protecting consumers and ensuring that companies carry out their statutory functions. Nor should they be placed above the secondary duties that encompass much broader aspects of water regulation, such as sustainable development and better regulation in water efficiency. For example, it is unthinkable that Ofwat would not consider issues surrounding sustainable water management, or energy and water efficiency and leakage control, when considering its sustainable development duty. Similarly, work force issues should be taken into account when considering duties involving efficiency and meeting statutory obligations. I also note that Ministers already have the power to issue social and environmental guidance to Ofwat to underline the importance of the types of issues identified in new clauses 16, 17 and 18. Guidance was issued by DEFRA in September 2008 and by the Welsh Assembly Government in February 2009, including guidance on sustainable development and on environmental policies such as water efficiency, water quality and climate change.