The Government has today introduced the Water Industry (Financial Assistance) Bill into the House of Commons, enabling it to fund a £50 cut per year for all South West Water household customers and provide additional financial support for exceptionally large or complex water or sewerage infrastructure such as the proposed Thames Tunnel in London.

Although the measures contained in the Bill will be used in the first instance to reduce customer bills for South West Water, they will be applicable to other English water utilities where the Secretary of State decides it is appropriate to provide financial assistance. Under the new clause assistance can be provided in any form, including grants, loans and guarantees, for the purpose of securing a reduction in charges for water supply or sewerage services. The Government now plans to legislate to enable customer bills to be reduced from April 2013.

In addition,the new legislation will also the Government to provide financial assistance for major works, for either new or existing existing water or sewerage infrastructure. However, the Bill stipulates that funding will only be provided for projects which involve exceptionally large or complex works. It also allows the Government to provide the funding after the infrastructure or the works in question  has been completed. 

Under this clause the Secretary of State can provide assistance in any form, including grants, loans, guarantees and indemnities, the provision of insurance and by acquiring shares or securities in a body corporate.

This commitment was in line with Government confirmation in a November 2011 statement to Parliament that it was willing in principle to provide contingent financial support for exceptional risks in the construction of the Thames Tunnel, a sewerage infrastructure project designed to reduce the amount of untreated waste water being discharged into the River Thames.

The measures in the Water Industry (Financial Assistance) Bill will enable Government to meet commitments it made in the Autumn Statement 2011 and Water for Life White Paper published by the Government in December 2011. The new Bill amends the Water Industry Act 1991 (WIA) by adding two sections after section 154.

No definitive figures have been provided for expenditure for either of the two new measures. However the Government has said that based on initial estimates, the South West Water bill reduction policy will cost no more than £40 million per annum.

The Government also said that possible proposed support for the Thames Tunnel (estimated costs £4.1 billion at 2011 prices) could not be monetised. A statement sais that while it was willing in principle to provide assistance in the form of contingent financial support for exceptional project risks, it wanted to ensure that the likelihood and impact of such risks were minimised