The water sector deliver basic services fundamental to healthy communities. Without clean water and good sewerage services schools, hospitals and businesses cannot function. However, it takes energy and chemicals to make water safe to drink or to make wastewater safe to discharge into rivers and watercourses. It takes substantial investment to replace old pipes and meet higher environmental standards but of course increased investment means higher water prices.

Therefore a significant function of the water sector - including the regulators, water companies and customer representatives - is managing the balance between these competing needs and, where possible, achieving a solution that is beneficial for all. The drought of 2005/06 in the south east of the UK and the recent flooding we have experienced has focused attention on a number of challenges that the industry must face up to including the impact of a changing climate, the ways that commercial and domestic customers use water, and the growing numbers of households to serve. The sector must work together and act creatively regarding the timescales for regulation and capital investment, the ways we monitor and charge for water use and improving water conservation.