19/09/10
It would be a pity if inconsistent policies added to the problems facing government and country in hard times.
While many of the public, public services are caught in a policy whirlwind, mostly-private (and already efficient) water has felt only gentle breezes. This may not last, however, with big choices and a white paper on the way.
No one could accuse the coalition of being half-hearted. In recent weeks, ministers have queued up to announce changes designed to reduce the deficit, or re-balance the economy, or both. The spending review next month will confirm that policy is being transformed before our eyes.
Supporters and opponents alike have been impressed by the speed and grip. The two objectives are being pursued with military precision. Momentum is everything, taking in its stride 'mis-speakings', backbench grumps, even creative readings of the coalition agreement. At 100 days, opinion polls were holding up well.
It would be rash to predict how things will turn out. Doubts are being raised – how could they not in such a bold enterprise? Some are brushed aside, such as how quickly to cut, and in what proportions. Others, such as apparent inconsistencies between policies, could undermine the whole project, which would be a pity.
Water policy isn’t yet in the frame, but the risks are there, as I’ll show in a moment. First, forewarned being forearmed, here are some cautionary tales. The differences will have to be reconciled at some point. It might have been better if policies had been aligned from the start.
Planning
More local decision-making is the new requirement. Regional spatial strategies and regional development agencies are dropped. But big infrastructure will be developed to a national master plan.
Environment
We are promised "the greenest government ever". But environment groups are noisily convinced that funding for protected areas is to be cut. Also, farming (cause of most diffuse pollution) will be "de-regulated".
Local government
Localism is the aim, informed by greater collaboration. But organisations already working with local government to remove overlap and duplication – strategic health authorities, police authorities, primary care trusts – are to go.
Civil society
In the Big Society, voluntary groups, charities and social enterprises are to fill gaps left by closure of public bodies. But cuts to grants and services carried out by these groups mean that already some are no longer the thriving organisations that inspired such confidence in the first place.
What are the lessons for water ministers as they set about making future policy?
• To assess the real costs and real benefits of changes, look at the whole picture
• Make pragmatism your ideal – principles and theories are often false gods
• Overcome your inner optimism (temporarily!) – paranoia and pessimism are allies against unintended consequences
• Above all, as my last two examples illustrate, don’t assume outputs and performance will stay the same if you change inputs.
If this sounds simplistic, I apologise; but inconsistent objectives and assumptions are already visible in policies proposed for the water industry.
Infrastructure
Demand for ever tighter standards and greater resilience will require major maintenance and asset development plans for the foreseeable future. The potential for adding to the industry’s flood defence responsibilities is also being looked at. But regulatory policy proposes to dismantle the business model whose record gives everyone confidence that tough challenges can continue to be met.
Drinking water
Companies and regulators work hard to maintain a social contract which means people can have complete trust in their drinking water. This has been built on companies taking responsibility for all stages of supply. It is unique among the privately delivered public services – nothing comes close to the trust required of something we ingest and wash our babies in. But plans to break up companies in the interests of market competition must weaken a bond on which society relies so entirely that it takes it for granted.
Investment
Since 1990 investors have provided some £50 billion to the industry. In the next 20 years, at least £20 billion more will be needed. This massive commitment was made on the expectation that policy and regulation would not depart far from current legislation. If this confidence proves misplaced, the result will be higher financing costs and possibly funds not being available at all. But changes being considered have already provoked warnings; and policy-makers have felt it necessary to set up a 'market reform and finance forum' to anticipate, and hopefully mitigate, the damage they know the changes will cause when implemented.
Sewerage
Water and sewerage companies will next year become responsible for private sewers. They will take this on despite the uncertainty, additional cost and reputational risk involved, because it is the right thing to do and they have the capacity and expertise to do it. But the proposed industry restructuring could dissipate the very strengths on which the confidence of customers and policy-makers has been built.
These disconnections may disappear as more evidence becomes available. Otherwise, incremental improvement to what we know works would seem a better alternative to some of the current proposals.
A version of this article, by Barrie Clarke, appeared in Water & Wastewater treatment magazine, September 2010.
