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H3O: Water UK reflects on 30 years of investment

This article originally appeared in Utility Week as part of their H3O series looking back on three decades of a privatised water industry.

To borrow the title from a popular ‘60s song if you’d have taken a ‘Ferry ‘cross the Mersey’ 25 years ago you would have been floating on one of the most polluted stretches of water in Europe.

Mismanagement and industrial activity had taken their toll to the extent that in 1981 then environment secretary Michael Heseltine described the river as “an affront to the standards a civilised society should demand of its environment.”

Since then, much has changed, and over the years the Mersey has come back to life and now the iconic salmon and even otters can be seen living in its water and on its banks.

In the early ‘80s the plight of the Mersey was far from an isolated case.  Decades of underinvestment meant water quality was poor and our beaches were badly affected by sewage. So much so that Britain was known as ‘The Dirty Man of Europe’ with some of our rivers having been biologically dead since the Industrial Revolution.

Fast forward to 2019 and the situation is vastly improved. Privatisation in 1989 brought with it nearly £160 billion of investment over the next three decades. Thanks to this investment customers now enjoy access to world-class drinking water and are five times less likely to suffer from supply interruptions, eight times less likely to suffer from sewer flooding, and 100 times less likely to have low water pressure.

In addition, leakage is down by a third since the mid-1990s, nearly three-quarters of beaches are now classed as excellent compared with less than a third 25 years ago, and wildlife has returned to rivers – so much so that the Thames, for example, now boasts seals, porpoises and even colonies of seahorses!

At around £1 a day, average bills today are broadly the same as 20 years ago once inflation is taken into account, and according to Ofwat they are around £120 less than they would have been without privatisation and tough independent regulation. Customer satisfaction levels for water and sewerage services are around 90 per cent, and there are high levels of trust in water companies.

These successes have come about as a result of the determination and passion of the industry. But we are committed to going even further. Individual company five-year business plans submitted last September set out proposals to 2025, summarised (for companies in England) in Water UK’s  Manifesto for Water.

Those proposals included some £50 billion on improved services and the most ambitious industry leakage reduction programme in 20 years – as well as cleaning up 8,000km of rivers and a real-term reduction in bills. But our ambitions don’t stop there.

In April, water companies in England set out how they intend to complement their business plans in tackling wider social and environmental challenges with the release of our Public Interest Commitment. The Public Interest Commitment, or PIC for short, includes a pledge to work together towards five challenging goals for the sector.

For example, on leakage, the goal is to triple the rate of reduction by 2030 – unprecedented in our history, to meet the unprecedented challenges posed to water supplies. On the environment, companies intend to work together on two challenging goals under the PIC: achieving net zero carbon emissions for the sector by 2030 and – building on our work to create a national network of drinking water refill points – preventing the equivalent of four billion plastic bottles ending up as waste by the same date.

On social improvement, the PIC also sets out the sector’s intention to strive on two fronts: first, to make bills affordable for financially-vulnerable households and develop a strategy to end water poverty; and second, to be the first sector to achieve 100 per cent commitment to the Social Mobility Pledge.

Three decades is a long time and many reading this article today will simply not remember how things were at the time of privatisation. Indeed, some will have lived their entire lives knowing nothing but a privatised water industry!

The bottom line is privatisation has brought about a remarkable turnaround with companies, supported by a trio of independent regulators as well as partner organisations such as NGOs, at the forefront.  The alternative – nationalisation – carries great risk, and at a great cost to water quality, taxpayers and the environment.

These days a trip across the Mersey is certainly a more pleasant experience than when Michael Heseltine visited all those years ago. But the next 30 years will bring unprecedented challenges for the water industry. Ensuring we continue to have enough water for future generations in the face of a growing population and a changing climate is a daunting task. However, it is one the water industry is up to meeting.