For a sector which takes very seriously its responsibility to work in the public interest, the conversation between politicians, companies and other key stakeholders is such an important one.
I also really can’t think of a more appropriate time for such a gathering. Water will be on the minds of everyone in the room today for all sorts of reasons, and not just because of the current heatwave. So let me share with you a few brief observations on the past year and what lies ahead. This year, of course, has seen publication of the Government’s 25 Year Plan on the Environment. We provided input to officials ahead of the plan’s launch, which we welcomed because it set a significant policy agenda ahead which had water at its heart.
Alongside the Plan, we launched the sector’s initiative to make it easier for people to top up their water bottles for free instead of buying and throwing away single use plastic bottles. We’re working with our partners to roll out this scheme all over the country over the next couple of years, creating a national network of refill stations and cutting plastic bottle use by tens of millions each year. A great example, we would say, of how water companies can be a powerful force for good.
But there’s no denying that it has also been a time of intense scrutiny in the industry –ranging from last year’s Labour Party manifesto commitment to take English water companies into state ownership, to the challenges directly posed to companies by the Secretary of State and Ofwat. On nationalisation, we would say this raises big questions.
The prospect of a state-owned sector struggling, as it did 30 years ago, to be a priority for public spending with potential negative impact on services and the environment, carries risks which need to be considered carefully against the positive work achieved to date by regulated private companies and how they are addressing the challenges which lie ahead.
Consider, for example: the £150 billion invested by companies in improvements since 1989, and the £8 billion a year which they continue to invest-the fact that customers now are 5 times less likely to suffer from supply interruptions and 8 times less likely to suffer from sewer flooding-or that rivers that had been biologically dead since the Industrial Revolution have revived, with the return of wildlife-or average customer bills of about £1 a day–bills which went up immediately following privatisation, reflecting a near doubling of investment compared with pre-privatisation levels, but which now are pretty much the same in real terms as in 1994, and which are due to be 5% lower by the end of the current industry five-year planning period in 2020-or, finally, the high satisfaction levels achieved by companies and that 86% of the public say they trust their water company, which is higher than some other sectors I could mention.
But despite these and other achievements, there is keen recognition also that there is much more to be done on delivering for customers, environmental improvement and transparency, as highlighted by Michael Gove, among others.
The sector is diverse and the issues impact companies differently, but all are determined to demonstrate their longstanding commitment to work in the public interest.
We are seeing this in the 2020-2025 business plans which companies are preparing to submit to Ofwat, covering many aspects of delivery, such as leakage, water efficiency and water poverty -and the further commitments for which regulators will press by the time the plans are finalised. We have seen it in the action from individual companies on company financing arrangements, the widespread support for the direction of travel of Ofwat’s agenda to promote change in this area, and the subsequent engagement on the detailed proposals. And we are seeing it in the conversations taking place between companies, regulators, policymakers and stakeholders about what more needs to be done to support the ambitions of the sector in the next few years and longer-term.
With growing expectations on price and service, the need to do better on the environment and the challenges to resilience posed by population growth and climate change, two things are striking about the way ahead.
The first is how far water companies need to work with others – be that other companies, to encourage further transfers of water from areas of surplus to areas of deficit, or customers, to unlock the positive impact they can have through changes in their use of water.
Conceptually, none of this is new. What is different, though, is the scaling up needed in future.
The second is the need to strengthen the current tools available to water companies to step up to the next level. There is a lot we can already do in this space, such as the work in progress to improve the frameworks by which companies plan improvements in drainage management. But – and this is my final point – we also need to harness the role of public policy.
Whether it is the scope for building regulations and water efficiency labelling of household appliances to promote the water aims in the Government’s 25-year environment plan, or the scope for future post-CAP public funding for farmers to boost catchment management, this is a rich area of opportunity.
It’s an opportunity which we at Water UK believe we need to seize, with the support of policy makers and stakeholders.Hence my earlier point about the importance we attach to the conversations which need to take place with parliamentarians and others.