Speech: Doing more for customers and the environment

The below speech was delivered by Stuart Colville, Water UK Deputy Chief Executive, at the WWT Wastewater conference on January 31 2024.

I want to set the scene for this morning’s discussions by talking about how we can do more. 

I’ll start with some reflections about industry, but as everyone always does that, I do also want to talk about two of the other fundamental players here: regulators and government. 

In each case, as someone who talks to all three of those groups really every day, I’ll try to give you my perspective on what I think has gone well and what else I think each should do.  

Industry

So first, industry. 

I want to start by reflecting on the challenge.

Clearly it was a hard 2023, I think particularly for the English companies. 

At the beginning of the year, over just six weeks, one newspaper - The Times - mentioned sewage spills one hundred times. 
A hundred references in six weeks. 

Parliamentary interventions, headlines, social media, pretty much everything showed huge concern throughout the year. 

In the devolved nations, the focus, and intensity, and texture of debate all look different, but right across the UK you have seen a real surge in interest and concern about wastewater and the environment, expressed in different ways. 

Put simply: the public are clearly fed up, and government, regulators and others will all respond to that.

But how did industry respond.

I would like to think with some humility and determination. 

In May, there was the acknowledgement that not everything had gone right. That there should have been much more focus on the emotive issue of overflows. 

Then, the English and Welsh companies boldly proposed the largest wastewater investment programme in modern history – certainly in Europe – with plans not just for the next five years but beyond. 

In fact, of the 14,300 overflows across England, over 9,000 now have plans to deliver improvements, around a third of which, by the way, include some kind of nature-based element.

I’ve read the business plans and they are good. They offer a profound and unprecedented opportunity to meet the public’s expectations head on. That actually is the year’s big achievement.

But it’s not just plans - there’s a sense of real progress underway - on:

•    the world’s first carbon neutral treatment works 
•    Thames Tideway – one of the largest infrastructure programmes in Europe – entering its final stretch
•    massive progress on nutrients – which, by the way, is increasingly leaving agriculture looking exposed
•    innovation everywhere – I can’t visit a company now without someone wanting to show me an AI platform 

But. What more does industry need to do? 

Well, it won’t be smooth sailing. Delivery next AMP will be really hard. Capital delivery and supply chain risk, alone, is tough when we’re looking at £5bn just on construction work in each and every year of the period. 

And there will always be events that raise questions about the programme – high-profile incidents, or some metric or other that goes the wrong way one year, perhaps due to weather – we’ve just got to get better at remaining focussed through all of that, and let the investment – and the outcome it funds - speak for itself.

There are some things that are even harder.  Despite some amazing efforts and some real progress too, serious pollution incidents are still much too common. 

And we’ve all just got to be faster on transparency – one thing that has come through really clearly from the public is that they absolutely expect and demand the accountability provided by timely, accurate information.

But we are on the right track. Everyone in this room is about to make a massive difference to the environment: we’re going to keep going, keep making improvements, keep on delivering.

Regulators 

So who else. 

Well, I want to talk about regulators, at least those I know best. I’ll start with the Environment Agency. 

I’m going to make one helpful comment… then make three observations about challenges. 

I think it’s obvious that the Environment Agency, in recent years, have not been given all the resources they need to do the job. 

They should have been given more people years ago, and allowed to pay their officers more. It’s good that funding has been increased, and it should be increased further – in fact not just for activity in the water sector but in other areas too. 

Why? Two reasons. 

First, because if the environment regulator is seen as failing, that undermines trust in the entire system. 

Second, we cannot go on undervaluing environmental protection. Either we’re serious about nature or we’re not, and, frankly, if there is ever funny business by any industry then we need a regulator who can come down on that like a tonne of bricks and inflict real pain that hurts.

So that’s the helpful bit. They need more cash.

But the Agency also needs to think about three challenges: value, modernisation, and capacity.

On the first, they will need to get maximum value out of their additional resources – they must be able to look a billpayer – who is after all funding their activity - in the eye. That demands efficiency – in fact, I think they, just like companies, should have a clear, overarching annual efficiency target. 

The second challenge is modernisation. The Agency’s investment in areas like data is growing and offers the potential for much more targeted and risk-based work.

Equally, they were an early supporter of catchment and nature based working. 

Both of these are welcome.

But like any institution under pressure, there may be a temptation to fall back into more familiar approaches. Industry, government and NGOs should back the Agency to stay confident, to work back from the outcomes it wants to achieve and help it secure those with more agility and openness to new ways of delivering. 

So, for example: compliance with permits, yes, absolutely non-negotiable, of course – but that on its own will never be enough to restore waterbodies. At some point we’ve also got to look much more seriously about different models of planning and financing improvements in catchments, and I’d love to see the Agency really up for that debate – it’s something we need to look at now.

The third - and they’ll be pleased to hear final - challenge is capacity. A tidal wave of investment is coming, and the Agency have not always delivered the service they should in areas like permitting. I know this is an area they’ve been working hard to tackle, but we do need to be confident that we’re ready for the investment that’s coming. The public will not forgive us for any unnecessary hold ups.

Next I want to talk about Ofwat.

I was at Ofgem on Monday and got talking to some of the teams. 

They were explaining how they were urgently focussed on the need to get stuff built. 

They were honest about the fact that, sometimes, the cost of avoiding a catastrophic nationwide, days-long blackout that has maybe decades-long effects on the economy … you know, avoiding that calamity might mean that some projects get built a few years earlier than they would have been, or that we lose a couple of percentage points on cost efficiency.

Well, you can probably write the punch line here yourself, but I have to tell you, this was a refreshing experience.

Now, to be fair, I do absolutely see a real recognition now from Ofwat that investment is urgently needed. Even in areas like capital maintenance and asset health – topics where industry has previously complained about regulatory intransigence – there is, I think, some understanding that they can’t continue pretending that pipes will last for centuries without replacement.

But. If you read through some of their publications, these do not scream of an organisation that is obviously overburdened with thoughtful self-reflection on its own various contributions to the current situation.

And I think that does sometimes make it harder to get a proper forwards-looking approach to regulation that fully grasps the two overriding public policy imperatives, which are basically to secure water supplies against drought and clean up our environment. 

Bazalgette would not be possible under the current system – he wouldn’t have been allowed the money. That needs to change. We need to be allowed to invest much more in resilience and redundancy, and in anticipation of what’s coming down the track. Otherwise we’re going to end up blocking housing and growth - and leaving customers to the ravages of a changing climate.

Government

I want to finish by talking about government, and here I’ll focus on the Westminster government as the one I know best.
To be fair, the claim of Ministers to have done more than any others in recent history is, I think, true. 

But two messages. They need to deliver, and they need to go further.

What do they need to deliver. Well, the things they’ve said they will. 

Schedule 3 on sustainable drainage, plus the four policy proposals in their Storm Overflow Reduction Plan in areas like the repair of private drains and sorting out highways drainage – all of these are essential, sensible and long overdue. They represent a critical part of their own minimum contribution to sorting out the problems with waterbodies and I’m hoping Defra today will be able to confirm specific dates for implementing all of those.  

How do they need to go further: well, in all sorts of areas, not least about changing the model for surface water management and getting some proper regulations in place around wet wipes. But in the interest of time I want to talk about two things.
First, we are being overtaken by Europe - and we have no answer. 

I was in Brussels last week to discuss their progress on everything from source control to implementing new standards on micropollutants. 

They’re tackling PFAS, they’re making cosmetic and pharmaceutical brands pay for fourth-stage treatment, they’re putting new rules in on textile labels and plastic pellets. 

It doesn’t seem to me that we even have a good answer for what we might do when Water Framework Directive targets run out in 2027. This cannot last, especially if the devolved nations track some of those European changes. We have to have a conversation about the implications of all that.

The second area we need to go further is on monitoring. 

On operator self-monitoring, the status quo... must go.  

Why? Because each time we in this room protest about the strength of controls and sophistication of management systems, those hearing that conclude we must surely be defending the indefensible.  

I've heard it myself from politicians and the public - they are honestly in disbelief that companies are expected to decide on their own compliance.

The system was created for good reasons. But it's overdue for reform. 

Because without change, every time we make progress, critics will argue - falsely - that the data is unreliable. 

That nothing can be trusted. 

That the investment is wasted. 

That's why I, at least, welcome reports that the EA will take a more active role. Only a regulator, actually, can sit in final judgment over the permits they themselves issue.

So we need an increasingly active Environment Agency taking on more responsibility in this area, providing the reassurance demanded by the public over the data. 

And over the longer term, we shouldn't just stop there. The government gave responsibility for a new wave of in-river water quality monitors to water companies rather than the regulator.

In hindsight, I think we have to ask whether that was what the public would expect. As we move towards proper monitoring of whole catchments, we need the regulator to take the lead in delivering regulated water quality monitoring data across all sectors, including but not limited to water.

Press reports in the last day or two have shown the role that volunteers – in this case anglers - can play in filling some of the gaps in water quality monitoring. That kind of data is important and welcome. But national policy making shouldn't have to rely solely on people’s spare time or outsourcing testing to industry; we need a proper, comprehensive, cross-sector approach to measuring pressures in rivers, with funds provided to the EA to do its job.

Conclusion

So there we have it: some thoughts on how industry, regulators and government can all, together, do more for customers and the environment. I know, because they tell me, that industry is up for that challenge – I hope that government and regulators are too.