September 2024
Reading about the state of England’s water industry can be infuriating. Headlines abound of corporate greed & fat-cat bosses, bill hikes and pollution being profitable.
The sector’s record is indeed unacceptable, with untreated sewage releases exposed, prosecutions unearthing deliberate misreporting of environmental performance, and vast debts constraining the ability of companies to now invest in critical improvements.
It’s an oft-cited complaint that ‘Privatisation has seen bills rise’, the inference being that - rather than being spent on maintaining infrastructure and improving services - customers’ money has disappeared off in pay packets and dividends. Bills have indeed risen - the National Infrastructure Commission collated data showing that the average household water bill in England and Wales went from £255 at privatisation in 1989 to £426 in 2019. However, the Bank of England’s inflation calculator shows that if bills had risen at the rate of inflation in the 30 years since privatisation, they would have been £100 higher by the end of that period than they were.
So billpayers have been short-changed, but not in the way that they think. Privatisation has delivered cheaper water, but at a huge cost to the environment. It seems we have increasingly expected water companies to do more with less, extracting water from the environment and discharging wastewater back to it with less investment each year, relatively speaking - against a backdrop of climate change, population growth and stronger environmental regulation. Where investment cannot match need, it’s the environment that has been bearing the brunt of these shortcomings. New measures that will prevent poor practice around pay and dividends are an important step, but alone these changes won’t deliver the investment necessary to meet environmental ambitions and requirements.
Blueprint for Water looked at the draft Business Plans companies have put forward for 2025-2030, a period during which we encounter a series of legal deadlines and international obligations critical to nature’s recovery. These plans will determine whether the water sector plays a central role in the achievement, or the failure, of these targets. So, how are they shaping up?
To start with the positives, huge investment is proposed. This is necessary to counter historic underinvestment, to face new challenges, and to meet customers’ growing environmental expectations.
There are areas of the plans where companies’ proposals appear ambitious. Most have set a target of reducing serious pollution incidents to zero by the end of the period, whereas in prior plans they declined to set that target knowing they would fail to reach it. This shift is a significant one; there is a good chance the targets may not quite be met, but the culture shift involved in aiming for zero is as important as the final number. Reporting progress to stakeholders will be important to demonstrate commitment and transparency, as with many other areas of the sector’s work.
Another area where ambitions are positive is that of abstraction. In contrast to prior practice, by the end of the delivery period in 2030, all companies will be taking less water out of the environment to put into supply than they are doing today. This is a significant turn-around. Companies will do this by variously reducing leaks, reducing demand from households, or reducing demand from business. Within this the picture varies, with some companies strong on leakage and others on demand management – suggesting that there is more to learn by sharing experiences across the sector. Success will also be dependent upon Government action, such as by bringing in a promised water efficiency labelling scheme and reviewing Building Regulations.
However, other areas of the plans are more lacking in ambition. Despite policy encouragement, the use of nature-based solutions – such as wetlands to catch rainwater and prevent it from overwhelming sewers – has not been as prominent within the plans as many had expected. Reasons for this are not fully clear but appear to include company cautiousness and regulatory inflexibility. Clarity over uncertainties between now and final plan publication next year would be welcome, and issues not immediately resolvable must certainly be a focus for the next five-year period.
Companies also need to work towards meeting a legally-binding target to reduce phosphate pollution from wastewater treatment works. Although a sector-wide average of a 36% reduction sounds a reasonable start, it’s hard to tell whether each company is doing its fair share within this – and whether reductions have been targeted to deliver the best environmental improvements, or just to hit the target in the easiest way.
There is a wider question here though, which is ‘what will all this delivery add up to?’ Despite large proposed spend on the environment, the state of that environment by the end of the 5-year programme remains unclear. For final plan publication, we’d like each company to add a summary page showing what they expect to deliver for the environment – how many of the water sector pressures that prevent ecology and water quality meeting standards will have been resolved? What contribution will the plans have made towards government nature targets? How much carbon will have been saved by opting for green rather than ‘grey’ solutions?
Over time we hope to see regulation shift to support more of these outcomes. Whilst the water sector has wreaked significant damage upon our waters, it is also well-placed to contribute to their recovery. Government’s forthcoming regulatory review and future water bill offer the opportunity to ensure it can do just that – and Blueprint for Water members look forward to helping to shape the future of our waters.
Ali Morse is Water Policy Manager at The Wildlife Trusts and chair of Blueprint for Water. Follow @WildlifeTrusts
The opinions expressed in this blog are the authors and not necessarily those of the wider Link membership.
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