The reputation of the UK water industry, a key client for construction, has recently been sinking under the weight of regulatory and other critical attention it has been getting. Much of it, it has to be conceded, is totally deserved.
The industry is on the verge of the biggest investment programme in infrastructure it has ever seen, so much is at stake. Water regulator Ofwat wrote to the UK’s water companies in April challenging them to speed up delivery of infrastructure projects to help deliver on the government’s growth agenda.
The letter from Ofwat Chief Executive David Black calls on water companies to work with Ofwat and collaborate with each other and other stakeholders on the 30 major projects in the programme, that will include nine reservoirs. Ofwat wants companies to deliver “more efficiently and effectively” to achieve earlier completion dates, and to increase or bring forward the achievement of the benefits of the major projects.
Companies have been asked to set out how they might respond to the Ofwat challenge.
An honest answer might be that they haven’t a clue. And neither has Ofwat or any of the other bodies supposed to be regulating this vital industry, if a damning report from public spending watchdog the National Audit Office that has just been released is accurate.
Ministers and sector regulators have no coherent plan for delivery of the water sector’s massive spending plans, the NAO has warned in a report on water industry regulation. NAO says neither the environment department, Ofwat, the Environment Agency or the Drinking Water Inspectorate have a good understanding of the state of the UK’s sewage and water networks, and they have consequently failed to manage the rising risks associated with the sector.
Their poor regulatory performance would contribute to a 70% per cent rise in household bills by 2030, the report says, and had put consumer and investor confidence at an all-time low. Part of the problem is that no single regulator was taking responsibility for sewage pollution and the lack of a national strategy for infrastructure improvements risked a daily shortfall of five billion litres of water by 2050. Water company performance on mains bursts, supply interruptions and pollution incidents had not improved for almost a decade and the rate of mains replacement is so slow that it would take 700 years for the ageing water network to be replaced.
Given the lack of knowledge of the state of assets revealed by the NAO one wonders how the water companies and Ofwat arrive at the figures for their planned investments. What is it they base their conversations on? How can you manage what you haven’t measured?
Before they had a chance to get around to drafting their responses to the Ofwat letter water industry senior managers learned that they will face prison if they continue with their now long established practice of dumping untreated sewage into rivers and the sea rather than treating it first, as they are paid to do through our ever rising water bills.
An Independent Water Commission review of the water industry in England and Wales is considering a range of measures, including the potential abolition of Ofwat. It’s report is due in summer. A hard rain could be about to fall on water’s regulators as well as water companies.
Nick Barrett
Editor