Why a former punk rocker may be the first big test for public purpose in the water industry

Of all the utilities, water is probably the least prone to radical change. The first water infrastructure – wells and even some disposal of sewage - was developed over 6000 years ago. Water infrastructure in the Roman empire was more sophisticated than other utilities would achieve until well into the industrial revolution (and believe it or not some is still used today).

By the early 20th century many of the basic structures (sewers, waste water treatment for public health, water abstraction, treatment and distribution) were already in place across much of this country – though not of course in some impoverished regions of the world where the lack of access to clean water and basic sanitation remains a source of global shame.

So, for all that the industry showed a commendable urgency with regard to Covid 19, it is not by nature fast moving. Smart meter technology and roll out is well behind energy. Telemetry, digital approaches and data interrogation are in many cases not state of the art. While end of pipe acute pollution has been reduced, around half of households now have a water meter, and capture and /or elimination of methane from sewage is much improved, little of this is what anyone could call revolutionary.

This may be right in some respects. No-one wants to experiment with access to clean water or public health.

That said, in 2018 and 2019 there was a widespread view that the industry was problematic. In part aided and abetted by Ofwat price reviews which in some companies led to regulatory gaming and treasury departments being treated as profit centres, along with opaque financing structures and some major examples of poor performance, the Labour Party's espousal of nationalisation, whatever the root cause, struck a popular chord.

Between the industry and Ofwat there are some signs of the sector emerging from this. Ofwat CEO's call for companies to rebase themselves around their public purpose has been timely, and has reflected what a number of companies were already starting to think about - and which we at Sustainability First have been arguing for some time was urgently needed. And long-term innovation (as opposed to incremental change or short-term business process re-engineering) has now been recognised as something needing support.

The sector's reaction to Covid 19 has not only shown pace, it has also shown thought being given to social, customer and people issues which a number of past crises (the 2007 floods related water outage, successive outbreaks of cryptosporidium, a number of scandals and prosecutions, some reactions to the big freeze) suggested did not happen as consistently a few years back. And there is now an acceptance of collaborative efforts to ensure water resources are available for the next generation in the face of climate change.

But to some extent Covid 19 has to date been a relatively easy crisis for the sector: there were answers and the media focus has been elsewhere. And the water resource challenges, while genuine and urgent, play to the industry's strengths: whatever else water companies understand big engineering (albeit in some cases perhaps to the exclusion of behaviour change on consumption).

There are arguably more intractable challenges now on the horizon.

First, water industry support for customers in vulnerable situations is patchy and the infrastructure of existing support may really struggle to cope with potential changes to vulnerability and deprivation in the post COVID-19 recession and the threat to low skilled work from AI and automation. How will firms and the regulator square up to challenges to address spiralling water poverty, when political pressure to reduce bills is ever present but the welfare state is resource constrained? Will the response be a purposive one – grounded in public service and social capital by industry and regulator – or will it be incremental and grudging: a product of regulator and industry lowest common denominator and arcane arguments about willingness to pay methodology? Sustainability First has welcomed CCW's review of affordability support for water customers as a potentially important contribution in this area.

Second, and this is where the punk rocker comes in, the state of this countries' aquatic biodiversity is both unacceptably poor (only 14 per cent of water bodies in good condition, down from even a decade ago) and rising rapidly up the media and political radar.

Feargal Sharkey's specific complaint – that water companies routinely discharge untreated sewage into rivers when it rains – both hits a real nerve and in many ways is incapable of more than partial resolution. Combined sewer outflows are often the near-unavoidable consequence of the sewerage system we have built up over 150 years. Furthermore, in many places the sewerage system is not even the main problem: diffuse water pollution from agriculture can be much more damaging. If public purpose is about anything, it is informing the response to wicked issues such as this and galvanising the leadership for change - across multiple parties.

The industry and the regulator together have both an opportunity to inject some real purpose into their approach and the all too attractive temptation to put the issue off. The technical sounding Drainage and Waste-Water Management Plans, being developed by companies now, will crystallise this choice. The old approach would be do lots of worthy modelling and move the real choices right – create in the terms of Hitchhikers' Guide to the Galaxy a 'somebody else's problem field' (the somebody else being, as so often, nature or the next generation). The new approach might be quite different, with genuine ownership and acceptance of the issues, community co-invention, partnership work with land managers and flood authorities and public engagement. Very different to engineering explanations and one-way communication to stakeholders.

So it is over to Ofwat and the companies. It may be convenient to blame government, and indeed government may in the past have been complicit. But if the work we have just published from Slaughter and May on law, regulation and sustainability says anything, it is that there is much more space to act for both regulator and companies than they may wish to believe.