Watering down the mess

Thousands have lived without love, not one without water

Gentle readers. Here is the latest instalment in our ad-hoc series of Stuff-We-All-Really-Knew. Also known as the No Sh*t Sherlock column.

Apparently, the water sector in England and Wales is failing and needs stronger regulation to better protect billpayers and the environment. It took a ‘landmark review’, the Independent Water Commission, led by former Bank of England deputy governor Sir Jon Cunliffe to tell us that. Really? I am sure that the redoubtable Sir Jon is right, and that he deserves every penny of his not inconsiderable fee. However, I could have told the Government that for the cost of a pie and a pint. In fact, they could have read this column and got it for free, as this is something I have banged on about before. Several times.

The review was set up in October, so, in the great scheme of things, it’s been done pretty quickly, because of the huge lack of public trust in the sector thanks to issues with pollution, financial (mis)management, and failing infrastructure.

Now that we’ve had the review, the government – which has ruled out renationalising the sector – will have a simple template for sorting the mess, yes? No. There is, Sir Jon said, “no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector.”

Of course there isn’t. Take the financial mess out of the picture as that is a whole other complication of its own – Thames Water having to go back to the drawing board having lost its potential investor KKR, the myriad owners and shareholders that seem to be mostly pension funds and weird overseas investment funds – and you really have a massive problem of underinvestment and regulatory something or other. Underinvestment going back decades.

The UK population is increasing. It’s what populations do: Birds do it, bees do it, and people d it. And their need for basics things like water to drink, and wash with increases along with that. Yet we have built no new reservoirs to cope with this. Not for years. We’ve had a particularly dry Spring, which will mean, in a month or so, we’ll be talking about hosepipe bans, even if it rains from now until September. Water bills are increasing by an average of 20%, yet that money won’t go anywhere near what is required for proper investment in both new reservoirs and in repairing the leaky, ancient pipe infrastructure. I don’t know where the increased bills revenue will go, oh wait, yes, I do.

The water industry is supposed to be regulated. There’s even a body set up to do that very task. It’s called Ofwat and, thus far, has proved about as useful as the proverbial chocolate tea-pot. Sir Jon’s  report didn’t go anywhere near suggesting it be scrapped and replaced with something that actually, you know, has some teeth. Possibly because he was given certain parameters for the report the outset, and scrapping Ofwat lies far outside those.  All Ofwat seems to be able to do is issue huge fines, most of which end up on the Treasury bottom line.

What he did say, though, was that the current one-size-fits-all approach doesn’t work. Not every water company is the size of Thames Water or Severn Trent. Some of them are supplying water to customer that number in the hundreds of thousands, rather than the millions that Thames services. It makes no sense that these smaller companies – some of whom are actually running reasonably well – should have to jump through the same bureaucratic hoops, and be judged on the same performance criteria as the behemoths. Sir Jon did say that regulatory change is needed: “We really need a regulator that is close to companies, that oversees them and monitors them continuously, as we do in financial services with the banks – not just so they can intervene early… but so they can support companies to improve”.

This is only the interim report, and he is due to deliver the final one later in the year. I don’t mean to belittle his efforts, but will it make any difference to the quality of water in our lakes, rivers and seas? Will it improve our infrastructure so the people queuing up to get their bottled water when there’s a supply issue aren’t sat in their cars watching water cascading down the road from the eleventy-billionth leak this year? South East Water, I’m looking at you.

It’s a mess, it’s going to take more of a mess to sort it out, and, of course, I don’t have the answers. But neither, sadly, does Sir Jon, or the government.