Building on the Gray and Cave Reviews, the White Paper even acknowledges that the sector needs more innovation, something I was happy to see after having researched this issue for many years. All in all, the White Paper outlines many welcome and long overdue measures, but I’m left wondering whether the sector can embrace this more sustainable vision.
It’s not, of course, a case of “everything must go” before positive change can occur. But certainly, one of the first things to jettison is the sector’s self-congratulatory mindset. This comes from the very top, it seems, and gets wheeled out in each new press release, strategy and policy.
The new Water White Paper is a case in point. It opens by hailing privatisation as a ”success story” and seems overly proud that we’ve spent £90 billion since 1989. Well, it’s a matter of debate whether water privatisation has been a success because these “efficiency gains” have not been unequivocally found by independent research. Ofwat claims water bills are £110 lower as a result of its efficiency challenge, but it’s generally been overlooked whether the £90 billion has been spent on the right objectives in the first place and whether a different regulatory regime could have avoided this gross level of spending altogether. What might have happened had the sector not become locked in to an environmentally and financially unsustainable, capital-intensive way of doing things?
It continually surprises me to see the headline figure of £90 billion bandied about. Besides being a staggering sum of money, it’s also not been invested by “the industry”, as claimed. In reality, it’s come not just from customers paying ever-increasing water bills but mainly from allowing extraordinary levels of debt to be accrued for future generations to deal with. Both aspects are hard to be proud of during the hard times of a debt-fuelled global recession.
Let’s also not forget that the post-privatisation water sector has, according to the Walker Review, accumulated three times more customer bad debt than the electricity and gas sectors combined. It has also proved largely clueless about how it will reduce its spiralling carbon footprint to meet the goals of the Climate Change Act. Surely the industry doesn’t expect to saddle the customer with even more debt to pay for this historically self-induced problem?
In thinking of ways the sector might make a step-change, some look to radical innovations. The White Paper’s announcement of a Technology Strategy Board-initiated £3.5 million innovation competition on water security this March plays to this camp. Yet we must remember that innovation is neither a commitment to take lightly nor a short-term answer. Successful water innovations need open collaboration.
The risky journey from invention to innovation in the water sector can take decades – so much so, that high-profile technological innovations now used across the sector were in fact invented well before privatisation. With sadly dismal post-privatisation commitment to research and development, limited engagement with the sector’s highly inventive supply chain, and a shortage of young people coming up to replace now retiring innovation champions, the “innovation pipeline” required to tackle the many challenges faced by the industry is in danger of drying up.
Might a more modest assessment of the current situation give the sector a better chance to address its challenges using the promising framework of this new White Paper? If this would also stop the seemingly endless rhetoric of “success from an £x billion spend”, then so much the better.
Duncan Thomas, research fellow at Manchester Business School and blogger at Waterstink.com