The water industry in England and Wales is a story of success. Since privatisation – 25 years ago next year – the industry has raised over £100 billion to deliver major improvements in customer service and environmental quality. According to Ofwat, customers’ bills are a third lower than they would have been had the industry stayed in the public sector. And it is certain that had we still been in the public sector, much of the investment would not have happened.
Customer service levels are higher than ever, and better than for most private companies. Last month Wessex Water answered all customer calls in an average of 5.5 seconds. I recently spent one-and-a-half hours on the telephone to PC World trying to get a laptop repaired.
Despite this success, the media portrayal of the industry frequently reflects a different perception – of leakage and hosepipe bans. Customer confidence must be affected when there are headlines about non-payment of tax and opaque financial structures.
I believe part of the problem is the “utility badge”, which implies a focus on creating assets rather than providing services. I would like us to be seen not as utilities, but as customer service companies, and ones that provide service excellence and value for money.
It is no good us complaining that it is unfair, we need to deal with the issues proactively. Partly, this is about telling our story more effectively, but it is also about listening to customers and being much more responsive to their individual needs. As part of the development of our business plan, we have consulted more than 18,000 customers and incorporated their views into the plan. This engagement needs to be ongoing and our online customer panel will help us do this together with much greater use of social media, etc.
The Water Bill that is about to go through Parliament puts competition firmly on the agenda, but when it comes to tackling affordability and flooding, more could be done, and these are two key areas that influence the way we are seen by customers and the wider public.
Ofwat has rightly flagged the importance of companies responding to the current economic climate and most companies are proposing holding or reducing bills in real terms over the next five years. We clearly do need to respond to the economic climate, but in particular we need to focus on those who are least able to pay. At the time of privatisation, water and sewerage services represented 0.9 per cent of average household expenditure, and it is now 1.1 per cent, so not a significant change. However, there are a growing number of customers who have real difficulties, so the extension of social tariffs is very important as we plan for the future. Wessex Water was the first company to introduce a social tariff and we now have more than 8,000 customers not paying the full bill, but making a contribution that they can afford. This will grow significantly over coming years.
The government could help in the application of social tariffs by giving companies access to benefits data so assistance could be targeted effectively and efficiently. Currently we rely on a great deal of help from Citizens Advice and other debt agencies in making our assessments.
The government should also introduce legislation requiring landlords to give details of their tenants to companies. This would help enormously in collecting data from transient customers who can afford to pay but don’t, rather than these costs being passed on to other consumers.
When it comes to tackling flooding, we need a collaborative approach and greater clarity on who is leading. Customers are not interested in whether it is main river flooding, local watercourse or sewer overflows – they just want someone to sort out their problem. The current arrangements do not provide that clarity and are also a major hindrance in achieving sustainable drainage. We need clarity on leadership and fewer parties involved.
We also need a catchment-based approach to managing flooding and water resources. This needs to include sustainable land management, more permeable paving and clarity on the management of sustainable urban drainage systems. Not only would a catchment-based approach help in dealing with flooding, it would also help to protect the environment and provide more cost-effective solutions. We need a lead from government and regulators in adopting catchment-based regulation rather than focusing on point abstraction or discharge.
Wessex Water and many other companies have demonstrated that working in partnership with landowners and farmers can provide much more cost-effective solutions to problems such as pesticides and nitrates. We need a focus on sustainable solutions rather than energy-intensive and often very expensive capital solutions. This approach is key to holding down bills.
The forthcoming price review gives an opportunity to rebuild trust by controlling bills, continuing to share outperformance with customers and provide customers service which is leading edge for any service business.
Much of this lies in the hands of water companies but there is also a need for regulators to help by acknowledging and rewarding firms that deliver excellence. And we need regulators and government to point to positive actions by the industry and to support companies publicly where appropriate.
Twenty five years ago, the perception of drinking water quality in the UK was at an all-time low but actions of companies in raising standards and the Drinking Water Inspectorate in highlighting the improvements restored customer confidence. Together, we need to do the same across the board. If customers trust us to deliver high quality, reliable services that are good value for money, they are much more likely to respond to calls to play their part in water efficiency and environmental protection.
Colin Skellett, chief executive, Wessex Water