Sewage pollution amendment is totemic of how much we really value water

Sewage is everywhere at the moment, in case you hadn’t noticed. Campaigners have driven the issue of pollution from storm overflows way up the political agenda. How much does the Parliament ping-pong say about how we and our decision-makers really value water, asks Alastair Chisholm?

A row is in the offing between the Commons and the Lords over an amendment to the Environment Bill put forward to place a legal duty on water companies to “take all reasonable steps to ensure untreated sewage is not discharged from storm overflows”, which the government voted down, saying it was already taking those actions through other mechanisms in the bill.

Cue outrage that government was siding with its ‘mates’ in semi-monopolistic, polluting big business, lining their pockets while the rest of us swim (or paddleboard, canoe, fish, surf) in crap.

Government’s line was that the Duke of Wellington’s amendment hadn’t included an impact assessment and the costs required to discharge (sorry) the duty would be prohibitive at somewhere between £150bn and £650bn.

Cue more outrage that government doesn’t have a clue how much it will actually cost if it’s trotting out figures with a margin of error that wide, and anyway, where the hell did they come from? And set them beside the costs of the Tideway tunnel being built under the Thames to tackle this challenge at a gargantuan scale, which is costing Londoners £18 a year extra (possibly to increase to £25 because of delays) and at around the £30,000 mark per household those figures look very toppy. And anyway, if Tideway is so affordable, why aren’t shareholders paying not bill payers, when water companies have over the years polluted with virtual impunity?

A whole raft of questions arise from this. Here are just a few.

Amendment wasn’t a straitjacket

I’m no lawyer, but my reading of the controversial amendment was that it contained no timescale, and it included the phrase “take all reasonable steps”. Together these appeared to equate to quite some wriggle-room. So, I’m not really sure why government wouldn’t take it on the chin.

In discussion with many in the sector – water companies through to campaign groups –there’s widespread recognition that this is a big and complex thing to fix, and it’s going to take time. No-one seriously disputes that. And it’s down to government and ministers to balance cost against pace of delivery and arrive at a sensible timescale and roadmap.

Any suggestion that these sums of money (helpfully contextualised by government as being somewhere between the combined cost of the entire schools, police and defence budget, and more than the amount it’s spent on managing the Covid-19 pandemic to date) might need to be spent in a one-er is disingenuous to say the least. This is a multi-decadal undertaking.

And “take all reasonable steps” surely has to be looked at through the lens of the regulators of the water companies. What companies do, and invest, is dictated heavily by their regulators – in this instance the Environment Agency and economic regulator Ofwat.

This is influenced heavily by various strategic directions from ministers. The most recent being the Strategic Priorities Statement (SPS) from Defra to Ofwat which has just been consulted on and will inform Ofwat’s rules on what companies must focus on in their next 5-year investment plans. These should effectively dictate what is “reasonable” (to government).

Water company performance

The latest draft SPS is a bit stronger than the version of five years ago and includes stern words on “getting the basics right” on sewage treatment and storm overflows. Government puns it’s being “crystal clear” with companies on wanting to see improvements in overflow performance and rightly so.

Let’s also be clear here. Since privatisation, water companies have invested around £160bn in improving infrastructure, levels of service and (in some instances at least) the environment. At the same time, they’ve paid out approaching £60bn in shareholder dividends. Is that balance right? The optics are challenging and it’s a source of considerable angst among those pushing for improvements on sewage pollution.

But those calling for renationalisation to redress this balance might be careful what they wish for. The National Audit Office and others have pointed to huge inefficiencies and under-investment pre-privatisation when water infrastructure spending would be balanced against other demands on treasury coffers and generally come out worse. It wasn’t highly prioritised then, much as it arguably still isn’t.

This isn’t a new thing and the Environmental Audit Committee in 2000 recommended that “Ofwat seeks to ensure that its own statements do not "demonise" environmental and quality investment by portraying it as the key upward pressure on prices without equally emphasising the customer and public benefits which it delivers.”

The Committee also opined that the water companies had arguably been regulated too softly in the years post-privatisation and that a new approach should “enable companies to adequately prepare to renew and repair the cohorts of sewers and mains which will come up for renewal/rehabilitation simultaneously as a result of historical peaks in building activity.”

That was over twenty years ago and the adequacy of what existed then has to be cast into serious doubt. In recent years we’ve seen a far greater focus on water company regulation, with Michael Gove and Ofwat Chair Johnson Cox ratcheting up the pressure following the Labour-led, pre-general election renationalisation agenda a few years back.

That’s resulted in far greater transparency in company ownership, tighter scrutiny of investment plans and the advent of public interest commitments etc. A couple of weeks ago a bunch of water company CEOs painted a picture of progressive clean-up of the bad-old-days to the Environmental Audit Committee under their watch.

Ministers still not fully on-board

But there’s a long legacy of all manner of parties under-valuing our water environment and the investment needed to keep it (and us) healthy.

And ultimately, the buck stops with ministers. It’s they who set the policy and strategic direction to regulators, they who allocate budgets.

Over the past decade or so of austerity they’ve presided over the well-known slashing of the Environment Agency’s budget. They’ve also knowingly set the environment and its importance against the ability to deliver economic growth, housing and infrastructure development.

Measures such as sustainable drainage systems are only just finding their way back into ministerial consciousness as a solution to current climate and water quality challenges, having previously been cast into the wilderness by Eric Pickles as a burden on developers. The impact of housing development on water infrastructure capacity is being recognised more, with the automatic right to connect to the sewer possibly under review.

But ministers still have a confused perspective. The Environment Bill contains a requirement for water companies to undertake in-line quality monitoring above and below storm overflow outfalls. Severn Trent Water CEO Liv Garfield told Audit Committee members her company was scouring all corners of the earth to find the technology to meet this soon-to-be legal requirement at the scale necessary.

So, while government may be keen to ensure companies atone for the self-monitoring crimes of the past, in other areas of monitoring – smart water metering for example – it’s tone deaf.

The benefits of water metering are many and very well-known. They help customer (and company) visibility of their consumption enabling improved water efficiency (vital given looming resource pressures with population growth and climate change). They help detect leakage (a previous big strategic priority for government and Ofwat) and they help deliver energy efficiency because heating water in the home is a massive contributor to emissions and we heat too much of it.

But if you want to see what a politician sucking a wasp looks like, try talking to them about (near) universal metering. They blanche and run for the hills. More widespread metering is absent from the SPS despite its huge benefits.

Why, when we pay for everything else by volume – mobile data, gas, electricity, fuel for our cars and so on – are we the public supposedly not ready, in these climate and nature-imperiled times, to pay for the volume of precious water we use and flush down the sewer (‘cos we all go, y’know – we’re all polluters)?

Value water

There is still an awful long way to go before the real benefits of a healthy water environment aren’t taken for granted, and are properly recognised and invested in. Government might argue that the Environment Bill will also include a water efficiency target and that’s true, but it’s not translating into priorities for future company investment plans. The bottom line is, we’ve sweated the asset that is our water environment to breaking point. We’re ultimately going to have to pay more to bring it back from the brink.

In the final few days before UK-hosted COP26, a tweaked amendment on a duty to end raw sewage discharges has been put forward to the Lords, will likely pass and be taken again to the commons on Wednesday. It’s clearer on timescales for delivery now, including the words “as soon as reasonable”. Perhaps that will be enough to swing it.

Pressure on government and its MPs to concede will be considerable with the full glare of campaigners and the media, not to mention the eyes of the world on it.

Alastair Chisholm

Director of Policy, CIWEM