Speech by Ian Pearson at the Water UK 7th Annual Leakage Conference at the Commonwealth Club, London - 4 October 2006
I’m grateful to Water UK for the opportunity to speak today. It’s been a challenging summer as we all know. Parts of the country have experienced record temperatures. A record dry spell. Hot on the heels of two dry winters.August provided a brief respite. But the drought in the south east continues. And if we don’t tackle global warming, as the Met Office warns today drought will become a lot more common across the UK and threaten the lives of millions around the world.
The current drought has brought a number of issues into sharp focus. Not only for us in Government and the water industry, but also for the general public.
What’s becoming more widely felt is the public’s need to be assured of a sustainable water supply. One that achieves what today’s consumers want, and the country’s future needs.
Of course there are different circumstances from region to region. And the level of restrictions this summer has generally been quite limited. But I still think that the resources, and the system, have been, and are being, severely tested.
We need to think about the lessons, certainly. But maybe there are also opportunities worth exploring.
Drought and water resources
The Environment Agency believes that the drought in the South East is the worst we’ve seen for 30 years.
Water companies in the region have relied on their drought plans. Most have introduced hosepipe and sprinkler bans. One company has had to bring in more substantial restrictions using drought order powers granted by Defra.
It’s clear that the hosepipe bans in the south and east of England and the publicity campaign are having an impact on demand. Companies say that pressures have eased by up to 15%.
But I’d like to see better data on how much is actually being, and has been, saved. UK Water Industry Research (UKWIR) may make this possible. They are doing research on this and the results will help to properly assess the benefits of recent demand management.
For me, the drought has raised some important questions, particularly as a new Minister: How well are we communicating with the public? How effectively are we managing demand? How do customers feel? And overall, do we have the frameworks in place to manage drought and ensure a long-term sustainable supply?
I think we can look back on this year so far and agree we’ve got through it with relatively “shallow” restrictions. But there is a broad consensus, that we need to be looking forward and planning for likely future pressures.
What’s in store for us weather-wise this winter isn’t clear. We certainly can’t ignore the possibility of another dry winter with all the issues that could entail. I know that a good deal of work on contingency planning is underway and that companies are modelling the impact of various winter rainfall scenarios. I will want to monitor this closely and I look forward to hearing about the outcome of this work when the Secretary of State and I meet the water companies again in early December.
This is the kind of ground we’ll need to cover: the debate about this summer’s water management, what we’ve all learned, what needs to change and how to cope effectively with a third dry winter.
A mature debate can help us move forward. Because we’re all in this together.
None of us believes that water policy is just about getting through dry summers. It is about the best and most effective ways to use and manage this precious resource – now and in the future.
Water is one of the areas where Defra is looking at more progressive future steps. Targeting improvements. Planning to reverse some of the recent negative trends affecting our environment.
There is increasing momentum behind the message about One Planet Living. The message we are trying to get across on the need to move away from lifestyles that use up natural resources as if we all had three planets to live on, instead of just one.
Water is at the heart of two of the Department’s major goals: avoiding dangerous climate change and maintaining and enhancing the natural asset base.
But these can’t just be Defra’s goals. Everyone needs to think about the water that they’re using. And those of us here today need to come up with policies that provide efficient, sustainable and affordable water supplies across the country.
Government action
The Government, as you would expect, is already carrying out a lot of work on this. Work is being done to help us understand what works best in promoting more sustainable consumption of water.
We are committed to delivering more sustainable homes. And we’ve announced that we will consult on mandatory minimum standards for water efficiency in new build.
Government departments are also working jointly on opportunities for more effective and enforceable ways to encourage more efficient use of water in existing homes and commercial buildings.
I believe this work is valuable and important, and it should support a public consultation on new options and their likely benefits by the end of this year. I’m looking forward to giving everyone an opportunity to contribute to the debate.
We’ve also commissioned research from Waterwise to look at the scope of hosepipe bans. Their findings will gives us the evidence we need for consulting on the options available for improving the legislation which I accept needs to be updated.
The Government’s work to encourage sustainable consumption has wider benefits too.
We’re supporting a trial in the South West to see how combining benefit entitlement checks, water meters and water efficiency measures can assist low income households with their water bills. We’re expecting the results of this next year.
It reflects the growing recognition about the importance of working together at all levels to reverse the trend of rising water consumption by domestic households.
That is one of the key reasons why we as Government set up the Water Saving Group last year.
The Group brings Government, regulators and the industry together in promoting water efficiency.
It has an ambitious action plan to deliver within two years and the areas that the Group is focusing on include: customer perceptions and awareness; best practice in promoting water efficiency; information gaps; priorities and funding; the policy and regulatory framework; and measuring success, which includes targets.
I have been very impressed with the work I have seen so far:
- important research was commissioned by the Consumer Council for Water during the summer on customers’ perceptions and attitudes to water and this will underpin the Group’s future work programme.
- company incentives for improving the promotion of water efficiency are being developed. As part of this work, Ofwat is looking at ways to encourage developers to install water efficiency devices. Such as linking a new building’s level of water efficiency to the charges developers have to pay for connecting to the water infrastructure.
-And the Group is taking forward work, led by the Environment Agency, to define “water stressed” areas, along with targets and benchmarks.
I’m pleased with the early response, and with the work going on. But we do have an ambitious programme here. I am particularly pleased with the input from Water UK and the water companies.
In the future, without this kind of co-operation, we simply won’t be able to achieve the sustainable water supply system we all aspire to.
Long term planning for water resources
I’ve briefly mentioned the long term picture, and I’d like to take this opportunity to discuss our future planning.
One key element is our intention to make the long-term 25 year water resource management plans statutory. Following consultation earlier this year, we are planning for the legislation to come into force next April.
The plans will show how each company will work to achieve a sustainable supply-demand balance for the public water supply.
For the first time, these plans will also be subject to public consultation – giving the customer a vehicle for debating some of the fundamental water issues we face.
The plans will set out some of the key assumptions made by the companies: such as how frequently restrictions may be needed during drought periods to protect the environment and also the public from excessive bills.
And, crucially, the public will be able to question those assumptions.
The plans must take full account of likely housing development, particularly in the south east. And the most up-to-date information on climate change.
The Secretary of State will be able to direct changes to the plans in light of consultation responses.
But I want to make sure Government participates fully in these plans as they are being developed. We need to ensure there is an overall national strategy for water that will deliver a sustainable water supply for the future. I don’t believe however that a national strategy requires a national grid for water. As the Environment Agency concluded recently there is no new evidence of a need for large scale transfers of water.
Metering has been mentioned a great deal recently as a way to encourage households to use water more carefully. But I see this as only being a long term demand management tool. It’s not an adequate response to short term resource considerations.
And metering is not an answer in itself. It’s a tool that should be used as part of the strategic planning of water supply and demand.
At the moment 28% of households in England and Wales are currently metered, and this number is growing at a rate of around 2% a year.
As metering grows, I believe that support for the concept of wider-scale metering will also grow - particularly in areas of water stress.
Most of the remaining 72% of households are still paying for their water by rateable value But these have not been used for taxation purposes, or updated, since 1990.
I recognise that there are anomalies in this system. Can we really expect, in 25 years, to still be charging customers based on rateable value? I don’t think so. Will we have moved to full metering? And if full metering is the answer, how do we achieve it?
Some of these issues are raised in the water resources management plans. Others need a kick-start from Government.
These are important issues, and so we will consult on the best available options before deciding how to proceed.
Leakage
Now I couldn’t speak at the 7th Water UK Leakage Conference without mentioning the ‘L’-word……..leakage!
It may be unfair in some cases, but – let’s face it – this is the industry’s Achilles’ heel. In fact it’s the system’s Achilles’ heel.
Most of the companies have really increased their efforts and met their annual leakage targets. Well done – that really is good stuff.
But some are failing to meet their targets in successive years. And lets not mince words that is simply not acceptable. I expect to see Ofwat taking robust and effective steps to ensure that future targets are met.
How can we urge consumers to use less water during periods of drought when their water companies fail to meet their own leakage targets?
How can we tell consumers they can’t water their gardens with a hosepipe, when they see thousands of gallons running down their street from faulty pipes?
Water companies must lead by example. You know that, as well as I do.
I’m concerned that the current framework for setting leakage targets has neither the understanding nor the confidence of the public. And it doesn’t take proper account of the full range of costs and benefits, especially environmental and social costs.
That’s why I have asked for a review of how leakage targets are set. A proper review – led by Ofwat in conjunction with Defra, the National Assembly for Wales, the Environment Agency and the Consumer Council for Water. And I want to see full participation in that.
I want to see a methodology for setting leakage targets that is truly fit for purpose.
And I want the review to improve on the reporting of leakage management – helping people to understand the extent and funding of repairs and mains replacement. The data used for the review must be of the highest possible standard, with all those involved contributing fully so we have a robust and enduring model to take forward.
Investment
You will all be aware of the recent headlines about the £1bn shortfall of investment in the early years of this review period.
Companies have to deliver their services, and it is up to them to plan and manage their businesses to do so.
I look to the regulators, Ofwat, the Environment Agency and the Drinking Water Inspectorate, to monitor performance, and to ensure that companies meet their legal obligations. If companies fail to deliver, then this must be taken into account as part of the price limits.
Role of consumers
But don’t get me wrong this should not be about Government or regulators using the ‘big stick’. It might be needed on occasions. We have duties to the general public. Far better for everyone to work together for a common purpose.
Government and the industry can’t work in isolation when tackling the challenges that we face.
Consumers, as the drought has shown, need to be playing their part too.
Helping the public understand water issues; helping them to value water; encouraging them to change their behaviour – all of this is critical.
The research reports by the Consumer Council for Water on consumer behaviours and attitudes to water will greatly help the work of the Water Saving Group.
But clearly there’s much work to be done by all of us.
Customers will be more likely to take action if industry is seen to be taking action.
Industry is more likely to take action if Government is seen to be interested, involved – often giving the lead.
Effectively, what I’m talking about is, what The Secretary of State has called, an Environmental Contract.
A way of recognising that the issues facing our nation, our environment, and, for that matter, our planet, can only be tackled by our unified efforts.
A way to set out both our individual and collective roles and responsibilities for all stakeholders.
The water issues I’ve discussed fit well with this. There is already considerable collaborative working.
We are collectively tackling big challenges like the Water Framework Directive. And we also agree about getting the wider nation involved in the issues.
Conclusions
So, we have much more work to do. We need all of the measures I’ve outlined, not just some of them.
We need to keep our eye on the big issues, even after the short-term media focus moves on.
And, yes I’ve said it before and I’ll say it again, we’ve got to keep working together – Government, industry and consumers.
Because only together, will we achieve what we all want: a modern, efficient, sustainable water supply for the future.
Page published: 4 October 2006