Slow growth in water competition

There has been a slow but steady growth in inset appointments. A number of new entrants have emerged including companies like SSE Water owned by the major utility company Scottish and Southern Energy and Avon Valley Water owned by Biwater.

Mostly the inset appointments have been for new housing developments, in Ofwat jargon "unserved" areas, although there appointment has still proved contentious. Typically the new water suppliers are offering their customers a 5 % discount over the Water plc's bulk rates. For developers a number of benefits are offered such as easy adoption of the new foul and surface water sewers and help with investment costs.

New entrants to the market are to be welcomed as they will stimulate new ideas and services for customers. But with the drop in new house building and slow rate of new appointments it will be a very long time before these new competitors are a serious force in the water market place

Negative impact of AMP cycle on water sector

Photo source: De Nora
There has always been a lot of concern by suppliers to the water utilities about the negative impact of the 5 year AMP investment cycle. Now hard figures obtained by British Water have quantified the impact on employment in the water industry. The effect of the downturn in work at the end of AMP4 has been more severe than many had realised. The British Water figures suggest the number employed have dropped by about 45%. The latest official estimate of the numbers employed in the water sector supply chain is 90 000 (EU Skills survey 2004). This suggest that a staggering 40 000 jobs may have been lost.


This loss of experienced people will have a major negative impact on the water industry. Many will have sought other employment or retired early meaning that they will be lost to the industry. There is also the considerable cost of making experienced staff redundant. All this comes at a time when water companies are facing huge challenges to become more efficient, and to find clever ways to deliver the capital programme outputs mandated by Ofwat. When the inevitable upturn in work that the £22 billion AMP5 investment programme will require finally arrives at sooner or later this skill shortage will impact on the capability of suppliers to deliver.

It is hard to be critical of individual water companies who have only acted in their own best interest. However economists have long recognised that the action of individuals can be damaging to the group – that’s one of the fundamental reasons for regulation. Suppliers calls for concerted group action across the water sector have largely been ignored, perhaps because its been hard to quantify the impact.

The British Water is to be congratulated on providing hard evidence of the damage the downturn is causing. But to make the case more robust it needs all suppliers to the water sector to take part in the survey. If your company has not already done so please complete the survey at British Water Survey






The water sector is likely to feel the consequences of this latest downturn for years to come. While it is too late to avoid the damaging impact of this latest downturn action it is not too late to act before the next cycle in 2015.

London flooding risk

Photo courtesy: Thames Water

Climate change will bring increased risks of flooding in London – but how well prepared is the capital to deal with it?

The London Assembly’s Environment Committee has launched a new investigation to find out.

The Committee will focus its review on the flooding risks that most often affect the largest number of Londoners - surface water and river flooding – mapping the risks and assessing challenges.

No agency has overall responsibility for flood risk, so the investigation will review how all the relevant bodies – Environment Agency, local authorities and the GLA - are working together. The Committee will also look at the Mayor’s role.

The report from this committee is not due out till the end of the year but it is safe to predict that the report will be critical of the way the key bodies work together. That was one of the key concerns of the Pitt Review. It is absolutely vital that if the problems of flooding are to be tackled effectively there is clear leadership and a co-ordinated approach – it is far too easy for cash strapped organisations to assume someone else will handle the issues. So news that the Government has announced a £2million boost to funding to help local authorities deal with flood risk assessment is a small step in the right direction but a lot more action is needed.

All Party Parliamentary Group on Sewers and Sewerage reformed

News that the All Party Parliamentary Group on Sewers and Sewerage is to be reformed will come as welcome news to the water industry. Its first meeting is likely to be in the Autumn after the group is re-registered in September.



At the same time the Environment Minister Richard Benyon has announced that Defra is planning two consultations this autumn. One is to establish national standards on sustainable drainage and the other is to review the transfer of ownership of private sewers to water companies. These two areas were key recommendations in the Pitt Review. Potentially they both have big implications for the water industry and could herald welcome new investment. Establishing ownership standards for SUDs is essential to enable their adoption by water companies or local authorities and would remove one of the biggest impediments to their widespread use.

Climate change: opportunity or threat

Photo source : Paul Hipwell

UK businesses need to be ready to face the risks and benefit from the opportunities that climate change could bring, Environment Secretary Caroline Spelman said in a major keynote speech today.

“We know that some level of change is now unavoidable and it is the responsibility of us all to think about what a changing climate will mean for our health, our businesses and our way of life. By planning for the adaptation we need now we can ensure that the UK is best placed to meet the challenges of climate change head-on.

“A warmer climate will bring both opportunities and challenges for businesses of all sizes. I want to ensure that UK businesses are well placed to take advantage of the new opportunities that arise as well as ensuring they are ready for the difficulties that higher temperatures and more adverse weather could mean for their staff and working practices.”


It is ironic that the news came just days after the UK Statistics Authority released the latest national statistics on Land Use Change in England. In a worrying trend it shows that house building on flood plains has actually increased over the last year. In 2009 the statistics show that 11 per cent of dwellings were built within areas of high flood risk (an increase from 9 per cent in 2008). Clearly the messages on climate change risk are not getting through.

This is a worrying trend for the water industry. It will inevitably lead to more incidents of flooding and that will increase yet further the pressure on the water industry to tackle flood risk issues. On the positive side it will also increase the political pressure to allow higher capital spending by the water industry. The Environment Secretary is also right to highlight the potential business opportunities that climate change will generate. Farsighted companies will be investing now in these opportunities.