AMP - let's have some common sense
According to a quote I read recently, "common sense is the knack of seeing things as they are and doing things as they ought to be done."
When it comes to AMP, the UK Government is sadly scoring in the ‘must try harder' region of the common sense spectrum.
Even to the lay person, shutting down an entire industry every five years makes little sense. In the time between the peak spending of AMP periods, skilled labour is lost to other sectors and equipment suppliers wind down their operations. When the new AMP period kicks in and spending starts to increase again, the result is always the same – it becomes that little bit harder and more costly to find the right workers and equipment.
The logic of continuing this approach at a time of economic recession is even harder to fathom.
So for the benefit of the common-sense challenged, here are some suggestions for how the AMP process should be run.
Firstly, why not give water companies their own five year timeframes?
Staggering AMP periods would create a situation where some companies are peaking when others are slowing down, giving constant employment for skilled workers within the industry.
Given that many of the more prepared water companies had their draft plans ready months before AMP 4 even ended, this approach shouldn't be too difficult to achieve.
2. Restore Scotland's AMP timetable
As an extension to the above, why not restore Scotland's AMP equivalent spending timetable so that it's once again out of phase with those of England and Wales?
Though it was undoubtedly done for all the right reasons, the decision to align Scotland's spending periods with the rest of the UK has actually made things worse.
Previously, Scottish projects offered gainful employment for out of work contractors and suppliers when the English and Welsh AMP periods went quiet. Why not return to this position at least?
3. How about some financial stimulation?
Earlier this year, the Government promised to inject extra investment into the UK's infrastructure projects to help stimulate economic activity.
Despite delivering proven benefits for other sectors, most notably the UK car industry, nothing so far has materialised for the water industry. In fact, Ofwat has again over-ruled the requests from water operators for more money and called on them to cut their water prices.
Which begs the question of where the money for investment is meant to come from. Unless money is injected into the industry, the danger is that water companies will ultimately move to protect their shareholders, cutting new projects and storing up potential obstacles for the future or paying less attention to leakage and the wasted water and energy associated.
My suggestion would be that water companies should be given financial incentives to get projects started early, or at the very least, allowed to get at their AMP funding at special low interest rates if done during 2010 before the traditional peaks of mid AMP (2011 and 2012) period.
4. Benefit from competitive labour
Whenever an AMP period peak finishes, it becomes steadily more costly to retain skilled workers, who are understandably lured away by the promise of work in other sectors.
Either staggering AMP periods perhaps north and south or giving water companies early and assisted access to their AMP funding could help overcome this problem, creating an environment where work was ongoing and smooth rather than being subject to the peaks and troughs of AMP spending.
Listen to the water industry!
Much of the above is what the water industry has been saying for years. Yet the message still doesn't seem to be getting through.
It boils down to this. There is another way to approach AMP – the question is whether the Government is interested in taking it and helping the UK economy now. Before it's too late.