Contractors need clarity on drains transfer

With private drains due to transfer to water company ownership in 2011, Dean Stiles asks whether those involved are up to speed and discusses the issues and concerns.

Domestic drainage contractors of all sizes face the potential overnight loss of half their work when private drains transfer to water company ownership. The transfer will be the greatest change the water industry has faced since privatisation in 1989, and possibly since the 1875 Public Health Act and the first government steps to bring sewers and drains into public control, says the Society of British Water and Wastewater Industries (SBWWI).

In little over a year, almost half of the privately-owned network of sewers and drains will transfer to water company ownership if the government keeps to its timetable. The move is part of the government's response to recommendations made by Sir Michael Pitt's Report on the floods of summer 2007.

The transfer, expected in 2011, is subject to secondary legislation contained in the Flood and Water Management Bill currently before parliament. However, the society is concerned that the short parliamentary session and likely general election may delay the bill coming into force.

Martyn Hopkinson, SBWWI vice chairman, says: "This is a major issue and small contractors are concerned as to when transfer takes place. They are looking for visibility; whether that is going to happen in 2011 as suggested."

Sewers forum
The society has set up a Private Sewers Forum to help industry meet the challenge the transfer poses. "We are trying to get some joined up thinking among the supply chain and other major stakeholders," explains Hopkinson, who is also chairman of the Private Sewer Forum.

The forum provides a link for the supply chain in all its forms, including government and the water companies, to discuss all aspects of the private sewer transfer question. It will give a wide range of industry viewpoints and provide an influential voice in discussions with government and the water utilities, he says.

Small contractors fear that private drain work - "their bread and butter" - will be lost to them once taken over by the water companies, says Hopkinson. The uncertainty over the transfer date and the many unknowns the proposed transfer involves is stifling decisions on investment in personnel, training and new machinery, he continues.

Hopkinson expects that the transfer will happen, but not necessarily in 2011. "In some ways the more time we get, as a supply chain, to look at issues and to look at the effect this is going to have on industry, is probably a good thing," he says.

In its consultation in early 2008, Defra said transfer will occur between 2010 and 2015. Last month a Defra spokeswoman said: "We are on schedule to meet the deadline: the Floods and Water Management Bill is going through parliament at the moment." The bill also includes separate action to ensure that any new sewers or drains are under the remit of water and sewerage companies.

The scale of the task is large: water company sewage networks will expand by between 70% and 100% following transfer, of which most is of unknown location and condition.

Defra estimates that well over half of all houses in England have a private sewer or lateral drain with some 200,000km of pipework connected to the public system, which, by default, are the responsibility of householders they serve.

But these are estimates and water companies need to undertake detailed surveys to assess costs or to be in a position to tender the work. They also face difficult decisions regarding how to manage the expanded sewerage and how the associated increased volume of work is best undertaken while maintaining existing levels of customer service.

The transfer will not initially include sewers connected to private pumping stations, and treatment plants will not transfer straight away. Defra is still assessing how this can be done but it will transfer at a later date, giving water companies the opportunity to locate and survey all existing pumping stations to identify any remedial works before adoption.

Most water companies are non-committal about their planned methods for managing the work. Yorkshire Water will take responsibility for 22,000km of private sewer pipes, in addition to the 33,000km of public sewers it already owns. A spokesperson says: "We support the transfer, as we believe that it is good for our customers. The transfer will provide much greater clarity on ownership and responsibilities, and the cost of maintenance and repairs will be distributed for fairly across our customer base."

The company says it recognises the scale of the transfer, and has set up a dedicated project team to ensure it is ready to take on the new undertaking. It is working closely with Water UK and with Defra, "but we can't invest fully or make the changes that will be needed until we have certainty that the transfer will go ahead. Ultimately, we need confirmation of the date and the detailed scope of the transfer so that we can ensure that the transfer is a success".

Transfer costs
Ofwat's draft determinations document on future water and sewerage charges for 2010-15, issued in July, did not include any expenditure relating to the transfer of private sewers and lateral drains. "Companies will be able to seek recognition of significant financial costs arising from the transfer using the interim determination mechanism," says Ofwat. A spokeswoman for Ofwat describes the transfer as a "wait and see what happens game before we can make any firm decisions".

Some in the industry believe that water companies will give private drains a low priority given the cost of undertaking detailed surveys to establish the size and condition of their extended networks. Managing the extensions to their networks initially is likely to be reactive activity.

The nature of the work is such that much of it will suit tier two contractors. For many contractors it will be a case of the same job but for a new customer. But the water industry will need to establish protocols with the insurance industry as insurance policies pay for a large proportion of private drainage work.

This is particularly relevant for repairs to drains. If a defect crosses the boundary of ownership, should one company take the lead and split the cost between the insurance company and the water company or should two crews be involved in the repair?

Claire Brown, writing in a WRc report, said: "The cost to the water industry is unknown as the condition of the private system is unpredictable and has not been maintained to the same extent as the public system. Some areas of the private system have never been investigated or repaired, making it difficult to establish the condition without surveying every lateral drain and private sewer across the country."

Complete system
Managing the sewer network as a complete system is clearly a useful and worthwhile benefit recognised almost universally by the industry, and will give water and sewage companies the ability to co-ordinate and manage maintenance procedures and identify any shortfalls in capacity, which the Pitt Review identified as an important consideration.

Undoubtedly those contractors with established relationships and contracts with water companies will benefit too from the new tranche of work that sewer ownership transfer provides. The likelihood is that water companies will look to contract out this new work following the trend well established in the industry.

And medium and large contractors are best placed to tender, as water companies will look to these contractors to deliver the service on their behalf. It is highly unlikely, given the current economic climate when water companies are seeking to reduce staffing and cut cost, that they will recruit the number of people necessary to run call centres and repair and maintenance teams to manage the formerly private sewer network.

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