Not good enough, Chancellor

The Government's approach to the environment and regulation is lacking in vision, argues Sam Ibbott of the Environmental Industries Commission. But what does this mean for water?

Party conference season is over. There was the usual posturing and chest puffing, a few shots across the bow between those friendly enemies the Tories and Lib Dems in an attempt to rally the troops, and a lot of high-falutin’, esoteric debates that seem to matter far more to those inside the conference centres than those outside them.

Most speeches made at conferences go unnoticed and unreported.

Having been to a number of conferences myself, I can assure that this is usually for the best.

The party faithful feel obliged to go – showing ostensible interest in a seemingly endless number of worthy causes, whilst secretly picking which event to attend based on the quality of canapés. You might be surprised by just how many people you can get interested in the constitutional framework of Papua New Guinea if you have the right sandwiches.

But sometimes, speeches make the front page – and with good reason. Politics – be it party political or otherwise – matters. What MPs think matters. And if those MPs are ministers, it matters even more so.

None more so than when the Chancellor of the Exchequer stands up to speak. And for those of us that work within the environmental industries, the Chancellor’s speech was quite something.

For those who have been following the Government’s de-regulatory exercise, the Red Tape Challenge, the Chancellor George Osborne’s comments that “a decade of environmental laws and regulations are piling costs on the energy bills of households and companies” and the negative connotations this implies, will come as little surprise. So too was the Chancellor’s complacency deeply concerning – a resolution to “cut our carbon emissions no slower, but also no faster, than our fellow countries in Europe” did not sound much like the words of a forward-looking, growth focused Chancellor. Perhaps some of Treasury mandarins might remind him in a quiet moment that, on the Government’s own figures, the UK’s environmental industry has a turnover of some £112B, employs more than 900,000 people, and has exports worth some 5% of a US$3 trillion global marketplace. Perhaps in future he might be a little less dismissive of the sunrise industry of the future, that, should he will it, could greatly fill his Department’s coffers, create jobs, secure our energy supply, and produce a better quality of life for everyone.

Sadly, this is not the first time the environmental industries have disappointed in the Chancellor’s leadership on the environment. The Government’s ‘Green Economy Roadmap’ published earlier this year was signed off by the heads of the three departments – tellingly, the Treasury was not one of them. You would have thought the clue was in the name.

But as the Westminster bubble retuned from its annual staycation, the business of governance goes on. And for the water industry, there is no bigger emanating from Whitehall than the forthcoming Water White Paper.

Due for publication in December, the White Paper will set the direction of the water industry for perhaps the next decade, maybe more. In a recent meeting with the Environmental Industries Commission’s (EIC) Water Management Working Group (an association of around 80 companies working within the water industry’s supply chain), Defra’s Water White Paper team confirmed that the White Paper will focus on:

  • Securing sustainable water supplies for the future
  • Increasing choice and competitive opportunities, driving innovation, improving customer service and value
  • Maximising the contribution of water to economic growth
  • Creating a modern regulatory system that protects customers and minimises regulatory burdens
  • Ensuing fair and affordable water charges by setting out the Government’s response to the recent affordability consultation
  • Ensuring an effective approach to wastewater management that contributes to improved water quality and reduced flood risk
  • Incentivising water conservation through changing attitudes and behaviours

Quite an ambition. There is, understandably, a great focus on consumer protection in the White Paper, but of more importance to WWT readers are the areas covering the regulation of the industry and where the Government sees future problems. The White Paper will seek to address unsustainable abstraction levels, and the flexibility needed to adapt to climate change – all against a backdrop of drought, increasing the focus on water resilience.

It will also see the Government’s formal response to the independent review of Ofwat (published earlier this year), which it hopes will give a clearer steer on key policy areas, and more clarity about the role of Ofwat and what it should (and should not) be delivering.

The Government hopes to put in place the building blocks for a shifting relationship between the regulator and the regulated by making Ofwat less hands-on, with stronger incentives and more partnership working to develop solutions.

The Government sees this a long-term process, with the first changes starting to come in at the start of the next price review, but stresses the need for companies to respond positively to these changes if they are to succeed.

Whatever happens, the water industry would do well to approach the Water White Paper with an open mind. Its ramifications will be long-term, and it is unlikely the industry will see such a wide-ranging review (and the legislative impetus to drive change) for many years – EIC will be leading the way with Government to ensure we get it right.

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