Why the Coalition offers hope on key solutions

While tax, immigration and defence may have divided the Conservatives and Liberal Democrats. The two parties making up the UK's new government are more united on green issues, say the EIC's Adrian Wilkes and Sam Ibbott.

The post-election period will prove to be a challenging time for the water industry, not least because the formation of a new government can often see a period of unpredictability. It takes time to see if pre-election rhetoric is turned into firm manifesto commitments, and, once the election is won, which of these commitments are quietly shelved or conveniently forgotten, remaining forever in the spin doctor’s tray marked “aspiration”.

Add a second party into the mix and things start to get complicated. Principles and policies are bartered in return for Cabinet seats, and the ever-looming PR battle rages as both sides try and save face with their grass root supporters and the wider public.

But while the Conservatives and Liberal Democrats have often fallen out over the likes of tax, immigration, and defence policy, one area in which there is refreshing, and encouraging, unity is in the area of “green” politics – nuclear energy notwithstanding.

The Coalition’s agreed “programme for government” speaks of the need to “promote the green industries that are so essential for our future”, and sets the rather ambitious aim of being “the greenest government ever” Indeed, this last phrase even made it into this month’s emergency Budget. But the devil is forever in the detail, and many in the environmental sector felt it to be a missed opportunity with the Chancellor, for example, choosing not to use his ace card – the tax system – to put a price on pollution and environmental impact.

But we should not be downheartened. The Coalition is still in its infancy and has made much of openness to new ideas and new approaches. This gives us a fantastic opportunity to bend a fresh pair of ears; an opportunity to re-engage with government; to persuade.

To this end, the Environmental Industries Commission (EIC) has built on its pre-election campaigning by launching several manifestos for the Coalition on a range of key environmental issues, including water management. The EIC’s Water Management manifesto sets out three key lobbying areas that the members of EIC’s Water Management Group – spanning 80 organisations in the water and wastewater industry – have highlighted as being fundamental to the future of their industry and the environment.

For the Government, austerity is paramount, and profligacy a thing of the past. But a difficult economic climate is something the water industry, and the employees therein, have had to adapt to with alarming regularity.

A key strand, and long-standing campaign, of the EIC’s water management manifesto is reform of Ofwat’s regulatory role. Specifically, the EIC’s lobbying activities will see renewed vigour in the call for the restructuring of Ofwat’s five-yearly price review cycle which has seen a ‘boom and bust’ investment cycle in the industry, leading to instabilities in the supply chain; the migration of skilled workers into more stable sectors; and, ultimately, higher costs for the consumer.

To rectify this, EIC’s members argue that the legislation governing Ofwat should be reformed, instilling an obligation to promote a more long-term – 20 years plus – approach by water companies to their investment programmes. It is argued that Ofwat must proactively assess water companies’ proposals for their encouragement of environmental innovation, creating jobs and ensuring future export potential.

A second feature of the EIC’s water manifesto is the promotion of Sustainable Drainage Systems (SUDS). Importantly, SUDS can assist in urban drainage and flood prevention; an issue that is high in the public consciousness following last year’s flooding in Cumbria.

As part of this process, local authorities will play a pivotal role. EIC believes that authorities should be required to draw up Surface Water Management Plans for any major new development, with the related building regulations, planning guidance and housing density guidelines including a presumption in favour of the use of SUDS. Tax Increment Financing, which uses anticipated future increases in tax revenues to finance the improvements that are expected to generate those increased revenues, would be an innovative way of encouraging local authorities to provide the investment.

There is little incentive for water companies to take part in SUDS schemes. To rectify this, EIC will continue to press Ofwat to recognise SUDS as part of water company assets for the purposes of Ofwat financial settlements, and review the mechanism that water companies use to charge for surface water drainage to incentivise the control of surface water at source.

Thirdly, the EIC is campaigning for higher targets for water quality; specifically during the implementation of the Water Framework Directive (WFD). Good water quality not only has environmental benefits but also economic benefits: £3.6B worth of benefits to the UK economy if the WFD is implemented properly, according to Defra.

To fully seize this benefit, EIC is lobbying to ensure that the Environment Agency uses only the more rigorous WFD targets when measuring water pollution – rather than the current, less stringent, General Quality Assessment – and cites WFD standards when releasing figures on water quality to the public. Without this more ambitious, government-led, policy framework, the economic potential for the UK’s water management technology sector will be wasted.

Adrian Wilkes is chairman, and Sam Ibbott, public affairs manager, at EIC. For more information, or for a copy of the EIC’s Water Management manifesto, contact [email protected]

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