Chief executive of the Environment Agency, Philip Duffy, has told delegates at British Water’s Annual Conference that action is being taken to meet rising customer expectations.
“There has been a real collapse in public trust in what the sector is doing,” he said. “The EA is turning that around by gathering more water quality data than ever before, increasing inspections to more than 10,000 per year, and closing the justice gap to strengthen enforcement powers.”
“Longer term planning is needed to raise the bar to meet rising expectations in communities for things such as pharmaceuticals and sludge treatment.”
The event took place in Brighton on 26 November 2024, and during the opening regulators’ panel, Marcus Rink, chief inspector at the Drinking Water Inspectorate also flagged the looming problems of metals, plastics, and PFAS chemicals, which will require dedicated focus in the price review for 2025-30 water company investment plans – PR24.
Duffy also observed that conversations on water quality are overly focused on the water sector, and less on other actors, such as agriculture and manufacturing which also cause pollution.
Paul Hickey, managing director of the RAPID programme at Ofwat said, “We are on the cusp of releasing our final determinations [for PR24] and [they] will be positive in supporting the ambitious plans the water companies have to protect and improve the environment.
“We will, through a step-change in investment, improve river health, address storm overflows, stop damaging abstraction, and reduce leakage for more resilient water supplies.”
Hickey highlighted the need to harness the creativity of the supply chain and bring in experience from other sectors to get the most from PR24 investment for wider environmental benefit. He also noted how engineered solutions can, and should, work alongside nature-based solutions (NbS) rather than being seen in opposition.
Duffy said that the EA is taking an evidence-based approach on implementing NbS, “Currently, there is a mixed picture on nature-based solutions for wastewater and the nutrient cycle. There is a deeper question too that regulations are not outcomes-focused and are very strict on how things need to be done, creating a context which makes innovation difficult.”
Duffy argued that the EA is taking considerable risk as a regulator in allowing water companies to trial various nature-based solutions which are pushing at the boundaries of the regulatory framework, but said that it is the right thing to do to deliver value to the environment in the long-term.
As the UK Government launches the largest independent review into the water sector and regulation since privatisation, led by former deputy governor of the Bank of England Sir Jon Cunliffe, British Water chief executive Lila Thompson asked whether regulation of the water sector is broken. All agreed that fundamental change was needed.
Water UK chief executive David Henderson said it is and that the Cunliffe Review into the water sector, which was announced in October 2024, was “not before time” and he wanted to see “faster, cheaper, and simpler” regulation.
The panel cited areas of improvement including lengthening planning cycles for the medium and long-term, reforming outdated legislation, removing competitiveness between regulators, simplifying regulatory complexities, and reducing the costs of the processes; along with setting catchment-scale, outcome-based, targets and trajectories for optimised planning.
As the leading membership organisation for the water industry supplier community, British Water members’ views and expectations were never far from discussions. Delegates expressed their concern that regulation was slowing down innovation and there was little confidence that there would be a smooth transition for the supply chain between the 2020-25 asset management plans (AMP7) and AMP8.
During a panel on optimising solution delivery, speakers from the supply chain stressed the importance of creating minimum asset standards for solutions deployed across multiple water companies. By finding areas where common standards would work and being led by outcomes rather than bespoke specifications, greater innovation and efficiencies could be achieved.
There was reiteration of the need for procurement time reduction and more transparency and long-term visibility of AMP8 work programmes instead of an ad-hoc model.
The day ended with a lively panel exploring whether there should be a collective communications response to the sector’s challenges and the need to engage with customers and communities. Mark Wiltsher, senior director of communications at Ofwat, said that he was not convinced that the apologies from all of the water companies on combined sewer overflows had been great.
“That is what we’re hearing from consumers,” he said, “and it is not helping. Delivering will speak louder, and people’s perceptions of the water sector will change when they notice the difference.”
All agreed that changing public perception of the water sector cannot fall on the shoulders of the water companies alone, and Karma Loveday, founder and editor of the Water Report, asked the panel how the whole sector could take advantage of the massive PR24 investment opportunity to leverage and strengthen communications.
One suggestion was for companies in the sector to ensure investment is used to leverage communications and make sure there are strategies in place for delivering messages to the public to build an overall understanding of the sector.
Reflecting on the day, Lila Thompson said, “I was very pleased to hear the strength of feeling from all stakeholders in the water industry around the need to drive a change in culture and behaviour. This is how a collective vision can be developed that can be communicated to customers.
“It is time for an end to the often adversarial and hierarchical nature of relationships between the regulators, water companies, suppliers, environmental organisations, and wider society – I am hoping that Sir Jon Cunliffe’s review will help set a collective, strategic, vision which prioritises actions for the sector. This will then help the sector deliver for the environment and customers in advance of the third British Water Annual Conference in 2025.”
