For a climate change research project I’m working on, I’ve just been browsing the ‘new and improved’ Conservative/Lib-Dem extended coalition agreement. I was looking for changes that might affect the role of decision-makers in improving community resilience to extreme weather events. Happily I not only found plenty of those but also came across two passages with direct implications for the UK water industry.

Firstly, page 17 of the coalition agreement says:

We will examine the conclusions of the Cave and Walker Reviews, and reform the water industry to ensure more efficient use of water and the protection of poorer households.

It’s good to see the Cave Review and Walker Review outputs (hopefully) not being overlooked in the face of the high priority being given to deficit reduction measures. (The closing page of the agreement emphatically states: ‘The deficit reduction programme takes precedence over any of the other measures in this agreement, and the speed of implementation of any measures that have a cost to the public finances will depend on decisions to be made in the Comprehensive Spending Review.’)

Secondly, page 16 notes:

We will introduce measures to promote a huge increase in energy from waste through anaerobic digestion.

I imagine this objective has a fairly wide reach and may include promotion of projects at local, regional and national scales. Nevertheless it may also have the potential to provide a much-needed impetus for further investments, R&D and innovation in the wastewater side of the UK water industry (for instance, I’m reminded here of site visits to see enzymic hydrolysis in action during a project for UKWIR some years back). We’ll have to wait and see, I guess.

In addition to these two obvious pointers towards probable future water sector actions, there was a third passage that stood out. On page 31 of the agreement it states:

We will increase the proportion of tax revenue accounted for by environmental taxes.

The system operated by the England and Wales water industry is already quite controversial – at least for those who understand what’s bundled together in people’s water bills (this paper by Dieter Helm is a good place to start!). Currently water bills cross-subsidise national environmental improvements and major projects alongside funding the more traditional regional water and wastewater services are aware of. Consequently I think it’s not clear that this particular coalition pledge will result in any changes to whatever Ofwat or the EA have planned. Besides, why ‘rock the boat’? (Some might say that this de facto ‘tax’ burden is already being quite successfully – albeit rather ‘stealthily’ – applied via the present water bill set-up…)

There were a few other items of note throughout the extended agreement that caught my eye. However these ones seemed to have the most significant implications for the water sector at the moment. Nevertheless we’ll be sure to listen out for any reactions to these passages in the coming weeks and months then report back here with whatever we find.

Update (15/11/2016): Added featured image from the Changing Course report.

Duncan Thomas

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