Politics: the role of policy

By Richard North - August 16, 2022

Amid all the worries and woes besetting this nation, at least we have a little bit of good news to cheer us up. Two removal vans turned up in Downing Street yesterday to collect the Oaf’s goods and chattels.

Apparently, he plans to camp out at Chequers with his family until he is finally thrown out of office. He will depart for good from his office at No.10 when his replacement takes over. The presence of the removal vans appears to indicate that he is preparing to leave voluntarily, so we won’t need the bailiffs to move in and evict him.

Presumably timed to avoid the risk of him being filmed or photographed alongside his removal vans, the Oaf has treated himself and his family to his second foreign holiday in three weeks. There will be time enough for departure shots when, one supposes, he takes the “perp walk” to see the Queen, and hand in his resignation.

Meanwhile, his zombie government continues to preside over the wreckage of the British state where, increasingly, it becomes easier to list those public functions which still work with some semblance of efficiency.

Should one endeavour to list the failures, still at the head of the list, on the grounds of topicality if nothing else, is the water industry where what is widely acknowledged as the botched privatisation, the dysfunctional regulatory system and inept government policy have combined to deliver a shortage of water, an excess of sewage in the wrong places and over-priced, under-qualified CEOs.

But with the focus on the privatised industry, rightly lambasted for being debt-ridden, foreign-owned and engulfed with executive excess, it is easy to miss the devastating contribution of misguided government policy.

Latest in the long line of false moves was highlighted in a piece in The Times yesterday which announced: “Cross-country pipelines ‘would solve water crises’”, heralding a policy proposal from environment secretary George Eustice.

In his quiet, relatively obscure way, Eustice – if not the worst environmental secretaries in living memory, from a long line of post-holders where there is strong competition for that accolade – is certainly one of the most incompetent.

His contribution at the moment runs to building an array of huge pipelines to connect reservoirs in higher rainfall areas, mainly in the west, to those more at risk of drought, mainly in the east.

“If you could then transfer winter rains from flood lagoons in places like Shropshire to reservoirs in places like Norfolk you would solve two problems with one piece of infrastructure”, a source close to Eustice is cited by The Times as saying. “We have increasing flood risk in the west and greater stress on water resources and challenges around abstraction [taking water from rivers and lakes] in the east”.

Eustice’s plan, we are told, would involve much longer-distance pipelines explicitly designed to connect the wettest areas with the driest. However, we are warned that they would not be a quick fix. They would take years to construct even if the idea was adopted by the next prime minister.

And yet, if we turn to the professionals of the Institution of Civil Engineers (ICE), and their 2012 “State of the Nation” report on Britain’s water resources, we find that Eustice’s idea was comprehensively debunked some ten years ago.

A national water grid is regularly heralded as a solution to the spatial variation in water resources in the UK, the report said, noting that the concept of designing a grid similar to the electricity grid to move water around the UK is held up as a “silver bullet”.

However, the experts said, reality is not that simple. We must change our perception of the form of transfer systems that are likely to provide solutions to water scarcity problems in the UK. This will not resemble a “national grid” as such a solution would be too costly, too environmentally damaging and too grand a design for the need.

The transfer capabilities we need, they said, are much more likely to take the form of short interconnections between adjacent water supply areas that enable water to be transferred to places of (transient) shortage from places of (transient) plenty.

Thus, rather that Eustice’s “huge pipes”, the experts had in mind transfers between adjacent regions or as transfers between more distant regions in a series of supply-demand rebalances that allow the water needed to be provided through a displacement chain rather than through a long pipe.

Interestingly, this expert report was published just a year after the White Paper on “Water for Life”, which instructed water companies on how to structure their investment programmes.

It was there that then environment secretary Caroline Spelman told the companies to balance investments in new supply infrastructure between reservoirs, pipe replacement to reduce leakage and the metering of water supply, giving the green light to the economic regulator Ofwat to assess the balance of expenditure when it decided how much customers could be charged to fund company business plans.

In determining the balance, Spelman encouraged the water companies to adopt the Sustainable Economic Level of Leakage (SELL) concept, effectively making leakage reduction subject to cost-benefit considerations. Furthermore, by building the concept into the five-yearly Ofwat price review, it built a short-term financial perspective into the system.

Although a systematic EU-wide review of best practice on leakage reduction, published in 2015 preferred a broader approach, taking account of political, economic, social, technical, legislative and environmental considerations (PESTLE), the ICE report got there first.

Noting that ongoing investment in aging infrastructure to reduce leakage and improve resilience was required, it recommended that the current leakage target setting methodology based on the White Paper’s “economic level of leakage” should incorporate a more accurate value.

Like the EU report several years later, it wanted criteria that reflected the true value of water to society and the environment. This, the report stated, “will drive lower leakage levels by incentivising companies to make better use of existing resources in preference to developing new resources”.

Yet, it was the economic criterion which was to dominate UK policy on leakage reduction – a policy devised by government and sanctioned by the regulator Ofwat, whose regulatory cycle encouraged short-termism.

The water companies, as one might expect, found this policy to their liking as it sanctioned the adoption of ostensibly cheaper policy options, such as fitting meters to domestic supplies, putting leakage reduction on the back-burner and disincentivising infrastructure renewal.

Thus, while we now have multiple, knowing analyses on the shortcomings of the water industry, with This is Money pitching in with its ha’porth, there is little recognition that both the industry and its regulators are working within a policy framework set by government.

Without the implicit permission granted by successive governments to short-change the British public, the key issues such as pipework renewal might have been given much higher priority, and the current supply situation might be very different.

And yet, when we see the Guardian refer to failures of government policy, we see it referring to John Armitt, chair of the National Infrastructure Commission, who has been one of the main influences perpetuating the distortion of policy.

Therein lies the ultimate failure of the system for Armitt, by qualification and experience, has no background in the water industry, and quite evidently has only a limited grasp of the issues.

Government is slave to the myth that a small band of elite industry outsiders are somehow imbued with a special talent which enables them to dictate policies which the real professionals would not endorse.

In a sense, we are driven by prestige, which also dictates access to the media, thereby ensuring that the industry is run by overpaid but inexperienced and unqualified amateurs, working within policy frameworks imposed by equally inadequate ministers.

It is no wonder the industry is in such a mess.