Associate Martin Hurst looks at the issue of water pollution and in particular why we face the glaring problem of raw sewage. This article was first published in Utility Week.

It will not have escaped Utility Week readers that there is an ‘issue’ around sewage. A campaign started by Feargal Sharkey, known to my generation as lead singer of the Undertones (their single ‘Teenage Kicks’ was John Peel’s favourite song), has gained traction across the media and political divide.

But what exactly is the problem, beyond an understandable ethical concern that discharging raw sewage into rivers and seas is hardly right for a developed country (my philosophy studying daughter immediately said when I talked to her about the issue: this is about ethics, not economics).

The media and political feeding frenzy on sewage makes it particularly hard to separate fact from hyperbole and form a balanced judgement of appropriate policy, regulation and water company actions. Few acknowledge that the problem is in part a creation of the Victorians and Edwardians, who designed brilliant sewerage systems for their time, but ones which were not designed for the run-off of rainwater from the tarmac and concrete we find in modern towns and cities. As with all these things, the solution isn’t straightforward, or cheap.

In some respects, our rivers are cleaner than 50 years ago. Major ‘point source’ pollution from factories (and sewage treatment works) has reduced markedly. Fish have returned to rivers that had none. Many beaches are cleaner, though there is more to do.

Outcomes

A major reason for privatising water was to raise funds to improve the quality of ‘bathing waters’, funds that the Treasury had systematically underprovided when water was in the state sector – sound familiar?

However, things have largely stalled for two decades. The EU’s water framework directive, which the UK supported, sets a target of 75% of water bodies being in good condition by 2027. The current figure is around 15%. The main problems are now ‘chronic’ water pollution from diffuse sources such as farming and road run off, coupled with sewer overflows when it rains. Both are exacerbated by over-abstraction of water from rivers, which stresses habitats and reduces dilution of pollution. The balance between these causes varies locally: the solution can differ over half a mile of river.

In the policy world of thinktanks, the optimal approach is to start from the desired ‘outcome’ – improved water quality – and work backwards. Wessex Water have been advocating ‘Outcome Based Regulation’ for some time; logic is on their side. If a river or beach has poor water quality you work out the main causes and tackle those first. Ideally you would also apply the ‘polluter pays’ principle and make the farmer, road user, developer or water company pay to solve the problem.

However, as a former senior civil servant for 20 years, including as environment and farming adviser in Number 10 and water director in Defra, I know it isn’t that simple.

First, ministers of all parties have been reluctant to impose additional costs on farmers. The occasional egregious offender can be hauled over the coals, but if we require the whole industry to change, someone else must pay – in this case the taxpayer or water customer.

Second, government/regulator funding pots concentrate on one outcome. Natural flood management spend must be justified by flood benefits. Funding for catchment work must show environmental benefits. Water company spend must benefit customers. But the work on the ground is nearly identical in all cases. These ‘vertical’ approaches are missing multiple benefits.

Third, organisations in the firing line are understandably risk averse. The Environment Agency fall back on their statutory duties rather than looking for lower cost but riskier ‘nature based’ solutions. Government concentrates on demonstrating progress on the process under fire – combined sewer overflows – rather than improving water quality. No-one is willing to lead the debate about why the sewers overflow or what good water quality means.

Trust deficit

Fourth, there is a bias in the system towards short-termism and refusing to make explicit trade-offs. For 20 years government, Ofwat and the industry took the benefit of a falling cost of capital and rising gearing as lower bills for customers and higher dividends for shareholders rather than updating networks. Even now, with problems in every newspaper, there is still a tendency to push solutions back in time, given the cost of living crisis (and the political cycle?). The trust deficit which has followed is understandable.

What might a solution look like? Inevitably much will have to await a new government, with five years of power. But ongoing work led by Indepen and Sustainability First offers some suggestions.

First, bring the funding sources for nature and catchment approaches under a single umbrella, with local, place-based decision-making.

Second, create a formal voice for the long-term in water decisions. Make it clear that the new long- term plans required of the industry by Ofwat are here to stay.

Third, start on the 2029 water price review now, accepting that some things may have to change quite radically. Five-year reviews don’t work for everything. We may need some form of independent ‘commission’ to inform this, and we will need government to be much clearer up front in guiding regulators on how to prioritise between competing objectives.

Fourth, ensure we don’t close the door now to the flexibility any new administration will need.

Fifth, invest in data from monitoring and telemetry, in machine learning to interrogate the data and in better ways to model systems. Be transparent in releasing this data and use it to develop a forward-looking risk-based approach to capital maintenance.

Sixth, support those who are trying to create a ‘trusted narrative’. Have the courage to open the debate up about the balance between ethical concerns about sewage discharge and the big problem of water quality and cost management. Start a conversation about trade-offs and priorities.

Finally, and hardest, accept the need for culture change: in regulators, companies, among NEDs and civil servants. This is needed for a balanced view of risk taking and innovation and to encourage everyone to look beyond the process to the desired outcomes.