Thoughts on the Cunliffe Review: The findings are out. What comes next?

Our Managing Director for Water & Infrastructure, Mark Kaney, shared his thoughts following the conclusion of the Cunliffe Review.

So having had some time to reflect on the final findings of the Cunliffe Review, I find myself at a moment of both optimism and pessimism. While there is much to like (some of the issues highlighted are very familiar to those who work in or alongside the Water industry) it does feel as though there is now a sense of waiting to see the ‘how’ against the ‘what’.

Given this, I thought I would share some thoughts on some of the key elements, adding a slight musical flavour to it…

“Meet the new boss, same as the old boss” – Roger Daltrey (The Who)

So we are going to get a new regulator. Ofwat have been fired for their shortcomings and the big 4 will now become 1. While this is good news as it should correct the mis-alignment of targets and constraints, and give a single view of what good looks like in terms of asset performance and value for money, this action won’t correct the poor performance around governing the economic returns properly or the under resourcing of the Environment Agency. The proposed “supervisory approach” should help but the quality of leadership, employees and direction will be paramount.

“Then she lit up a candle and she showed me the way” – Don Henley (The Eagles)

So strategy will no longer be driven by the water company but regional water authorities. The big thing here is that these plans will bring together all facets of water use, reuse and recycling. In addition to direct domestic, commercial and industrial water consumption, industries such as agriculture, fashion, data centres, food and beverages will be considered and planned for together. This may mean more clarity for water company business plans and more tools to hold big users to account, driving them to behave responsibly. This is a welcome change and as an asset management professional, better line of sight is always a good thing!

“You can’t always get what you want” – Mick Jagger (Rolling Stones)

When discussing the ever-higher levels of performance we need from our systems, the debate always comes back to “years of underspending”. While true, we are at a point where it is, what it is. If a 25 year national water strategy is developed, the investment required to meet the performance and service aspirations will be big, very big. It will be very hard to balance the politics of rising costs, trying to keep bills affordable and unlocking the funding to drive the required refurbishment and renewal necessary to future-proof our infrastructure. Even if the money is made available, do we as a sector have the ability to make the step change in delivery and management to spend it quickly and wisely? AMP8 will give us a good indication of where we are at with that.

“I’m living with something that just isn’t fair” – Ozzy Osbourne

One thing is clear, scrutiny both public and political won’t be going away. These changes will take a while to be implemented, and we won’t see a significant shift in model until AMP9. What we are left with for now is £100bn to invest and a large, complex programme that needs to start moving fast. The skills challenge is ever present as is resource capacity and our slow pace of innovation. There are CMA outcomes to be decided affecting a large part of the population and a demand to half pollution by 2030.

This can feel like the deck is stacked against us being able to achieve our goals. We do have to remember though that British water industry expertise is sought the world over. We also have some of the best infrastructure and engineering companies in the world working on delivering these programmes. In the absence of absolute clarity and tempo from above, we may need to drive this ourselves as a water sector. This will be hard, but may be the way we prepare ourselves for the brave new world as set out by this review. Even though the whistle has blown and the game has started, AMP8 still feels like it’s yet to get going. We are all here and ready to support our clients though. Just pass us the ball and let us run…