Examination of Witnesses (Questions 71-104)
RICHARD AYLARD AND PHIL STRIDE
25 JANUARY 2011
Q71 Chair:
Good morning and welcome. Just for the record, Mr Aylard, could
I ask you to introduce your colleague, for the record?
Richard Aylard:
I'm Richard Aylard. I'm the External Affairs and Sustainability
Director at Thames Water, and my colleague, Phil Stride, is the
Head of the London Tideway Tunnels.
Q72 Chair:
You're both very welcome. We're most grateful to you for being
here with us today, and also for the informal briefing you gave
us last week. One question I had at the outset: you gave us an
indication last week of what the total cost was going to be. We
understood from Ofwat afterwards that the cost projections had
already gone up over what had originally been proposed. What reassurance
can you give the Committee this morning that these costs—mindful
of inflation and possible delays—will remain at the current
projected figures?
Richard Aylard:
The initial cost was given to the Government in March 2007, when
Ian Pearson, the then Water Minister, announced that he wanted
us to proceed with a solution. That figure was worked out on the
basis of a small team of about six people doing a desktop study
to see what was needed, and what the cost was likely to be. At
that stage we couldn't justify spending the millions of pounds
that were required to work the scheme up in detail, because we
didn't know whether we would be required to go ahead with it.
Once we got the go-ahead from Ian Pearson, we then commissioned
a large team, including international experts, of experts in funding,
risk, infrastructure, planning—all the disciplines—and
it was that process, over a period of more than a year, that produced
the latest figure. I'm going to hand over to my colleague, Phil,
to talk about exactly what's in that number and how certain we
are we can achieve it.
Phil Stride: The
main thing to state is that at the period that Richard mentioned
in 2006 it was a high-level estimate looking at unit costs—for
instance, the length of tunnel and number and diameter of shafts.
The team of over 100 people that worked on that two years were
very much able to understand the design of the project and understand
all the component parts that would make up the project, so we
were obviously able to provide a better estimate, understanding
what all those component parts were. We've got a very robust risk
management process that was able to consider all the risks involved
in the project, and have been able to analyse how much we should
allow in our estimate for those risks. On top of that, we've also
used the HM Treasury Green Book on Optimism Bias, to include an
amount of optimism bias that would normally be put into a project
of this scale and complexity at this time of its development.
That's why we feel that we have, now, a robust estimate for the
project, which we feel confident the project can be delivered
for.
Q73 Chair:
Just for the record, what does that amount to, per household and
per property?
Phil Stride: £3.6
billion is the estimate for the project. We have estimated that
the customer bill impact would be just over £1 per week per
household on the average bill, so just over £50 per year
per customer.
Q74 George Eustice:
Do you think that the current Waste Water NPS—the draft
one—provides a sufficiently clear framework to help decision-makers
make their decisions on key applications?
Richard Aylard:
It is clear, but we think it could be clearer. It talks about
need, specifically in terms of whether a project is included in
either the Environment Agency's National Environmental Plan, or
a company's Asset Management Plan. Those aren't primary sources,
however. The real need comes from one of four drivers. First of
all, there is a statutory requirement that we, as a company, have
to meet, or it is because there is population growth that's going
to occur that we need to address. It may be, thirdly, because
of ageing infrastructure that needs to be replaced, otherwise
it will become more expensive to run and a poor deal for customers.
The fourth thing is whether it's to achieve a level of service
that customers want, and are willing to pay for. In the two projects
included in this NPS, they are clearly both legislative drivers,
so we'd like to see a clear reference to what those legislative
drivers are, and also the timescale within which the work has
to be met. We'd like to see a clearer link established between
the fact that a solution to a problem is needed, and needed urgently,
or on a specific timetable, and that the identified project is
the best way of addressing that need. That is there in the NPS,
but we think it could be clearer, and specifically a reference
to the individual legislation and the timescales, we believe,
would help the Major Infrastructure Planning Unit in reaching
their decisions.
Q75 George Eustice:
Obviously when the NPS was originally conceived, it was in the
era when we were going to have an Infrastructure Planning Commission.
Do you think that the fact that that has now gone back into the
Department, and the Secretary of State is making these decisions,
changes the role of the NPS and its scope?
Richard Aylard:
Not as far as we're concerned. The idea that this would be a special
planning procedure for nationally significant infrastructure projects,
and that the Government's policy is there for everyone to see
and plan to, remains the same with the change from IPC to the
Major Infrastructure Planning Unit, although of course there is
parliamentary oversight added, which can only be good for democratic
accountability.
Q76 George Eustice:
The other thing that quite a few people have criticised is the
vagueness of some of the terminology in the NPS, talking about
"relevant", you shouldn't do anything that's "unacceptable",
or very subjective terminology in some places. Have you got a
view there about whether that should be tightened up, perhaps,
by giving clearer definitions to some of those terms?
Richard Aylard:
We'd always like things to be as clear as possible. On the other
hand, I can see it from the other point of view: these are things
that have to be weighed in the balance by the decision-makers.
It's very difficult to lay down absolute hard and fast rules for
everything, because what they are trying to do is make judgments.
We need to make the judgment as transparent as possible, give
as much information as possible, but there's a limit to how much
one can direct things in general, when you're looking at very
specific local impacts.
Q77 George Eustice:
But are there any where you might tighten it up? I can accept
things like "reasonable" and "relevant"—that
leaves an element of subjectivity in things. But the other one
that's cited by some is this term, "associated development",
which is used—
Richard Aylard:
We don't have very strong views on that. We think it would be
helpful if it were included within the policy statement. If not,
we have to apply separately for it through the Town and Country
Planning system. It would be easier if it were together, but not
insuperable, if that's what we ended up with. On balance, yes,
we'd like to see it there, but it's not one of our top priority
issues.
Phil Stride: In
terms of clarity, going on from what Richard said, I think it
would also be advantageous if there was greater clarity on the
benefits that the project provided. Particularly in terms of the
Thames Tunnel, for instance, being clearer about the water quality
benefits, the benefits to aesthetics that we talked about previously,
health to river users, and also the sustainability of the tideway
of the Thames. It would be better if those benefits came out more
clearly in the NPS as well. In terms of clarity, one of the comments
that we struggle with on good design is "as attractive as
possible", which we feel is a very subjective term and one
that might lead to some debate as to what that means when we put
forward a design.
Q78 Mrs Glindon:
Just going on from what you said, particularly in relation to
need, would you say that, from the things that you think should
be included, that perhaps the criteria for proof of need isn't
as robust a basis for the IPC decision-making as it should be?
Richard Aylard:
When you say the criteria for need, what do you mean?
Mrs Glindon: Inclusion
in the Asset Management Plan, or the National Environment Programme.
Richard Aylard:
Yes. That's a good start, to reference those, but the reason that
a project is in one of those two documents lies elsewhere. In
the case of really big projects, it's usually with a statutory
driver—we have to do it, by law, so it's quite helpful to
say what the law is, and what the timescale is, rather than just
saying, "If it's in the National Environmental Plan, that's
good enough." We think it could go further by referring back
to where that comes from.
Q79 Mrs Glindon:
Do you think that the criteria are robust enough for the IPC decision-making
processes?
Richard Aylard:
If a project is included in the National Policy Statement, that's
a pretty clear statement that the Government wants it to be done.
However, if the Government can spell out more why they want it
to be done, and when they want it to be done, that would help
the IPC in conducting their examination. Because that's got to
be set against all the local impact statements that, of course,
all the boroughs will naturally come up with.
Q80 Mrs Glindon:
And the things that you've said. Thank you. So do you think that
the NPS should give the IPC some flexibility in interpreting whether
need for a project has been determined?
Richard Aylard:
Not really. In fact, "No," I think, is the answer to
the question. What we want to do is get a clear statement on need,
so the Government should assess that. They should do their impact
assessment. They should look at what the law says, and then once
all that has been done and the draft NPS has been consulted on,
the need therefore should be clear. What we're trying to get away
from is the previous planning situations, where an awful long
time was spent discussing need before we even got on to the local
impacts. If you want a streamlined process, and I think we all
do, then you don't want to have too much flexibility in there.
It should be restricted to the planning issues that the IPC are
supposed to be looking at, rather than the wider context of the
project, which should be in the policy statement.
Q81 Chair: Looking
at alternatives: perhaps your project is not the best one to choose,
but in other areas, are there other alternatives that, perhaps,
if they had been spelled out more fully in the National Policy
Statement, would have made a better contribution to the debate?
Richard Aylard:
I'll leave Phil to come on to the Thames Tunnel in a minute, but
if we look at Deephams Sewage Treatment Works, that's the ninth
largest works in England, and it treats the waste of more than
800,000 people every day. The works is very old. It's hard to
keep it working at its proper standards, and it won't meet the
new standards coming in in 2017. The range of options we have
is pretty limited. We don't have capacity in any of London's other
sewage works to take 800,000 people's waste there, so we are faced
with either redeveloping on the existing site and an adjacent
site, or moving the works altogether. Therefore, the range of
options is pretty limited, and they are spelled out in the NPS,
although I think they could be a little bit clearer about what
we actually have in mind. Our original proposals for this site
were put together long before National Policy Statements were
even thought of, so we will now have to have a robust site selection
methodology and a proper consultation process. The point about
the works at Deephams, however, is that the waste from 800,000
people converges there. If you want to build something on a different
site, you are going to have to take that waste, which amounts
to 200,000 tonnes of waste per day, in a pipe, and pump it somewhere
else and build a new works. In terms of what alternatives you
have, there isn't a great deal, other than looking at potential
adjacent sites where you could do more with what's there. Do you
want to talk about the alternatives for the Thames Tunnel?
Phil Stride: In
terms of the Thames Tunnel, although there is reference to the
other alternatives that were considered, I think it could be clearer
as to what those alternatives were and how viable they were. It
could also record the fact that a significant amount of work went
into evaluating those various options between 2000 and 2006, and
a clarity that that information was presented to the Minister
at the time, who wrote to Thames Water requesting us to proceed
with the tunnel option. This again was reinforced by Caroline
Spelman in September last year.
Q82 Chair:
My question was a more general one in other, smaller scale schemes.
I'm particularly keen on looking at sustainable drainage systems,
but Water UK have been quite critical, in the sense that the assumptions
underlying the National Policy Statement perhaps are overly optimistic.
Is that a fair comment?
Richard Aylard:
We have to first of all look at the extent to which the National
Policy Statement is designed to address projects that are not
nationally significant infrastructure projects. By implication,
it's a relevant policy consideration for works that are below
the threshold, and it would be useful if that was spelled out.
Certainly, in looking at any project, it's always worth looking
at the alternatives. Sustainable urban drainage has certainly
got a very large part to play in London, in stopping the existing
problem getting worse as London grows. But given how densely populated
London is, and given the nature of the geology, it's not going
to play a very significant part, at least in the short and medium
term, in dealing with the existing programme. You've got to have
both a short-term and a longer-term solution. If the NPS were
pointed at smaller projects in guidance terms, as well as the
nationally significant ones, that would help to make it clearer
what's to be looked at.
Q83 Neil Parish:
Is the National Policy Statement strong enough on the specific
sites of both Deephams and the Tunnel? Do you consider it lays
out the specific needs for the project to have those sites in
place, or would you prefer it to be stronger? Or am I leading
you on there?
Richard Aylard:
It does lay out the need for the schemes, but we then need the
flexibility to, through the consultation process with local people,
work out where the best sites are for actually developing the
Tunnel. We need to know roughly where it needs to start, roughly
where it needs to finish, and which bits we have to pick up along
the way. However, exactly where those sites are is not something
that should be in the policy statement. That's a matter for us
to work on with local councils and local people and put our proposals
to the IPC, or its successor body, to sort out.
Q84 Neil Parish:
When it comes to applying for planning permission, then, you are
relatively happy with where the National Policy Statement is at
the moment?
Richard Aylard:
In terms of the geography, yes. It does talk about the options
available at Deephams, and it talks about the potential to develop
an adjacent site. Again, that could be a bit clearer, but as I
was saying earlier, there aren't too many options for Deephams,
because of the fact that it's part of a fixed network that's been
there for a very long time. We're not going to be able to rebuild
the whole thing in any cost-effective way. As far as the Thames
Tunnel is concerned, we know the broad route, and the individual
sites are not something that should be in the Policy Statement,
because it will evolve through the consultation process. Indeed,
it is evolving as we speak.
Q85 Neil Parish:
Is there sufficient discussion on how the IPC should balance the
short-term local impacts with long-term benefits in relation to
the Tunnel and Deephams?
Richard Aylard:
Again it's a question of how much direction is to be given to
the IPC, and how much they're to be left to make their own judgments.
If the whole task is about balancing Government policy for these
projects with local impacts, then they need to be left the discretion
to make those trade-offs in their own way, having heard evidence
from both sides. I'm not sure it's possible to give them very
much clearer direction from the outset, except in general terms:
The Policy Statement could talk, as it does, about the need to
make sure that anything that is proposed is sustainable. There's
a sustainability assessment in the National Policy Statement,
which is helpful, and we welcome it.
Q86 Neil Parish:
Okay, you've reinforced that. Does the Generic Impacts section
of the NPS provide adequate guidance for decision-makers on the
relative weight they should give to the specific impacts of the
schemes?
Richard Aylard:
It certainly records what the potential impacts are, the things
that the IPC should be looking at—although of course they'll
get very strong input from local councils through the local impact
statements. The extent to which you can weight different factors
depends very much on the individual locality. If you've got housing
development right up to the edge of a sewage treatment works,
odour is going to be a bigger factor than if you're fortunate
enough to have a barrier between you and the nearest local people.
The same would apply with noise. Therefore, some of those things
can be looked at through a sustainability appraisal. Otherwise
they have to be interpreted in a local context, and that's really
the job of the IPC to do that when they have the input from the
boroughs, which we think is very important.
Phil Stride: Definitely.
Obviously that's been done based on the level of information there
is currently—or there was a while ago, when this was done.
As the scheme develops you'll be able to make those judgments
in the context of more detailed information in relation to the
sites. That's why, for both projects, it's been difficult to make
a judgment at this stage.
Q87 Neil Parish:
So when this goes to planning, you are relatively happy that,
as far as you are concerned, the National Policy Statement will
back up what you want to do?
Richard Aylard:
Yes. It's a clear statement of policy. As I say, we thought that
the need could be spelled out more clearly. There are areas where
the language could be tightened up, and we're going to comment
on some of those in detail in our response to Defra. But in principle,
the Statement of Policy, our planning application, which will
have been developed through two full stages of public consultation,
and the local impact statements from the borough, give the decision-makers
what they need to weigh up the proposal.
Q88 George Eustice:
What you say is entirely logical, but isn't there a danger there
that by not ascribing some kind of weight to these various factors,
you will end up with a situation where there will be a great deal
of variance in terms of how the NPS is interpreted locally, and
that that therefore almost undermines the purpose of the NPS?
Saying that you should take account of odour is not exactly a
revelation to most people. A normal planning committee would do
just that, without an NPS.
Richard Aylard:
Yes, but I think they would give it a different weighting, depending
on how close people were living to the site. They'd look at prevailing
wind. There are a range of different local factors. Noise is a
good one. If we've got people within 100 metres of a sewage works,
then a noisy plant going late at night is a big problem. If we're
talking about something out in the country, we wouldn't want to
spend an awful lot of money on noise suppression, because there's
no-one there to hear it, or no-one close enough to hear it. We
have to accept that the local factors are important, but there
is some pretty good guidance in there. The odour standard is one
thing that we think needs to be looked at. The odour standard
that's been suggested is much tighter than is in the existing
Defra guidance. Existing Defra guidance talks about the need for
flexibility, depending on local circumstances. There's a mismatch
there that needs to be sorted out. For example, Mogden Sewage
Works literally has housing development all around, and is right
next to Tesco's and Twickenham rugby ground. Odour is a bigger
issue there than for some of our smaller, more rural sites, which
are literally out in the country.
Q89 Thomas Docherty:
I understand what you're saying about smaller projects. Regarding
the specifics of the two London projects that have been notified
in the NPS, could you usefully have a discussion under the Generic
Impacts section of the NPS about both the likely impact for the
area, and what possible ameliorations would be available? My very
brief reading of it is that it's quite a dry, factual section
that doesn't put much flesh on as a discussion. Or do you think
that's better left to the planning application itself?
Richard Aylard:
To be honest, it's something that is central to the consultation
process. We've just done a first phase consultation with local
communities up and down the route of the proposed Thames Tunnel.
We'll be doing another full phase of consultation from September,
all before we submit our planning application. Local impacts are
being identified by that process, and they're being addressed—in
some cases we're moving sites completely. To try and spell that
out in a policy statement would be too early and too prescriptive.
The NPS should state that local impacts are really important.
It should give a very strong emphasis on the role of the boroughs
and their local impact statements, which I know some of the boroughs
have concerns about. I'm sure you'll hear about those later on.
We think they're important, but they're being addressed through
the consultation process. There are big, big changes going on,
and I think will do with any project of this scale.
Q90 Thomas Docherty:
You've led me very nicely on to my next question. What impacts
have been identified so far as being of particular concern from
the consultations that you've had? There is possibly a difference
here between what the local planning team is concerned about,
and what the local residents, or resident groups, are concerned
about.
Phil Stride: The
main concerns are obviously where we're proposing to build on
open space or recreational areas. That's been the greatest amount
of push-back that we've had, currently, in people's concerns.
That's followed by traffic movements taking materials to site
and taking materials away, potentially. People are very concerned
about traffic movements. They're also concerned about noise from
the site during the construction phase, and other issues that
probably aren't as prominent as that, such as light nuisance from
the sites, and certainly odour as well. In that sort of order,
those are the main points that people have been concerned about.
Q91 Thomas Docherty:
You'll appreciate that we've had some submissions—I don't
know whether you've seen them yet—from some of the local
groups. It's not our job to get into the specifics of that, but
could I ask a policy question? What would be your assessment of
the likely cost and the impact on the project if you were to use
brownfield sites—you've mentioned playing fields and so
on before—rather than some of the greenfield sites you're
looking at?
Richard Aylard:
We're looking at very few greenfield sites.
Phil Stride: Of
the 22 sites that we've currently identified as being required
by the Thames Tunnel, only three of those construction sites are
on greenfield sites, if you like.
Q92 Thomas Docherty:
Can you just confirm which ones they are?
Phil Stride: I
will go on to another category in a minute, but the main greenfield
sites are Barn Elms in the London Borough of Richmond, King's
Stairs Gardens in the London Borough of Southwark, and King George
Park, which is in Wandsworth. Those are the three sites where
we propose a construction site in a park or recreational area.
There are also a couple of sites where we've proposed an access
way through a park, in two cases: one in Chelsea and one in Tower
Hamlets. I think you mentioned that previously. Those are the
areas where we've proposed to build in a park area.
Q93 Thomas Docherty:
What's the impact?
Richard Aylard:
The point is that we've been out and consulted. We've got a lot
of feedback. We're now assessing all of that. We're looking at
what local people are suggesting. In some cases it's clear we'll
be going to entirely different sites. In other cases it's clear
we'll be able to propose some mitigation. Exactly what we can
do is still being worked through, and will be in our consultation
response, which comes out at the end of March. The costs are being
worked through. In general, there is always a trade-off on costs.
Communities up and down the river would like us to use the river
for 100% of materials—taking the excavated material out,
and bringing materials in. We can't do 100%, because that would
undoubtedly be ridiculous in terms of cost. We can, however, go
a long way. Exactly how far we can go, and exactly what we can
do at each site, is being worked out, and will be part of the
phase two consultation. Where we've had to go for greenfield sites
at the moment, it's because we simply haven't been able to identify
brownfield sites that are suitable where we need them. Again,
in some cases that's being reworked, and there will be some different
proposals in some areas when we come back with the second phase
in September. It's not for want of trying. We're very clear that
greenfields would be a last resort. In some cases we are currently
at last resort, but we can back-check and see if we can move things
in a more positive direction.
Phil Stride: Yes.
We have followed our site selection methodology, which we agreed
with all the London boroughs, to the letter. It clearly states
in there that we would obviously prefer to use brownfield sites.
We've followed that, and another point in relation to cost is
that the cost difference between purchasing a brownfield site
and a recreational park area isn't as great as it may appear,
because although we would need 100% of the area we purchased for
the construction phase of the project, we would probably only
need something in the order of 15% to 20% of that area for the
permanent operational site. So we would be able to sell on a large
part of what we'd purchased after the scheme had been commissioned,
which would obviously be netted off against the cost that we paid
for it initially. So that cost differential isn't as great as
it may appear.
Q94 Neil Parish:
Can I follow you up on this? There is an argument that since you
first put the plan through, the recession has hit, and there could
well be some brownfield sites that may be available and may be
available at a competitive price. I think you are saying that
you are re-looking, as far as King's Stairs Gardens is concerned,
or whatever. You are still looking for alternatives, are you?
Is that fair to say?
Phil Stride: The
key thing is that when we went out, we were sharing our proposed
scheme. We'd done a certain amount of work to be able to describe
to everyone involved what we planned to do. A key part of that
was that we were keen for local feedback, to understand whether
there was information we'd missed, things that we hadn't perhaps
looked at that would have been possible. Certainly, in the case
in point, the feedback we had from the residents of King's Stairs
Gardens was that there was a piece of land, a brownfield site,
not that far from the gardens. The developers, when we'd approached
them 12 months previously, had said that by the time we got to
October/November 2010, they would probably be three storeys out
of the ground and the residential development would be well under
way, and part of our site selection methodology was that we wouldn't,
as part of this scheme, knock down residential development. Where
that's occurred, we have been very proactive in understanding
what that opportunity was, who was selling it, and whether there
was an opportunity for Thames Water to acquire that land so that
we had a brownfield site rather than a greenfield site. Certainly,
whilst that situation on this particular area is commercially
sensitive, we are vigorously pursuing that opportunity.
Q95 George Eustice:
I wanted to get your view on the issue of how you balance out
the economic costs and benefits. When we had evidence from Ofwat
last week, one of the concerns they had was that, as currently
drafted, the NPS envisages that the very fact that a project is
listed on a project plan—business plan—signed off
by Ofwat gives the impression that it's the best value option,
and they were very keen to stress that that's not their role.
They suggested that perhaps we needed more clarity and should
include a requirement for applicants to demonstrate, within the
NPS, that it was the most cost-effective option. Have you got
a view on that?
Richard Aylard:
Cost comes into this in two ways. The first is the base cost of
delivering the project, which is something that's looked at for
nationally significant infrastructure projects, by the Government,
when they look at the legislation, and when they do the impact
assessments. If you've got a legislative requirement, then your
aim is to meet that legislative requirement at least cost, so
options appraisal comes into that. That's the first stage. That
should be done before the NPS is finalised. Once the NPS is finalised,
cost then comes into it when you're looking at what might be done
in terms of mitigation for local impacts—the kind of things
that might otherwise have been done through a Section 106 agreement
with councils, and things that might add to cost, such as particular
design elements. We think because those things are local impacts
they should be looked at in the discussions with the IPC, with
the company's proposals on one hand, and the local impact statements
from the councils on the other. Clearly we recognise that big
projects can have big impacts, and often big localised impacts,
and that those need to be mitigated, and that there's a cost to
doing that. However, there is equally a reasonable limit to what
that cost should be. We see it as part of the role of the IPC
to establish what that cost is. In terms of whether a particular
option is a cost-effective way of dealing with the need, which
is driven by a legislative driver in the two cases we're talking
about, we think that should be done before the NPS is finalised,
rather than revisiting all of that when we get to planning.
Q96 George Eustice:
So you don't think it necessarily requires some sort of benefit-to-costs
ratio to be—?
Richard Aylard:
Not within the discussions that take place once the NPS has been
finalised. That should be done before you get to that stage. I
point out again that it is very difficult to talk about whether
the cost is reasonable; if you have to meet a particular legislative
requirement it's a question of how cheaply that can be done effectively.
The test you go through is that whatever we build has got to work,
it's got to be safe, reliable, and deliver the standards. It has
to be as cost-effective as possible in order to keep bills down
for customers. Then there are factors like mitigation, local impacts,
and design, which come into the equation as well.
Q97 George Eustice:
I'm going to move on to the issue of the economic impacts on customers.
As it's currently drafted, the NPS very much looks at things through
the prism of the planning system, and it's all about impacts on
the local economy and the economic benefits that might be delivered
by an infrastructure improvement. As someone who represents a
South West seat, I'm very conscious of the way that this can have
an impact on water customers. Do you think that there needs to
be a more explicit recognition of the impact on water customers?
You mentioned the £50 increase in your bills. Does that need
to be more explicitly recognised within the NPS?
Richard Aylard:
It is in there, and I think it is something that needs to be looked
at for each individual project. The nationally significant projects,
as I say, tend to be driven by a legislative driver, so you haven't
got too much flexibility there. For some of the smaller projects—in
fact, for all of the smaller projects where the National Policy
Statement is seen as guidance—there is already a value-for-money
test before anything is included in a company's Asset Management
Plan with the regulator. It's Ofwat's job to make sure that bills
are as high as they need to be and no higher. There are pretty
strong constraints on us as a business from going around spending
customers' money that doesn't need to be spent.
Q98 George Eustice:
You don't think there's a danger of future conflict between the
water regulator, who set the cap about what an acceptable water
bill is, and the NPS, which has a slightly different focus in
the economic benefits that it weighs up?
Richard Aylard:
There's always going to be that tension where you have legislative
requirements that have to be met by a water company, with a system
that says the costs will be borne by customers. But the existing
balance in the system between Ofwat and the quality regulators,
the EA and the DWI, with the Government setting policy, works
as well as the system can be devised. The other question, of course,
is the affordability factors, which I know the Government is looking
at with the Walker Review: things like a social tariff, which
we at Thames Water have been pushing, as the Chair knows, for
some time, because we think there is a need to protect our least
well-off customers, and I'm sure that would apply in the South
West as well, although of course I don't know that area.
George Eustice: I'm sure
the Chair would rather not talk about South West Water bills again,
having covered it in detail previously.
Chair: The Chair remains
completely impartial.
Q99 Mrs Glindon:
Just going on from that, you've already mentioned design and cost.
Do you think that the NPS should be specifically amended to take
into account the need to balance the benefits of good design with
costs? If so, would you think of any principles that the NPS should
include in guiding the IPC on weighing costs against benefits?
Phil Stride: The
main thing on the design element is that in terms of the design
of the Thames Tunnel, which I know best, as with any design, we're
trying to make sure that the project is the optimum project to
deliver the scheme objectives and deliver proper value for money.
That's the key objective. In terms of the engineering aspects
of it, we need to make sure it delivers the function, its functionality
is right, and it delivers the output that's required. Obviously
a subset of that is aesthetics. It is just how you judge those
and balance those together. Also, it could be reinforced to pick
up operational issues. A design has to be functional—as
a company, we need to be able to operate the plant once it is
installed. It needs to be operated in a safe way and obviously
it needs to be secure. There are lots of aspects of design that
it could be clearer on, in terms of how you balance all those
different parameters.
Q100 Thomas Docherty:
There's always a bit of a discussion about what is consultation,
and what is sharing of information. Having worked for companies
that used to do consultations, I understand that there can be
a difference between the two. Specifically on consultation, rather
than providing information to the public, how effective do you
think the consultation and dialogue has been on the preparation
of the NPS with the public—specifically with the London
focus on the major projects?
Richard Aylard:
Regarding the NPS specifically, the Government has been consulting.
We've just put a link on our Thames Tunnel consultation website
to the NPS consultation. It's on the front page and it is flagged
up, to try to direct people there. We've seen that you've had
good input from London Councils, the GLA, the EA and others, but
I'd be surprised if very many communities and individuals have
been reached by it. I don't know whether that was the aim or not.
It may be that this is the kind of consultation that is particularly
aimed at, for want of a better word, the specialists and the statutory
bodies, rather than local communities. Local communities have
certainly responded in their droves to our consultation on the
specific project. I think we need a different level of consultation
for the NPS than for the projects that are covered within it.
Q101 Thomas Docherty:
I think that's probably a fair assessment. Do you think that there
are lessons, therefore, that the Government can learn, either
from yourself or other organisations, about engagement with the
public?
Richard Aylard:
I suspect that there are. We've certainly been working very closely
with the Defra officials. They came to some of our consultation
exhibitions, and they've been talking to us about ways in which
the two consultations can feed into each other. Consultation isn't
easy. First of all there is a trade-off between starting it very
early, when people say, "You haven't even thought this through
yet, so why have you come to us to consult?" or leaving it
too late, and then they say, "This is all decided, it isn't
consultation." You have to find somewhere along the way to
do it, and we've erred on the side of caution with our consultation,
and started quite early. The other thing is just finding a way
of reaching the individual customer, or citizen, from the Government's
perspective. People tend not to read things that come through
the letterbox, whatever you put on the outside of the envelope.
Even when we do radio advertising, newspapers, and television
interviews, a remarkable number of people say, "This is the
first I've heard of it." I'm afraid this is an issue where
I don't have any magic answers other than to say that Defra are
working with us, and we'll continue working with them on this.
Q102 Thomas Docherty:
This was my area of specialty before I came here. There's obviously
a concern that the public will be surprised at the NPS, because
it doesn't have an engagement. I accept the point about the statutories,
and that the professional consultees are being consulted. Do you
think that that is a realistic danger that we face—that
we'll get to a situation in three or six months' time where there
will be something of an outcry amongst the public that they haven't
been adequately engaged and consulted in the NPS?
Richard Aylard:
Personally I don't think so, because people will still have a
very real opportunity to be consulted on the individual projects
within the NPS. A lot of the content of the NPS is the thing that
you'd expect the boroughs and representative bodies to be making
their views known on. Perhaps you'd expect some technical organisations
too. I don't think it's the stuff of individual community groups.
That's just a personal view. Phil, would you agree with that?
Phil Stride: Richard
and I have done over 200 external presentations over a period
of time, so obviously that's helped in our getting the message
out about the Thames Tunnel. The key thing that I would add to
that, which perhaps has surprised us over the last six months,
is particularly that when we've gone out to do public meetings
and the like, we've had very little push-back about the need for
the project. Of the comments that people have, comments about
the need for the project have been in the low percentages. The
vast majority, in the 90% area, has been about the local impact
of the project. Even if you take the residents at King's Stairs
Gardens, or residents of Barn Elms, they support the need for
the project, but they're just very concerned about their local
park. Relating that to the NPS, the NPS is about describing the
need for the project, which we've had very little push-back on.
Hopefully that would relate to whether there would be a public
outcry about the need. I don't think there would. I think Nick
Raynsford at one meeting called it "universal support"
for the need for the project. In my view, having gone to many,
many groups, there is heavy buy-in for the need to do the project.
Q103 Chair:
Just before we release you, can I ask when you expect to do the
environmental impact assessment?
Richard Aylard:
Work on that has started. In order to get a sensible environmental
impact assessment it has to be done over more than one season,
so that work is ongoing now and it will ramp up. It will be there
to accompany the planning application in the middle of next year.
Phil Stride: Yes
indeed, and we'll have some initial outputs from it when we start
the public consultation phase two on 5 September this year.
Q104 Chair:
Is that the same for the Habitats Regulations Assessment?
Phil Stride: Yes.
That work's also ongoing.
Chair: We're very grateful
to you for being with us, and I'm sure we'll have other opportunities
to discuss this and other matters with you in future. Thank you
very much.
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