House of Commons - Environment, Food and Rural Affairs Committee

The draft National Policy Statement (NPS) on Waste Water - Environment, Food and Rural Affairs Committee Contents

Written evidence submitted by the Consumer Council for Water (CCWater)

The Consumer Council for Water (CCWater) is an independent non-departmental public body representing the interests of water and sewerage customers across England and Wales. We have four local committees in England and a committee for Wales.

We have worked with the water industry and its regulators since 2005 to get the best results for consumers. In that time we have:

— been central to achieving the customer focused outcome from the 2009 price review, which was over £1 billion better for water customers than the 2004 review.

— convinced water companies to return over £135 million to customers through either additional investment or keeping prices lower;

— dealt with over 80,000 complaints;

— returned over £10 million to customers in compensation; and

— cost only 23p on each water bill a year. This will reduce to 21p in 2011-12.

We welcome the opportunity to submit evidence to this Efra inquiry into the proposal for a National Policy Statement (NPS) on Waste Water, published by the Department for the Environment, Food and Rural Affairs on 16 November 2010. The NPS is a welcome basis for planning authorities to make decisions on proposed large scale waste water infrastructure, taking into account the sustainability and environmental impact of such projects.

Our evidence is provided from the perspective of the water customer, both domestic and business. It addresses the three areas of scrutiny identified by the Committee: the planning principles in the proposed NPS, the sustainability and environmental criteria underpinning the NPS, and additional issues or principles that should be addressed.

1. EXECUTIVE SUMMARY

1.1 The draft NPS for waste water will deliver an important part of the new planning regime and will help the public see how proposed major new infrastructure projects are assessed.

1.2 The draft NPS guidelines for primary consideration[1] will give customers an assurance that major infrastructure proposals (such as the Thames Tideway Tunnel and Deephams Sewage Treatment Works) are subject to impact assessments.

1.3 CCWater supports the proposal that the assessments in the draft NPS must:

— make clear the full environmental impacts of projects to allow challenge;

— consider alternative, sustainable solutions; and

— consider whether the new infrastructure has a role in reducing flood risk.

1.4 In addition to that, two key approaches must be taken to demonstrate to customers the legitimacy of the decisions taken.

Involve in decisions those who will pay for new infrastructure

1.5 The NPS should emphasise the need for involving customers in the decision-making process for new infrastructure. This will help get customers' support for potential bill increases to pay for the project. At the 2009 price review, involving customers in choices and understanding their priorities helped 84% of customers accept the impact of proposed prices on their water bill.[2]

Full cost-benefit analysis of the options for a project

1.6 Cost-benefit analysis of the options will allow the public to see how the cost of the scheme compares to the benefits that will be delivered. This would help get public support for the final chosen option.

1.7 A single scheme like the Thames Tideway Tunnel is likely to have a considerable impact on all of Thames Water's sewerage customers' bills. Customers' willingness to pay should be considered if sewerage customers are to pay part of the cost.

1.8 This submission provides detail on the four key questions, and refers to the Thames Tideway Tunnel project as the largest single example currently available of a large waste water infrastructure project.

2. SUSTAINABILITY AND ENVIRONMENTAL CRITERIA

2.1 CCWater welcomes the:

— environmental assessments that will be required for a new proposal;

— sustainability appraisal; and

— inclusion of the Flood Risk Assessment.

Environmental Assessments

Full environmental impacts of projects must be clear to allow challenge

2.2 Customers will welcome the environmental assessments that will be required for a proposed project (its effects on habitats and biodiversity, landscape, air quality, carbon emissions, and water quality). CCWater's consumer research on water company draft Business Plans during the 2009 price review revealed that a significant proportion of consumers (average 90% across all water companies) said that the condition of their local environment was an important issue to them.[3]

2.3 The environmental assessments must allow the planning authority to understand the full impacts of the proposal in order to either challenge the project, or identify additional works or measures needed to mitigate these effects. The environmental impact of a large scale waste water engineering project (such as the Thames Tideway Tunnel) will be significant. Such projects have a large carbon footprint, not only during construction, but also from on-going greenhouse gas emissions associated with pumping and extra treatment processes. These full impacts must be considered.

Sustainability Appraisal

2.4 CCWater welcomes the sustainability appraisal that forms part of the statement. To get customer support for projects they will need to be assured that the cost of building and operating large waste water projects meets:

— a current need for improved waste water treatment or management; and

— adequate "future proofing" to ensure consumers receive a reliable and effective waste water service in the future/over the lifetime of the asset.

Alternative, sustainable solutions must be considered when planning infrastructure projects

2.5 The NPS sustainability appraisal requires the consideration of alternatives. This is consistent with other Government legislation and initiatives relating to improved management of surface water. Anna Walker's independent review of charging for household water and sewerage charges considered the importance of managing surface water to prevent flooding and to reduce the burden on waste water infrastructure:

"Surface water drainage presents an increasing challenge, exacerbated by the heavy rainfall and flooding arising from climate change. Household customers should, over time, be incentivised to reduce the amount of surface water drainage going from their property into public (sewerage company) sewers. This aim can be achieved cost-effectively, in a way that supports the 'polluter pays' principle, if this service, too, is paid for by those customers who use it—that is, by those connecting their hard surfaces to the public sewers." Anna Walker[4]

2.6 Research also shows that consumers are aware of the impact of surface water flooding, as this quote demonstrates:

"Climate change was allegedly a contributory factor in the flooding we had this summer." Customer, Bristol[5]

2.7 More sustainable methods of managing surface water through Sustainable Drainage Systems (SuDS) need to be considered. This could be as alternatives to large scale infrastructure, or as methods of controlling surface water that can work alongside such infrastructure (separation of surface water from combined sewers, and surface water management techniques such as landscaping or permeable surfaces). It is therefore important that major developments form part of an integrated and holistic drainage and waste water management strategy.

2.8 Surface water management solutions will not always be a solution on their own, especially in large scale urban environments. The assessment of the Thames Tideway Tunnel project shows the practical difficulties in constructing and operating surface water management solutions across London. However, surface water solutions can help alleviate pressures on waste water infrastructure, particularly where new development occurs.

Flood Risk Assessment

New infrastructure could have a role in reducing the risk of flooding

2.9 Flood Risk Assessment is important in the planning process. New waste water infrastructure should be assessed to see if it could have a role in reducing or managing the risk of flooding. It must not inadvertently contribute to it. Research on consumers' priorities during the 2009 price setting process revealed that consumers were aware of the need to assess the capacity of any new building or infrastructure to be adequately protected against the effects of heavy rainfall:

"Some of these houses that flood with a combination of storm water and sewage have been built in areas that flood regularly" Customer, Tower Hamlets[6]

3. OTHER PRINCIPLES IN THE PLANNING PROCESS

Involve those who have to pay in the decision-making process

3.1 The criteria for judging whether a new infrastructure project is successful should include considering whether those who are paying for the project support it. A successful project is likely to have involved those who have to pay the costs in the decision-making. This would help get support and buy- in to the project.

3.2 Anna Walker's independent review of water charging recommended that Government should consult with customers when considering investment in water or sewerage services.

"The review team recommends that there should be a new requirement on government to consult with customers before agreeing any water quality improvements which water customers will have to pay for, to set out the costs and benefits including the impact on household bills and ensure effective consultation through CC Water and any agreed customer consultation arrangements. Customers views would have to be taken into account before any commitment to expenditure was made."[7]

3.3 The Environment Agency found, in its work on improving community and citizen engagement in flood risk decisions, that:

"The importance for local communities is having ownership of the process and the outcome as solutions based on local knowledge and ideas are far more acceptable to the community."[8]

3.4 This is also shown in the Government's policy document, "Building the Big Society" which states:

"Only when people and communities are given more power and take more responsibility can we achieve fairness and opportunity for all."[9]

3.5 Customer consultation has a role in the draft NPS. It should be used in the range of assessments carried out when considering major new infrastructure. The Planning Inspectorate needs to consider customers' views both on the need for the new infrastructure, and about the possible impacts. It would ensure that decisions take account of the concerns customers may have, or reveal any concerns (at a local level) not covered by the assessments. It would also demonstrate to the public that their views have been actively sought and taken into account.

Conducting cost benefit analysis should be part of infrastructure development

3.6 CCWater would like to see greater emphasis in the draft NPS on the need for a robust cost benefit analysis of any proposed project. This includes a consideration of the financial impact the cost of the project may have on customers (especially lower income households). As an example, the Thames Tideway Tunnel is the biggest single sewerage project since privatisation in 1989. The current estimated cost is £3.6 billion, but cost estimates have doubled in three years, and there are no guarantees against further cost escalation.

3.7 The costs of all the Thames improvements taken together will add very significantly to the sewerage element of sewerage bills across the Thames Region not just in London. A total spend of £4.6 billion (including £1 billion already agreed for the Lee Tunnel and associated sewage treatment works plus design costs) will add £80 to £90 per household per year to sewerage bills by the time works on the main tunnel are complete. This is an increase in household sewerage charges of some 75% over 2010 baseline average sewerage bills.

3.8 This will be in addition to the bill impact that will arise from the transfer of private sewers and lateral drains to sewerage company ownership from October 2011. There may well be more cost increases to come because of wider European quality requirements, including those associated with the Water Framework Directive.

3.9 Customers need to be assured that the investment is justified, can be done at the lowest realistic cost, and the financial burden is fairly shared. We believe the distributional impacts of the cost of such large infrastructure projects should be given attention as part of the NPS assessments. The cost should not fall most heavily on those least able to pay. The draft NPS should include an analysis of the cost weighted against the benefits, and the willingness and ability of customers to pay for the infrastructure (if the cost is to be wholly or partly funded through sewerage bills).

3.10 Any new large scale wastewater infrastructure costs are likely to be carried by waste water customers. It is therefore important that there is a clear demonstration of value for money. Customers' perception of value for money is lower than it needs to be for the future sustainability of the industry. CCWater's research indicates that customer satisfaction with sewerage services is 87%. But satisfaction with the value for money of sewerage services is significantly lower at 71%.[10] This is roughly on a par with that of much more expensive energy services.[11] Satisfaction with value for money could fall if sewerage bills increase without customers accepting the need for investment.

3.11 In conclusion, as the costs of major infrastructure projects are likely to fall on sewerage customers, they must be consulted and involved in the decisions. Anna Walker similarly concludes in her review[12]:

"The review team has therefore concluded that environmental improvements fundamentally relate to the quality of water supplied and the sewerage disposed of. As such, under the "polluter pays" principle, they are appropriate for the water customer to pay. However, this conclusion demonstrated how important it is:

— For the government to ensure that whatever the challenges, diffuse pollution is paid for by the polluter, not the water customer;

— Before agreeing any new environmental improvements, governments must consult and listen to the views of customers or customers will be being asked to pay inappropriately high costs." Anna Walker

4. MONITORING AND PUBLIC ACCOUNTABILITY

Public access to information on project assessments will provide greater transparency and encourage customer involvement.

4.1 There should be greater emphasis on the monitoring of scheme delivery, and public access to information relating to each scheme. The sustainability and environmental assessments complete with robust cost-benefit analysis would show customers that both the costs of the investment and their ability and willingness to pay had been properly considered.

4.2 The Thames Tideway Tunnel will be the first opportunity to make the costs of a large infrastructure project visible to the public. Such information should be made freely available, including on the web. This would enable customers to access key information and to be involved in the decision making process. This would be a welcome addition to the NPS.

5. CONCLUSION

5.1 The National Policy Statement (NPS) for Waste Water is a welcome basis for planning authorities to make decisions on proposed large scale waste water infrastructure.

5.2 Overall, CCWater would like to see greater emphasis in the NPS for:

— full environmental impacts of projects to be clear to allow challenge;

— alternative, sustainable solutions to be considered when planning infrastructure projects;

— new infrastructure to be assessed for a role in reducing flood risk;

— cost-benefit analysis of the infrastructure proposals to measure the value of a project against the cost paid by customers;

— involvement and consultation with those who will pay for the project; and

— public access to information on project assessments will provide greater transparency and encourage customer involvement.

January 2010

1 When the Infrastructure Planning Commission (or its successor) considers both the need for new waste water infrastructure serving over 500,000 people, and the impact of this infrastructure, both during its construction and when it is operational. Back

2 Customers' views on Ofwat's 2009 Draft Determinations
http://www.ccwater.org.uk/upload/doc/Draft_Determination_Final_15_Oct_2009.doc Back

3 Understanding Customers' Views-PR09 Qualitative Research into Customers' Priorities-MVA Consultancy, February 2009 http://www.ccwater.org.uk/upload/pdf/PR09_Executive_Summary_Final_Feb_2009.pdf Back

4 Independent Review of Water Charging and Metering for Water and Sewerage Services-Anna Walker, December 2009. Back