Environment, Food and Rural Affairs CommitteeWritten evidence submitted by the Consumer Council for Water

The Consumer Council for Water (CCWater) is the 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 price review when CCWater did not exist;

convinced water companies to return over £135 million to customers through either additional investment or bill reductions;

dealt with over 90,000 complaints;

returned over £12.4 million to customers in compensation; and

cost 21p per water bill per year.

We welcome the opportunity to submit evidence to the Environment, Food and Rural Affairs Committee inquiry into the Natural Environment White Paper.

Our evidence is provided from the perspective of the water customer, both domestic and business. We have a broad database of existing reports and we conduct tracking research each year. This helps us to reflect the views of customers in decision making.

1. General Comments

1.1 Broadly speaking, CCWater feels that “The Natural Choice: securing the value of Nature” (the White Paper) is heading in the right direction.

1.2 We are encouraged by the commitments that will assist other sectors, such as agriculture, to increase their contribution to tackling the pollution for which they are responsible. These include the support for catchment level measures and the commitment to develop a strategy for tackling diffuse water pollution from non-agricultural sources.

1.3 In particular, we support the commitment to expand schemes where providers of nature’s services are paid by the beneficiaries. This should help to encourage the agriculture sector to focus on environmental stewardship.

1.4 For these schemes to operate effectively and provide legitimacy for interest groups there needs to be a robust, transparent framework, including clear objectives, in place. We therefore support the commitment to carry out a full review of the use of advice and incentives for farmers and land managers, with the aim of creating an improved approach with better outcomes.

1.5 We await any further details on abstraction reform and strengthening the sustainable drainage framework, which will be set out in the forthcoming Water White Paper.

1.6 We welcome the work to define the benefits that can be gained from ecosystem services, and optimise the best way of achieving these benefits. Benefits need to be monetised effectively and fed into robust cost-benefit analyses of investment decisions.

1.7 We welcome actions to strengthen the evidence available for decision making, such as the work on the Natural Ecosystem Assessment and planning for low- carbon infrastructure.

1.8 In addition, although these are not specific commitments, we strongly support the priorities for influencing the European Union (EU) set out in section 5.19. We agree that the overall aim should be to put the EU on a path towards environmentally sustainable, low-carbon, resource-efficient growth. The intention to press for a climate change audit of existing EU policies and spending plans should contribute strongly towards this aim.

1.9 We also agree with the intention to press for new or revised legislation to be:

evidence-based, science-based and flexible; and

designed with regulatory and administrative burdens, and compliance costs weighed against the benefits.

1.10 In the future, we consider that the requirements set out in EU Directives should take account of the impact on customers’ bills of those requirements and the scale and pace needed to meet them.

1.11 CCWater has evidence and experience that may help Defra in engaging members of public with the issues raised in the White Paper.

2. Response to Consultation Questions

2.1 We have responded to the questions which have most direct impact on water customers.

2.2 Question: Does the White Paper set out an accurate assessment of the barriers to public engagement with the natural environment and make the most effective proposals for re-engagement?

Question: What further research and/or evidence is required to develop practical programmes sufficiently detailed to deliver the White Paper’s ambition to fully embed the value of nature into policy delivery.

2.2.1 We feel that the White Paper generally makes an accurate assessment of the barriers to public engagement. Public engagement will improve if consumers are involved with the decisions that affect them and, especially, if they are consulted over the scale, pace and cost of any changes. In this way, as we said in our response1 to last year’s consultation2, the White Paper objectives will be delivered successfully.

2.2.2 Consumers do value their environment. Defra’s 2009 research into consumers’ attitudes towards the environment3 indicated that over half (55%) of those consulted would like to do at least ‘a bit more’ to help the environment. Consumers were clear that they are willing to play their part by adapting their lifestyles if they are engaged in the right ways. This information is very similar to our own research on customer views on water and sewerage issues.

2.2.3 For example, CCWater’s “Using Water Wisely” research into consumers’ attitudes4 to water use and water efficiency demonstrated that:

most consumers are willing to get involved if others do too;

they express a strong willingness to think about their own water use and ways of reducing wastage; and

many already undertake activities that reduce the amount of water wasted.

2.2.4 The research supports Defra’s own, showing customers’ willingness to “do their bit” and that different customer groups can be identified. Hence, water companies can help customers be more water efficient by tailoring their approach to different customer groups and providing clear and appropriate help and advice.

2.2.5 Our “Using Water Wisely” research showed that the biggest barrier to customers engaging in individual issues is their perception that others are not doing enough in terms of their contribution. In water, one such example is leakage, which can be perceived by customers as companies not doing enough to keep their side of the bargain. This can be a barrier to customers doing more.

2.2.6 Further challenges to engagement arise because meeting environmental targets has already come at a significant cost. Since privatisation, water and sewerage bills have risen considerably and are now more than 45% higher in real terms.5

2.2.7 Customers’ views on satisfaction with the value for money of the services they receive provide a useful insight in to the tensions that may arise should levels of environmental investment increase further. CCWater’s research indicated that, even though water and sewerage services cost on average £1 a day, customers’ satisfaction with value for money is, at around 70%, only roughly on par with that of significantly more expensive energy services. As a result, customers have only limited acceptance of future price increases to fund further investment in maintaining and improving the environment.

2.2.8 Our experience in the last price review6 has shown that where companies are more successful in communicating with their customers in a way that they relate to, about what they are doing and why, their investments have been more acceptable and are, therefore, more likely to continue to be acceptable in the future.

2.2.9 Our latest tracking survey7 provided evidence that this approach works. Water companies with a higher level of communications, such as Yorkshire Water and Northumbrian Water have a better satisfaction with value for money.

2.2.10 If price increases constantly exceed the levels identified by customers, the industry, its regulation and its funding system will lose legitimacy. This could put a significant brake on willingness to pay and the outcomes of future price reviews.

2.2.11 Ultimately, consumers will be more willing to pay for environmental changes if they accept why they are necessary and understand what the outcomes and impacts of any changes will be. For this reason it is vital that any new investment is subject to robust cost benefit analysis to ensure that it represents value for money.

2.2.12 Further research will undoubtedly be needed in the future. Willingness to pay or views on satisfaction with value for money should be monitored closely to inform the scale and pace of new investment or obligations.

2.2.13 In addition, CCWater considers that one of the priorities is to develop a methodology that ensures the quality of cost benefit analyses. To this effect, we welcome the UK Water Industry Research (UKWIR) project to identify best practice in cost benefit analysis and urge that Defra consider fully the recommendations and follow-up work.

2.3 Question: What actions are required across Government Departments, from local government and by civil society to deliver the White Paper’s proposals to grow a green economy and reconnect people with nature?

2.3.1 CCWater’s “Using Water Wisely” research, as referred to in section 2.2, may have parallels in other areas of the public’s perception of the environment and, hence, in their willingness to engage with the environment. For example, this research showed that there is a need for consistent, independent and trustworthy communications from a number of organisations on key issues. Customers view messages from bodies like water companies as being partial and will, therefore, treat them with caution. However, customers will value these messages more if are backed up by messages from independent, authoritative bodies they can trust, such as CCWater.

2.3.3 We know that a joint approach works. As a result of initiatives by CCWater, water companies, water regulators and governments, our tracking research indicates that the percentage of customers who are saving water has increased by four percentage points over the last three years.8 Over 75% of people now say that they have taken action to reduce water usage and this is an improving trend. It is encouraging that water customers are showing more willingness to do their bit in spite of any barriers.

2.3.4 Similarly, our research into flushable products9 helped us to develop several public information campaigns, alongside water companies, that have encouraged water customers to change waste disposal habits. Over the last three years, awareness of this issue has increased by 11 percentage points to 80%, helping to reduce the risk of sewer flooding.

2.3.5 We believe that our approach, backed by good customer research and partnering with other bodies, works well in terms of getting the public engaged and changing their behaviour. This could be replicated in other sectors beyond the water industry.

Common Agricultural Policy

2.3.6 In addition to these points, CCWater also considers that the reform of the Common Agricultural Policy (CAP) presents some useful opportunities to protect and enhance the natural environment. To contribute towards growing a green economy, the UK Government could support the following principles during discussions at EU level:

Current levels of support for agri-environment schemes to be continued, if not increased; and

Any revisions of the CAP should incorporate incentives to tackle pollution at source and avoid water wastage.

23 September 2011