“Although the decision to leave the European Union caused a certain amount of shock in the UK water industry this was quickly followed by the realisation it is important to work with the result and there is a great amount of work to be done.”
British Water has already been involved in discussions with other trade organisations, with Water UK, and the Government departments for International Trade (DIT) and Environment, Food & Rural Affairs (DEFRA) about how the industry can move forward.
Although the landscape is changing from week to week, it has been very encouraging to see how DIT has been reshaping itself to tackle the challenges ahead.
As the leading membership organisation for the water industry, British Water is well placed to ensure the concerns of the industry are heard, that the regulatory implications are clarified and that opportunities for international trade are not lost.
Uncertainty
In the aftermath of the vote there is still considerable uncertainty about what Brexit will mean, in terms of water regulation, agricultural policy, environmental standards and business overseas. British Water asked its 185 members how the decision to leave the UK was likely to affect future business.
An encouraging 42 per cent of those who responded said they were highly optimistic about the likely effect of Brexit on their company’s business, only 20 per cent were pessimistic, while 28 per cent said they felt uncertain.
Asked what the decision might mean to the water industry as a whole, the picture was less clear. Only 25 per cent said they felt highly optimistic, 25 per cent said they were pessimistic and 50 per cent said they felt uncertain.
Environmental standards
Membership of the European Union has had an enormous impact on the water industry. Over the last 25 years our members have helped bring about enormous improvements in areas such as environmental standards and water quality, improvements have largely been driven by European environmental legislation.
Some of us can remember clogged-up canals, dirty beaches and poor water quality before Britain joined the EU and it is important to remember a great deal has been achieved.
As the UK moves towards triggering Article 50 it is necessary to understand how legislation will adapt to ensure areas such as water quality and environmental standards are protected in a post-EU UK. The continuing legitimacy of existing environmental legislation needs to be made clear.
British Water is doing all it can to keep its members informed of all the latest developments. By participating in the discussions, the association can ensure government departments are up to speed with the latest thinking and expertise from within the water industry.
Another important consideration will be the effect of leaving the Common Agricultural Policy. The Conservative Government has pledged to maintain support for farmers – but has not yet laid out the conditions it will impose in terms of land management, pollution control and flood prevention.
In the past, conditions stipulated by the Common Agricultural Policy have not always been best suited to the UK economy, landscape and environment. Post-Brexit, the UK may have more freedom to introduce more effective measures to combat issues such as pollution, water management and flooding in rural areas of the UK.
Climate of change
Brexit is just one aspect of a changing landscape for the UK water industry. Ofwat is currently looking forward to AMP7, the next regulatory asset management period (2020-2025). The indications are it will take up the issue of bio-resources as well as the opportunities for bulk water supply and water trading.
There is a suggestion water companies could work more closely with municipal waste disposal operators and look for opportunities for renewable energy generation from bio-methane from sewage sludge and municipal household waste.
Co-generation of sewage and household waste for biofuel is highly complicated under current environmental legislation, but innovations in transportation of sludge and energy production could produce value through operating efficiencies and increased asset values. Ofwat has already identified a potential £800m of efficiency savings for customers in England and Wales as this approach is developed.
A more imminent change is the introduction of competition of water retail for business and industrial users, which will come into effect in 2017. This will bring great opportunities to agile, innovative companies and will see a huge boost in demand for smart meters and monitoring technology and added value services.
This focus on the reuse of energy, recycling of water and the growth of smart meters is not just happening in the UK but is part of a global rethink about the way water and waste are treated. The UK has some excellent technologies and British Water is keen to identify the best ways these can be exported to a global market.
Stronger future
British Water is working to strengthen its links with academia, working closely with Sheffield University, Cranfield University and the STREAM water group to ensure technology being developed in the UK is given every possible support.
Trade missions, which help UK companies create contacts within overseas markets, are one of the practical ways British Water promotes overseas trade and this will become even more important once the UK leaves the European Union.
As reflected by the survey results received from British Water members, the UK water industry faces a complex set of circumstances post Brexit. However there are opportunities, as well as challenges, ahead.
It is more important than ever that the views of water industry experts are considered as the UK makes important decisions about future regulation, environmental legislation and trade. In such challenging and changing circumstances British Water is determined to do its best to ensure that the voice of the water industry is clearly heard.
