Utility Week

8 | 23RD FEBRUARY - 1ST MARCH 2018 | UTILITY WEEK Interview scheme, pledging to offer water for custom- ers and passers-by at each of its 3,000 sites from March 2018. "The reaction to the announcement has been fantastic; but an announcement is one thing, now we have to deliver that ambition," Roberts says. He explains that water companies will work with Refill to develop local action plans by September this year. There is another key milestone for water companies that month – the submission of PR19 business plans. On PR19 and the price control challenges facing water com- panies, Roberts echoes the common narrative that it is a "tough approach". "Ofwat's direction of travel has been known for some time. The regulator has been trialling its approach for at least as long as I've been with Water UK," he says. "PR19 is a tough approach and it will be tougher for some than for others. But fundamentally companies are getting on with the business and saying: 'Right, how do we now respond to the direction that has been set in clear detail – in most areas – by Ofwat?'" Put simply, Roberts says, what the sector is trying to achieve is the "resilience of water resources and waste- water services at a price that is affordable and to do it in an efficient way that is customer focused". "And that's an ambition everyone in the sector shares, among the regulators, within government and so on. Water UK provides information and we share intelligence and good practice within the sector. It's not just about responding to government or Ofwat consultations," he says. "All of what we do is for a purpose. We have a mission to be trusted as a sector providing world-class services that promote an improved quality of life to cus- tomers and communities, and we try to promote that by bringing people together and sharing ideas." But Roberts says the emphasis of Water UK's engagement with various stakeholders and partners will vary over time. "Sometimes we will focus more on engagement with the government, sometimes more with the regulator. In the case of the wider debate about nationalisation, which has really gone up the agenda lately, it's more about engagement with the wider public. "We're at a point in the cycle of the sector where the regulator is still an important partner, but given where we are in the PR19 process, a lot of the action is between companies and Ofwat. We possibly have a slightly lower key role than otherwise might be the case. At the moment more of our engagement is with government and politi- cal institutions such as Parliament," he says. Roberts describes Water UK's contribution to PR19 as "flanking and supporting elements that help with the overall shape of the framework". He refers to the "ground-breaking" work Water UK published in 2016 – the Long-Term Water Resources Planning Framework. The organisation worked with companies, regulators, academ- ics and NGOs to produce the report, which looks at water resources in England and Wales for the next 50 years. "The dynamic model – rather than a retrospective one – explores the challenges of ensuring public water sup- ply in the face of climate change and population growth," he says. "It demonstrated the sector's ability to come together and think ahead strategically about the nature of the challenge and how people will respond to it. "Such research helped raise the knowledge level in the sector, enabling companies to go away and plan. Hopefully, in turn, they will deliver robust business plans that will stand up and deliver over time." Another appealing aspect of the water sector is the "real appetite to think long term", Robert suggests. "Notwithstanding the five-year investment cycles, companies are pro-actively – or at least with active encouragement from the regulator – not constraining their thinking to only five years ahead. "One of the things that has struck me over the past two years is the vigour with which compa- nies, certainly at CEO level, are thinking about how we can constantly improve. And the vigour with which they think about what the future shape of the sector will be." Roberts feels there is a "good degree of trust" in water companies, despite recent criticism. "That's not to say there isn't more that we can do. Although I feel pretty confident in saying every chief executive in the water sec- tor is passionate about not just sustaining but improving the level of trust that their company has with their own customer base. "We start from a good position, but yes, we can do better." On the wider nationalisation debate, Roberts believes the last-minute commitment to renationalisation in the Labour party manifesto "caught lots of people by sur- prise". "I don't think the topic was at the forefront of many people's minds beforehand and we would argue it is questionable that there is a major problem in the sector that needs a radical solution. The water sector has a fan- tastic track record in private hands. Yes, bills did go up in the first years of privatisation, but that was to reflect the need to make up for many years of underinvestment." Roberts says there is an "enormous amount to be proud of and there's a question mark over the problem we are trying to fix". "Is nationalisation the right answer? We feel there are potential risks associated with such a move. Our job is to present those questions and potential risks to policy- makers and encourage them to think hard about whether that is the right way forward." But the Labour party is not the only organisation from which the water sector has been taking a bash- ing. Environment secretary Michael Gove has signalled a crackdown on executive pay and offshore financial arrangements to address the "concerning" behaviour of water companies. On the day Roberts spoke to Utility Week, Gove wrote a letter to Ofwat's chairman, Jonson Cox, suggesting the government was prepared to give the regulator more powers to tackle questionable practices in the industry. Discussing the matter in more general terms, without knowledge of Gove's letter, Roberts defends the water companies. He says they have already made commit- ments to address such financial structures. "These struc- tures didn't and don't provide a tax advantage," Roberts says. "They were set up for legitimate reasons to raise bond finances that are simply not relevant now." Throughout his 30-year career, Roberts has worked at the interface between the public and private sectors, in industries where there is oen a strong public interest – such as water and rail. "In most of my roles it's been about trying to help create conditions within which com- panies can prosper by doing the right thing," he says. "In the face of critics, we should be hearing about what the sector has achieved and the contribution it has made in the past 30 years. We can't just gloss over that, but we recognise we do have a model that needs to evolve and continue moving." "It is questionable that there is a major problem in the sector that needs a radical solution. The water sector has a fantastic track record in private hands."

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