Insight – David Lloyd Owen

Through the looking Glas.

Just six months after writing about Glas Cymru’s challenges regarding the ‘cryptosporidium crisis’ it is time to write about them again. In July, a dinner was held to mark the first five years of the new company, and the next morning’s AGM reflected that, as expected, it has been the company’s most
challenging year yet. All the easy gains have been made in terms of improving service and lowering costs, yet the public expectation of further progress remains as relentless as the pressures posed by climate and demographic change.

Two themes were discussed at these meetings – should the Glas Cymru model be used in England and should Wales’ water quench England’s thirst?

In terms of performance, it is evident that Glas’ not-for-profit model is delivering, both in driving down the company’s cost of capital and its operating costs, while a closely monitored form of outsourcing has
transformed a drifting utility into a leading performer. More important (especially for customers) was the company’s reiteration that it believes that it can drive costs down to the point at which water and sewerage bills will be at or below the average for England and Wales. Such a feat would have been inconceivable in 1989, let alone in 2000.

Perhaps the crucial element in the Glas Cymru model lies in democratic accountability. Wales has a fledgling ‘national’ body that Glas was able to report to. Nothing similar exists in England at a regional level, let alone one that can address a river basin’s needs. England is seemingly inexorably wedded to its centralist model, the emasculation of its regions having if anything been ratcheted up over the past 32 years. Its regions simply lack the vehicles for any constructive representative engagement with its water companies other than through its current centralist settlement. In Scotland and Northern Ireland, such a governmental infrastructure exists, but it is meaningless unless there is broad political support for any such initiative from the very beginning.

At present, media stories in Northern Ireland about officials threatening to install water meters suggest that the climate there remains somewhat brittle for the next few years. Scotland may well be quite different, especially given Sir Ian Byatt’s second honeymoon with the sector. Scottish Water is in a bind about costs, attitudes and deliverables, and the not-for-profit approach may be applicable, as long as there is a real and broad consensus for such a move. When Glas Cymru emerged, there had been a great deal of worry about Hyder’s imminent implosion and inappropriate suitors for Dwr Cymru/Welsh Water. People were therefore ready to accept a challenging change for the better.

When it comes to water transfers to England, the author remembers a modest proposal he made in 2002, for such transfers between Wales and England to be priced in the same way as they are within the English companies. Critics from both parties were outraged at the suggestion. At which point, I retreated to the more fruitful occupation of tending my stocks of 88% pure water in my cellar. Given the maturity of our political engagement and the lack of appreciation as to why water flows somewhat
slower than electricity, the Thames region would do better to bring its leakage rates in North London down to those seen in leading South East Asian cities.

The broader lesson seems to be that if local political systems feel that you are answerable to them and feel part of the consultative process, they will be far more willing to buy into your involvement. That was the beauty of the Metro Manila, Tallinna Vesi and LYDEC concessions. They were plugged into locally accountable systems, and local IPOs provided both buy-in for local investors and a sense of progression for local politicians. Future privatisation proposals should consider the not-for-profit model, but only when they are pretty sure they know where they and their city wants to be, not in five but 25 years time.

Note: The author is a non-stipendiary member of Glas Cymru Cyf. The views expressed here are entirely his own.