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Water White Paper Keeps Supply Chain Guessing

The long-awaited publication of the Water White Paper at the end of 2011 brought welcome assurances of the Government's commitment to integrated and sustainable water management in future.


While there are no major surprises, - the White Paper follows on from recommendations by the Cave, Walker and Gray reviews – it is nonetheless an important milestone for our industry and generally speaking a positive one.   Now we must hope that the delays experienced in publication of the White Paper will not translate into sluggish implementation.


Better sustainability in our water supply; in the health of our rivers and streams and in our drainage and sewerage infrastructures are all embodied in the White Paper's admirable aspirations, which have been broadly welcomed by key stakeholders.


One area to be tackled is the sticky problem of ‘boom and bust' in the Water Industry supply chain.  The White Paper states that Defra will work with Ofwat and the water companies to "smooth out investment cycles in the water sector to reduce costs" – a commitment also echoed in the Government's National Infrastructure Plan published in November.    The 2011 Ofwat Review described the industry's cyclical five-year capital spending patterns as "bizarre" and "extraordinary",  impacting on job security, skills shortages and the competitiveness of UK companies abroad.


In tandem with the White Paper, Ofwat is currently consulting on a framework for setting price limits which has key implications for the investment cycles which impact on the supply chain.  It also recognises that a change is needed from less "investment-heavy engineering" solutions to those which better take into account operating and through-life costs.  


The Government's vision for a more sustainable Water Industry puts its trust in deregulation and increased competition to stimulate innovation and growth.   But

there are certainly some major challenges ahead if we are going to make a traditionally risk-averse industry with a culture of capital spending ‘change its spots' in an environment of decreased regulation.   The Supply Chain is certainly ready and willing to play its part in developing and refining possible solutions. 


 It's to be hoped that we really can break down the barriers which sometimes favour capital projects over improvements in operational efficiency, and that we can find ways of enabling projects which demonstrate better through-life costs and sustainable outcomes over investment terms of longer than five years.  

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