26
Examination of witnesses
Sarah McMath, Meyrick Gough and Andrew Newton.
Q76 The Chair: Good morning and welcome to the Lords Committee on the Environment and Climate Change. Today is the fourth session of our inquiry on drought preparedness, focusing on drought, planning and co‑ordination. I warmly welcome our three witnesses and thank them for taking the time to be with us this morning. I have a few words of housekeeping before we start the evidence session. I remind everyone that the session is webcast live and a transcript will be taken and made public. Witnesses will be able to review the transcript and make minor amendments. Before moving to questions, I remind members that any relevant interests should be declared the first time they speak. I take this opportunity to declare that I am a director of Peers for the Planet.
First, what is your engagement with national drought planning processes? In answering the question, please take a moment at the start to introduce yourselves and your organisations with as much detail as you think is necessary. Andrew Newton, would you like to start?
Andrew Newton: Good morning. I am principal engineer with the Ely Group of Internal Drainage Boards. That is a group of 16 boards covering an area of 70,000 hectares across the Cambridgeshire/Norfolk fens, so we go from Cambridgeshire up to King’s Lynn. We are a public body and financed by ratepayers, landowners and district councils, which collect a special levy on our behalf. Nationally, IDBs cover 10% of England. There are 112 of them in total. We have about 600 pumping stations. The Association of Drainage Authorities is our members’ organisation, representing us at a national and political level.
What do we do? It is water management. Traditionally, IDBs have been around for hundreds of years. It was related to drainage and agricultural drainage, but, over that time, especially in recent years, it has developed more into water level management.
The Chair: Would you say a little bit about your role within the national drought planning system and your engagement with the Environment Agency?
Andrew Newton: Quite simply, we have no engagement at national level. As an internal drainage board it is at local level. As I said, the Association of Drainage Authorities is our members’ organisation. It has no formal consultation with the Environment Agency; it is periodically asked questions about drought. From my point of view working on the ground, we have local engagement with Environment Agency officers when we are in a drought situation, but we tend not to talk and prepare before that eventuality.
Where I come from—the fens—it is unique; it is a lowland system, so we have the rivers and water level up here and the land levels down here. Water management is critical to that area. We have mainly a pump catchment; we pump water out into the rivers so it can go away. We really focus on balancing of water needs for everybody. As I said, we were drainage; we are now water management in terms of agriculture, but also industry and environmental sites.
The Chair: Before we move on, can you give some indication of whether you are satisfied with the level of engagement with the Environment Agency? Is there knowledge and expertise at local level that you possess that could be better utilised and is not used at the moment?
Andrew Newton: I do believe that, because we are an industry that goes under the radar. It is interesting that you asked us to explain our organisations and IDBs a bit more. When I give talks, I often get asked what an IDB is. When we have exceptionally hot periods, if you go back to 2022 or look at this year, we have had a big demand to provide water for agriculture. I think that is going under the radar, not necessarily at a very local level but definitely at regional and national level.
The Chair: Thank you. Sarah McMath?
Sarah McMath: I am CEO of MOSL, which stands for Market Operator Services Limited. In England there are 1.2 million business customers within a competitive open market. Within that definition, it is non-households, so anything that is not a household is defined as being within that competitive market. Those customers use about 30% of all water consumed in England and that consumption is quite skewed. Half a million of them use less than 100 litres of water a day, so less than that used by most of us in this room, but the top user uses 22 megalitres. I live in Guildford, and that is the same as all the water used by Guildford and the surrounding areas. Effectively, it is a market of all business customers.
The Chair: Who funds your organisation? What do you actually do for your members or businesses?
Sarah McMath: Our role within MOSL is as the market operator of that competitive market.
The Chair: Could you explain that competitive market?
Sarah McMath: All water companies in England have an obligation to be a member of us as market operator. We call them wholesalers in the market, but it is water companies with which you will be familiar. They are trading parties that contribute to our market operator fees.
The second set of trading parties comprise retailers. Those are organisations that have gone through a process of market entry, both with us as MOSL and Ofwat, effectively to provide a retail service to customers who choose them. If you are a customer, you still get your water and wastewater services from your incumbent wholesale supplier, but you can choose who sells that water to you, who produces your bill and who engages with you on any issues related to your water or wastewater services. That last point is very important when we talk about drought preparedness.
As for those retailers, at a summary level, my team manages the process of new retailers entering the market. We check that they have all the processes and systems in place properly to meet their obligations. We run all the market governance around code obligations; we work very closely with Ofwat specifically. At the heart of it, we have a system that takes consumption data from all those customers. The market opened in 2017. The majority of business customers are metered, so we take that consumption data and use tariff information provided by water companies that calculate how much the business customer needs to pay in wholesaler charges, and the retailer then works with their customer to provide that billing service. To give you a bit of scale, about £2.7 billion per year of wholesaler charges are settled within that market system. We also have a role as data custodian for all that consumption data that is managed. As I said, it is done at a much more granular level than household consumption.
Q77 Lord Krebs: I am trying to get my mind around this. As a householder, I buy my water from Thames Water and it sends me a bill. You are saying that if I ran a business I would not buy my water from Thames Water; some middle person would be flogging the water to me and somehow making money out of that. That seems a really weird thing. Why can I not buy it from Thames Water?
Sarah McMath: It is the same water and wastewater services from Thames Water. If you were in the Thames region at the point at which the market opened, Thames chose to exit the market as a retailer. That activity, which is accounted for in the price control, transferred, in the case of Thames, to Castle Water. The reason why that is beneficial to you as a customer is that you can then choose your retailer. Let us stick with the Thames region because that is where we are today. If you are a business, you can choose any retailer across the whole of England. If you run a business where you have premises across 15 different water companies, you can choose to have one retailer. If you are a multi-site organisation, say B&Q, you can choose to deal with one retailer on your behalf who ensures that you get the best deal in terms of what you are paying for your water and water efficiency services. Therefore, the benefits are primarily for multi-site customers, or their ability to choose.
Lord Krebs: If it is such a great idea, why can it not apply to individual householders?
Sarah McMath: That is a good question. I have a personal view on that, but I probably will not share it with you.
The Chair: I think it would be very useful to have some written evidence from you about the way your market works.
Sarah McMath: I am very happy to provide that.
The Chair: That is not something of which committee members were aware.
Lord Mancroft: Following what Lord Krebs asked, I have been a water customer since shortly after the day I was born, which is now quite a long time ago, both domestically in my own home and in various businesses in which I have been involved. I do not think anyone has ever suggested to me that I could buy my water from somebody else. I always bought it from the person who provides the water coming through my tap. I do not think anyone has ever suggested that I had a choice in who I purchased my water from, either domestically or in business terms. Is that not quite a strange market? I do not understand how this is.
Sarah McMath: The volume of customers who have switched since the market opened, i.e. chosen to go to a different retailer that is not their incumbent, is around 27%, but that is skewed towards larger-consuming customers. If I look at that through the eyes of water consumed, it is about 43%, where the person who is buying that water has switched who sells them that water. One recommendation of the independent commission was that there needs to be greater public awareness to ensure that business customers are aware that they can switch their retailer and who provides them with those services.
Q78 The Chair: Perhaps we can leave it with you to write to us. I will reserve the right to submit further questions to the organisation. In the meantime, could you address the question of your level of engagement with the Environment Agency, and whether you think that relationship is robust or as useful as it could be to our drought planning?
Sarah McMath: We attend the National Drought Group. I attend at CEO level and colleagues within my team attend at a regional level. A lot of what we do in those groups is to have the sort of conversation we have just had here to ensure that people are aware that there is a business retail market and the retailer has the relationship with the front-line customer. That is particularly important for multi-site customers.
We have also worked directly with the Environment Agency to combine the market data we have. Noting that there is a higher level of meter penetration, we have consumption data for that 30% of water consumed in England. We have worked with the agency to provide public drought restriction maps that enable businesses to identify the drought status for their various different premises.
We feel that there is a need for improved communication with retailers in drought or pre-drought, because they own that relationship with the customer. The wholesaler, as a water company, does not have customer details any more. They manage that relationship only in a crisis, and we saw challenges over this summer where two water companies were considering non-essential use bans which would impact only on business customers, with retailers not part of that process. That tends to come through us as market operators. We can cover some of this later, but, just to note, there remains a lack of clarity on which businesses would be impacted at a level 3 non-essential use ban. That is something on which we have worked closely with colleagues in the agency in the hope of providing some clarity.
The Chair: Excellent; thank you. Mr Gough, thank you for your patience. Over to you.
Meyrick Gough: I am managing director of WRSE, an alliance of the six water companies in the south-east of England. Our primary role is to look at producing a regional water resource management plan that sets out what schemes we will need to invest in over the next 50 years to secure supplies for future generations. We are one of five regional groups set up through the national framework established in 2020. That has been updated this year. Each of the five regions looks at a collaborative planning approach to set out the water resource positions and future investments, and then the five regional groups come together to look at the national scale of movement of water between the regions in order to tackle the future challenges that we look to solve.
The Chair: What sort of organisations are the five groups? Are you independent? Are you funded by the water companies?
Meyrick Gough: Water Resources South East is funded primarily through the water companies. We receive small additional funds through Defra, but that is to look at some of the other smaller multi-sectors. The vast majority of the funding for WRSE is via the water companies to help generate this regional plan.
Lord Krebs: I would just like to clarify this. I live in the Thames Water area. There is a regional organisation like yours that oversees Thames Water and other water suppliers in the Thames Valley. Which are the other water suppliers?
Meyrick Gough: On the specific point around planning, each water company has a statutory duty to produce water resource management and drought plans. That duty still sits with the companies. However, after 1999 the six companies in the south-east started to work together—they generate their own water resource management plans—to see if one regional water resource plan would be more efficient and they could consider the movement of water across the region. Our latest plan took that approach. We now generate that water resource management plan centrally. That goes to the companies, which will then scrutinise the plans and move those into their own water resource management plan.
Lord Krebs: Who are the companies?
Meyrick Gough: The six companies in the south-east are Affinity, Portsmouth, SES Water, South East Water, Southern Water and Thames Water.
Lord Krebs: Is that everyone in the south-east?
Meyrick Gough: That pretty much covers everyone in the south-east of England.
Earl Russell: Do the water companies have an obligation to accept your plan?
Meyrick Gough: They do not, but it is done in a collaborative way, and the whole purpose of the process that we go through, including consultations, is that we seek a solution that will work across the region for the challenges we face.
Q79 Lord Layard: Which sectors do the regional water resource groups engage with as part of their regional water resource planning?
Meyrick Gough: In developing the plans, we went out to engage with agriculture and industries. In the south-east, that is predominantly around minerals, paper mills as well as the power industry. We look at a very collaborative way in which we can take on board their needs. That is our engagement process. In developing the plans, in the south-east it is dominated by the water companies; they represent over 97% of the water extracted in a consumptive way. The other industries have a smaller part. As for the distribution of licences and the ability to abstract from the environment, companies have about 2,000 licences, and the remaining licences, approximately 6,000 of them, are through other industries and private abstractors. It is a combination, but the solutions are dominated by the requirements for public water supply.
The Chair: We have heard that regional groups remain advisory. Is that the case?
Meyrick Gough: We are not statutory.
The Chair: Do you think that further clarity is needed on the role of regional groups during a drought? We do not really know what your role is and what your engagement is with the Environment Agency. If you could deal with that, it would help.
Meyrick Gough: Let me try to set it out for you. Although our primary role is to do with water resource management plans, they in themselves will consider drought measures in how we solve the future challenges we face. We get involved with the National Drought Group and at regional level we also co‑ordinate. When we are in drought, we have a meeting every two weeks between the companies, CCW, the regulators and other sectors to try to co‑ordinate some of the messaging and drought activities. That is how we try to tackle it in the south-east.
There were examples in 2005 and 2006 where you could see that strong alliance and collaboration between the companies and some of the other sectors came to the fore. You can see a very co‑ordinated response around how you tackle droughts and how they play out across the region. That is particularly important because not all droughts affect regions in the same way. Sometimes, drought is more severe over the Kent area than in Hampshire, so understanding that impact and how you can alleviate some of the pressures is quite key.
The Chair: In the National Framework for Water Resources 2025, the updated expectations for the regional water resources groups include “a requirement for an independent chairperson for each regional group, enhancing governance and ensuring unbiased decision-making processes”, which suggests that these things do not exist at the moment. Do you want to comment on that?
Meyrick Gough: We have an independent chair. That person has been in place since the formation of WRSE. Currently, that is chaired by Chris Murray, our independent chair. He will oversee the activities and chairmanship as we go through and develop plans. As to the other groups, I believe four of the five have independent chairs, and Water Resources North is just appointing one now.
Lord Mancroft: Sorry, I am a man of very little brain and am having difficulty getting my head around this. Are you a corporate structure? Are you a government agency? Who owns you and to whom are you accountable? I cannot quite see what you are.
Meyrick Gough: We are not a corporate structure; we are just an alliance of companies. It is a kind of separate group of people who form and develop plans. We are not independent at this moment in time. We are just funded to undertake and develop a regional plan.
Lord Mancroft: By whom are you funded?
Meyrick Gough: Predominantly by the water companies. The vast majority of our funding at this moment is through the water companies.
Lord Mancroft: To whom are you answerable?
Meyrick Gough: We are answerable to our senior leadership team, which is predominantly made up from water companies, and the CEOs of all water companies.
Lord Rooker: To be honest, you are the most mysterious group of witnesses we have had. Following up the context of this issue, are you responsible in any way for contributing to where new reservoirs will be?
Meyrick Gough: In the development of the regional plan, yes. In the plan published this year, we set out the infrastructure required to meet future challenges. That is not only following the environment improvement plan targets around PCC and leakage reductions; it is also for the five new reservoirs, the extension of an existing reservoir, eight water recycling schemes, six desalination plants and a lot of infrastructure to move the water around the region.
Lord Rooker: Who responded to your plan? Was that the Government? Someone has to make the decision where they are going to be.
Meyrick Gough: To explain the process, we developed the plan on which we consulted, but the statutory mechanism for taking on all those schemes in the regional plan is through the companies’ own water resource management plans. They looked at the regional plan; they took their aspects from that plan into their water resource management plans. They went through their statutory consultation process. Going through that, you produce a statement of response, and the Government and Secretary of State then go through the adequacy of those water resource management plans. Those plans are the statutory mechanisms to promote these schemes. Does that answer your question?
Lord Rooker: It begins to. I would quite like a copy of that wonderful briefing note that you have in front of you.
The Chair: We will reserve the right to write to you with further questions.
Lord Mancroft: You talked about a statutory plan. Under what statute? I still cannot get my head around quite on what basis you have been set up, and by whom.
Meyrick Gough: The companies have the statutory plans under the Water Industry Act.
The Chair: The water companies?
Meyrick Gough: Yes. All water companies must produce plans to set out how they will meet their statutory duties.
Lord Mancroft: You produce it and it goes to the Secretary of State, so who does the Secretary of State then consult?
Meyrick Gough: The plans go out for public consultation. There is a 26-week period where they consult and then respond to those plans. That is the whole statutory process. At the end of that, the companies write their statement of response and they go to the Environment Agency and Ofwat. They go through the plans, technically assess them and advise the Secretary of State on whether he should allow the companies to publish their water resource management plans.
The Chair: We will leave that there, but it would be useful to know whether you would like to have a statutory footing and whether that would improve your working and formal relationship with the Environment Agency. If you could write to us on that it would be most helpful.
Q80 Lord Mancroft: How robust do you think the monitoring and modelling for future water demand is, and how confident can regional water resource groups be in their assessments of drought resilience?
Meyrick Gough: The modelling approaches and techniques that we use now are very robust. When we consider the challenges that we see from drought in the future, we refer back not only to historic trends but use mathematical techniques to look at how future droughts could manifest. A technique developed back in 2009 allows us to explore a much wider range of droughts than we have ever seen in the historic records. For example, what happens if the drought in 1976 had not finished in September and went on for another year? What happens if the 1921-22 drought had continued, or was more severe in the summer? The technique we use allows us not only to reference those historic droughts—there has been a handful of really big, challenging ones—but to explore a much wider range.
The dataset that is created is shared across the industry through our region, and then a series of sophisticated models looks at how that rainfall translates into river flows and groundwater levels. From there, we can understand how much water could be abstracted in those more extreme droughts. That is the process by which we try to make our assessments of how much water we can get out during the droughts, and then we overlay climate change on top of that. For all the assessments that we make, we run a range of 28 different climate change scenarios to test how water availability will change. As to demand forecasting, we will turn to MOSL and look at the non-water supply data[1] to understand what that is, as well as household forecasts.
I will share this document. In the old days when I first started doing plans, we used to fixate on a single forecast for everything—the population growth, the drought resilience and so on. Nowadays, we have moved away from that. We look at a much broader, wider range of adaptive plans. Within the plan, you can see that we now consider a very wide range and try to tackle not only the single forecast but the uncertainty that is associated with all the futures that we look at. From here on, we anticipate that the deficit in the south-east in 50 years could be as much as 3,000 megalitres per day or as little as 1,300 megalitres per day. When we develop our plans and set out what investments are required, we test to make sure we understand the foundation stones of those next sets of schemes that can best serve that wide range of challenges that we have, and we have further adaptation strategies around that. This is quite fundamental. We are no longer tying it to a single forecast. We are tying it to the range of uncertainties on those forecasts as well, which improves the robustness of our planning processes as we go forward.
Coming back to your question—I am sorry for a long-winded answer—essentially the techniques that we use are very robust. We consider the kinds of droughts that play out. Every time we do these plans, which is once every five years, we are back into that feedback mechanism. We monitor what is going on, we see how droughts are changing in nature, and then we re-run all these models behind the scenes. The one thing I say to the committee is that, as a region, we would like to use some of these datasets across the other sectors. We have done this for the water industry, predominantly. It would be good to understand how resilient some of the other sectors with their own private licences are to some of these more extreme droughts.
Q81 Lord Trees: We are interested in drought, mitigating it and preventing it, and key to that is forecasting it. I have been waiting weeks to ask these questions of people. Can you forecast drought? How accurately? How are you doing it? It looks as if you are the people who can help us on this, particularly Mr Gough. There are lots of important questions around this.
There are two angles to it. First, are you national? I know you are regional, but who provides forecasting for the eventuality of drought nationally in the UK? Is it you or your organisations? You talked a bit about the meteorological and hydrological data that you put into your modelling, but the other side of it is demand. Unless I missed it, you did not say anything about how you factor that into your modelling. Could you elaborate on that a bit? Clearly, forecasting something like drought is very complex, but how well can you do it? Could you expand on some of those issues?
Meyrick Gough: On forecasting drought, we are never sure when these droughts are going to turn up over the next 50 years. The approach that we take is to understand the potential droughts that could occur in any of those years. The technique that I talked about works around stochastics, and it is a way in which you can use lessons from historic droughts and then try to recut and resplice them in terms of creating these artificial droughts in future. Those are much more severe in either intensity or duration, or both. That gives you a very good sense of the potential challenge. We never know when that drought will occur, but we try to make sure we understand how the water resource system will respond to deficits in rainfall. That is what we do through that modelling approach that I tried to outline. For us, that is quite key and the fundamental bit of how we do those supply forecasts.
On the demand side, we also have a series of other models that will look at the temperature as well as the drought itself and how that affects the demand for water. We always know that the lowest consumer demand is typically in the wintertime. It peaks in the summer, and a lot of that is through external water usage, which is why temporary use bans end up helping to reduce that peak. That is temperature related. It is related to the number of dry days. It is also related to things like when schools are going to break up, school holidays and so on. We have some models around that to see where the peak demands could come on as well.
The Chair: We must move on. If there is something that you would like to add, please make sure that it is submitted to us in written evidence. Sarah, you indicated that you wanted to speak on the previous question as well. Do you have anything to add?
Sarah McMath: I will add something very briefly answering your questions about funding. Just to be clear, MOSL is funded by wholesalers and retailers but is not a trade body. It is a trading party-funded independent market operator and has an independent board. Our role is understanding the market to advance it for the benefit of business customers and the environment. We are an independent market operator. Therefore, a lot of our role is around consumption data: understanding in a drought or non-drought situation who is using the water, what they are using it for, when they are using it and whether they are using the right type of water. A lot of our work is in identifying where non-potable water is used for potable purposes—for example, spraying the outside of metal tanks to cool them down in industrial cooling processes, or for irrigation. That is our area of focus.
On the question about demand forecasting, I think it is well acknowledged that demand forecasting for non-household is not as robust as it is for household. The water resources management planning process does not require water companies to plan for or predict that demand in detail, partially because it is hard to do. We have seen a huge change in use in water. Where economic growth by region is driving different usage of water—we may get on to data centres later as a good example of this—part of our role is trying to provide as much clarity as possible on that data segmentation so that we can identify opportunities to focus on demand-side on-site solutions before we build desal plants. Let us make sure that we capture rainwater and use the appropriate type of water for non-domestic purposes.
Lord Lennie: Is not what you are about what a regulator should or could be doing, or in some areas is doing?
Sarah McMath: We work very closely with the regulators, with both Ofwat and the Environment Agency.
Lord Lennie: When you say you work closely, do you do what they should be doing and then pass the information to them? How do you mean you work closely with them?
Sarah McMath: We share data with the Environment Agency to give it a better understanding of that water usage by non-domestic customers.
The Chair: Andrew, you have been very patient. I will let you answer, and then we will move to Lord Rooker to see if there is anything left of his question that he would like to pursue.
Andrew Newton: Okay, thank you. I come to this from an operational background, on a relatively small but important area for water supply, predominantly for agriculture. As I said, lowland systems rely on our IDB assets for pumping and water supplying. The models really do not capture the fine-scale behaviours of our system. Abstraction in the fens is highly seasonal. When we had droughts in 2022 and this year, demand outstripped supply. Basically, in the winter, I pump the water away, and then in the summer I let it back into our systems for farmers to irrigate. When do I do that? It depends on the season. Sometimes it could be as early as February, but in a wet period it could be as late as June. Equally, we pump from August to October, even into November of this year. It would be hard for models to capture that human intervention as we need to make decisions on a daily basis. From a local perspective, we talk to EA officers only when we start feeling that there is a drought coming, and they rely heavily on us to provide information on what water demand is out there and how much farmers are irrigating. They have licence information and know what each farmer has a licence for. Farmers make returns on that. We do not necessarily get access to that information, so we could perhaps start looking at trends and predicting what could happen in future.
Q82 Lord Rooker: I have a supplementary to what we just talked about but will just follow up on boards. I can remember we had some floods in 2007-08. I was a Minister for Defra, and then I got into the drainage boards. I remember visiting areas, and the biggest complaint that I heard was that the drainage boards had not looked after the channels, so the water could not flow away in the way they wanted. In a drought situation, as you say, you need the channels to move the water about. Are you in a position to say to the other drainage boards that you seriously keep the channels empty of growth that causes blockages?
Andrew Newton: The majority of IDBs across the country religiously maintain their channels, especially where they have pumping stations, because we need to convey that water down to the pumping stations and use it in the summer to get water to where it is needed. Yes, we have an annual maintenance. A lot of the criticism is normally now addressed to the Environment Agency over lack of maintenance of the main rivers. We can pump the water out, but it does not necessarily go away. Some of the boards in Lincolnshire in recent flood events suffered from the failures of Environment Agency embankments that let water into their systems and overwhelmed them.
Lord Rooker: Okay. I will go back to the supplementary question. This is strange territory for some of us, talking about competition in water, because that is one of the great canards. As people have said, it is not like electricity and gas; the water is in the tap and all that. We have discovered that there is some choice. This is a question for you, Sarah. We heard that access to the data on non-domestic water use is a limitation for demand modelling. Who holds the data that you need for your modelling? Bearing in mind what you said, there must be commercial sensitivity in some respects of this. These companies, we have discovered now, are in competition. Who holds the data? Do you get complete access to it?
Sarah McMath: As the market operator, MOSL is the central custodian for the data in the business retail market. We see that national view of business customer consumption. That data is currently accessible only to water companies on a regional basis. Thames Water can see all that data for its region and retailers can see that for the whole country. That regional picture is available to retailers. As I mentioned earlier, we currently have an agreement in place with the Environment Agency and Defra. That is something that needs to change, and there is a change in process. At the moment, if I get a request for data from anyone in this room or anybody in Defra or the Environment Agency, I have to draw up a bespoke data agreement to provide you with that. We are going through a process with Ofwat at the moment to change that to say, if that data is to be used to advance the environment or society, we should be able to provide it.
A good example of where we have used that data is working with the Department for Education to create a schools dashboard. That has enabled us—we talked about the Cambridge region—to identify that per pupil consumption in Cambridge is higher than the national average. Going back to the point about demand management, that is really helpful data when you are looking at a water-stressed region, not just in a drought, to be able to target where there is probably wastage and customer-side leakage. Retailers will then engage with those customers to look at how they can reduce their demand and, importantly, wastage and on-site leakage.
At the moment, there are constraints around that data. We are also working with the strategic panel, which looks at the market more generally at the strategic level, to develop an open data strategy that will open up that data much more broadly. We are building a hub that will take smart meter data. About 800,000 new smart meters will be rolled out in the next five years to business customers. That is a lot of new data coming into my central system, so we are building an IT system that holds that. At the moment, access to that will be limited to those market participants, those trading parties. The next phase will look at how you open up that data to enable better demand planning and better interventions, particularly at a site level for things like rainwater harvesting.
Lord Rooker: That is very helpful, thank you.
The Chair: Before we move on to Lord Jay’s question, following on from what you just said, Sarah, in written evidence to the committee, the Environment Agency recommended that the Government introduce mandatory reporting of current and projected water use by all sectors to improve forecasting and water security planning. Will your organisations be supportive of that, starting with you, Sarah?
Sarah McMath: Yes, we believe there should be better demand forecasting for business water consumption where that data is available.
The Chair: Mandatory and statutory reporting requirements?
Sarah McMath: Can I take that away and respond in writing? Thank you.
Andrew Newton: It is different for me being on the operational level, but, yes, we need to make sure that we are demand forecasting for the agricultural sector in future. Yes, I would support a statutory requirement for that. We do not hold that data; we just facilitate the transfer of water. The agency should have good records on that and the water returns that come back from farmers as well. We need to use that data to be more robust into the future.
Meyrick Gough: Yes, I would support that. It would certainly mean better regional planning. Can I clarify two points, please? The bit through MOSL is all through the water companies and retailers. It is all measured, et cetera. In our region there are still over 4,841 abstraction licences. If you are managing a drought at a regional level, understanding the use of the other sectors is quite key in forecasting. There is also a group of abstractions that are not licensed. Anything less than 20 cubic metres per day is not licensed, and there has been an increase in those. Understanding their preparation and drought readiness is quite difficult.
Q83 Lord Jay of Ewelme: I am sorry that I cannot be with you in person today. As have others in the committee, I have found the structure of the water industry to be much more complicated than I had realised beforehand. I will ask a question looking ahead a bit. How significant a risk do future water users such as data centres, which Sarah McMath mentioned, energy projects and new housing developments present for drought? How could that risk be mitigated? We have heard different views on this. Data centre technology may evolve over time, reducing costs and reducing water use, or special arrangements could be made for providing water for large data centres. I would welcome the views of each of you on those questions.
Sarah McMath: I already mentioned that the current WRMP process includes projected business demand. It does not explicitly account for data centre usage. It is an area of rapid growth in our country, particularly in areas of water scarcity, because that economic growth is often in the areas where we know we do not have sufficient water. One challenge is that data centres do not need to use potable water. It sounds like you have already heard that from other people. That is factually true. In this country they can. In many countries across the world, they are not allowed to connect to the potable water system, and there is technology and innovation available across the world to enable them to use air cooling or to have a very high level of recycled water usage. If you run a business and you are allowed to connect to water that is pretty cheap, data centres choose to do that. There is what feels like a relatively solvable problem with data centres in terms of their access to public water.
Lord Jay of Ewelme: Can I interrupt? Am I right in thinking you said that data centres do not need water and there are other ways in which they can operate, such as through air cooling?
Sarah McMath: Yes. There are two alternatives to using potable water. They can use a small amount of potable water and then have a high degree of in-process water recycling. I have been to visit some of those in the UK, and that is existing technology. You can also use air cooling, which is more expensive, but, again, that technology is available. Where data centres choose to do that, it is usually to meet their ESG obligations more generally. It is rarely because there is a constraint on them using a connection to a potable water supply. There is no current requirement for data centres to actively report their water demand forecast or for them to look at more efficient cooling processes. We have a dataset at the moment from data centres, and are looking to improve understanding across England of where we have existing data centres and the amount of water they are using, to help understand the size of the challenge with this particular market segment.
Lord Jay of Ewelme: Thank you. Do others have views?
Meyrick Gough: When we develop our regional plan, we look ahead to see how much water will be used by industry. When companies develop non-household forecasts, they will look to break those sectors down by standard industry classification. They then look to the Government’s economic growth forecast to understand which of those sectors could increase. The environment improvement plan also then sets out that they expect businesses to become more efficient. That is one of the targets in the EIP. You take account of that as well in terms of the future.
Data centres are a fast-growing sector. It is happening within our planning cycle. Our planning cycles are once every five years. Within the plans, I talked about developing a plan over a range of different challenges going forward, but we also have something built into the plans called headroom. That is a contingency to deal with some of the immediate risks that you might face within the planning cycles about increasing demand. The industry has headroom. It provides that initial buffer for some of this.
To Sarah’s point, a number of data centres at the moment are looking at the air cooling approach, and more at a greater use of energy. Over the longer term, though, if you want to get to evaporative cooling—so you do not put the demand on the power sector but you move it over to the water industry; that is where the trade-off is that Government will have to think about—there are ways in which you can provide alternative sources of water. You could recycle water from wastewater treatment works to act as that cooling mechanism. There are examples internationally of how you could do that. Understanding that future challenge—most of that will be around the London area—there are solutions that can be put forward in terms of solving the data centre problem.
The Chair: Thank you. Andrew Newton, quite quickly, as we are tight for time.
Andrew Newton: I want to talk about a project that I have been involved with recently. There is rapid growth in Cambridge. There is an issue with water supply into Cambridge from Cambridge Water. It takes water out of aquifers, and it is affecting the chalk streams. Cambridge Water and Anglian Water are investing in a large-scale reservoir, but that is probably 10 to 15 years away. A farmer-led project that I am involved with is looking at using current farmer reservoirs or farmers building reservoirs—because they have a track record of building these cheaply and quickly—that could supply water into Cambridge. We need to work with water companies on this. It could also be going to other industries. To make that happen will probably need some kind of legislation change, but it is a good, innovative project. It is supported by local district councils, and the Eastern Powerhouse has written a report on it that we can share with the committee for further reading.
The Chair: Excellent, thank you. I will move on to Lord Lennie’s question because we have 35 minutes left and half the agenda to get through.
Q84 Lord Lennie: In your individual views as well as your companies’ views, is there enough clarity on what will happen in the case of a severe drought, the one-in-500-year droughts we have heard about, and how different water users would be prioritised?
Andrew Newton: I will quickly go through my point of view. We supply water for farming. Farming equals food for the country and livelihoods. I would like to see some kind of clarity around that. I often get asked by landowners if water is being transferred. We have some transfers off our water systems that go down to Essex. If that is happening, surely we should be supplying water for food and for the country. Equally, on a more local scale, I even get asked this by landowners: “We have a range of crops such as salad crops, potatoes, wheat and even turf. This year, when we have been under pressure, turf has been irrigated. Should food be prioritised over turf?”
Lord Lennie: Where would you go for clarity?
Andrew Newton: We need to go to the Environment Agency, and it will probably have to go up further to Government.
Sarah McMath: There remains a distinct lack of clarity on which businesses would face restrictions or exemptions in the event of a non-essential use ban. We had two instances this summer in two regions where we were very close to putting those in. We have been working with Defra specifically on determining a drought playbook that would be really clear on whom that would impact. Bluntly, if you look at how it is worded today, those are small businesses that in many cases rely on water for their business, and the decision that a water company would have to make would be, effectively, to issue something that would close small businesses. We are working on data to understand what the actual benefit would be, because you could end up imposing restrictions, not many people following them, those who do potentially losing their livelihood, and the result in terms of drought being a very small impact. That is an area that we continue to focus on.
Meyrick Gough: My view is that the water industry has drought plans, so it knows the measures it has to take in terms of that one-in-500-year drought. My concern is with the other sectors when they get to that point because they do not have that formal planning approach. That will mean that, if you can imagine yourselves in a very severe drought sitting around the table here, the water industry will have restrictions on it but is still able to supply, but you will have agriculture and other industries with no water at all. At that point in time, there will want to be some equitable sharing of that water. That then puts an increased demand on the public water suppliers that have already planned for that level of resilience. That is my concern. We have seen already that where private supplies fail they will turn to the public water supply system, and that will be an increased demand at a time when you really do not want it.
There are ways in which you can look at that. There are datasets already that could be used to try to understand and prepare for these types of droughts, and it is just a case of going through it. We did an exercise with south-east companies in 2018—Chris Counsell referred to it in your first evidence session—where we went through a sprint on what would happen in that real extreme. My best advice to this committee would be to avoid it at every cost you possibly could. The NIC report Preparing For A Drier Future set out the cost from purely trying to deal with a drought of that magnitude as opposed to getting self-prepared and putting the infrastructure, operating systems and everything else in place beforehand. For me, water companies, fine, but it is bringing the other sectors up to that level and being very clear. That will then help with the prioritisation of how you allocate the water.
Earl Russell: I will ask a quick supplementary to that question. Before I do, I remind the committee that I have declared an interest as a non-exec director and board member of the Water Retail Company as part of this inquiry.
I want to ask how you all feel other sectors should be brought in on drought plans, particularly the energy sector and critical infrastructure. I want to ask about your levels of engagement with those sectors. As part of that, I will quote a sentence that was in the press last weekend. It said that research commissioned by water retailers found that water scarcity could hamper the UK’s ability to reach its net-zero targets and that industrial growth could push some areas of the country into water shortages. I want to ask you about your engagement with those sectors. What more can be done to improve those relationships? How prepared are we?
Sarah McMath: In MOSL we do not have any direct involvement with customer groups; we do that via the retailers. We would certainly say that, if you look at the data from those sectors, the most important part of understanding that data is benchmarking it and understanding, as I said before, who is using the water, when they use it and what they use it for. I should have probably stated in my introduction that I also chair the UK’s water efficiency strategy group, which is both household and non-household. With that hat on, where I have an input to that from non-household and from household, we need much more focus on understanding and promoting water efficiency interventions, not just in terms of the things we talk about with grey water recycling and rainwater harvesting, but the real value that smart meter data provides, enabling retailers to work with their customers on where we are losing water within business premises. That customer-side leakage can be significant, and we need more focus on understanding where we are losing water in the system. We mentioned a scheme specifically.
Earl Russell: I am sorry to interrupt you. Can I be blunt? Is water efficiency for industry lost in the system at the minute?
Sarah McMath: There are a number of reasons why that is not being delivered as widely as it should. One recommendation of the independent commission was the way in which the market is set up in terms of who is incentivised to work with customers to use less water and who has that relationship. There are lots of challenges there. I am very happy to provide some written evidence on that. There are lots of policy changes and there are lots of reasons why there are a lot—
Earl Russell: That would be useful to the committee.
Sarah McMath: The retailers are doing a lot of work in that area to identify how we can better utilise that opportunity of demand reduction in business customers to close that gap and help us prepare better for drought situations.
Meyrick Gough: In short, I would welcome other sectors starting to get down to the levels of drought planning that we see in the water industry, particularly those around power and critical national infrastructure.
Earl Russell: How do we make that happen?
Meyrick Gough: At regional levels, we are engaging if there could be some form of statutory obligations or something along those lines where they could engage. It would be incredibly helpful. Drought is the one thing that gives me most grey hairs and sleepless nights, because I can still remember the water rota cuts that we had in 1976 in Caerleon in south Wales. That level of impact on today’s society and economy, given that one day’s supply-worth might go to data centres for cooling purposes or to the rest of the industry, would be quite devastating.
Earl Russell: I did an energy crisis game last week, and one witness talked about what would happen if we were at level 3 and moved to anywhere near level 4. It seems like all these systems are not properly joined up and interconnected.
Meyrick Gough: That is the key thing around doing that drought preparedness. Do this before the droughts occur. Do not try to do this during a drought.
Earl Russell: When you are entering into that critical situation.
Meyrick Gough: Yes.
Sarah McMath: It is another important piece of work. We can provide some reading on this about understanding the economic impact of not having water. When we look at water efficiency and demand management, we often talk about the fact that there is not a price signal.
Going back to your question about the role of retailers, if you simply engage with a customer to reduce their water consumption and their water bill, in the same way as you might if you were having an energy conversation, there is not that much of a driver to do that.
We developed some case studies that we can share. Look at Alton Towers as an organisation. It had an unplanned outage. It was not drought. There was a burst main that meant they could not flush the toilets. Therefore, it could not open to the public for a period of time. The impact that had on lost revenue compared to its water bill is significant. We are working with Defra to look at the cost of not having water and the economic impact of having to shut down factory lines, losing crops and of not being able to open tourist attractions, buildings like this or hotels to the public because you simply do not have water to flush toilets.
Earl Russell: Is there anything, Andrew, that you would like to say?
Andrew Newton: Not really. It is difficult for me to answer. I would refer back to the Association of Drainage Authorities, and we can provide an answer if we need to.
Q85 Lord Trees: This question is about abstraction and its relative effect on drought vis-à-vis water, rainfall collection or river flow. The Environment Agency is limiting abstraction licences to protect the environment. Is this, in your opinion, the right approach? How can different sectors increase their resilience to drought in the absence of abstraction?
Meyrick Gough: My view is that it is the right long-term approach we need to get to a sustainable level of abstraction. The key here is how quickly we can get there, and we need to get there as quickly as we can. You need to make sure you have the support and infrastructure in place to help make those licence reductions come through. I definitely think it is the right thing. It is important to understand the trade-off and risks, and the pace at which you proceed with those reductions, targeting and prioritising the key catchments you need to get to first. We are now looking at plans that are moving water right across our region, from Oxford all the way down to Hampshire, from Hampshire across into Sussex, and from Sussex over into Kent. Our ability to plan this out to make sure there are sufficient supplies to meet that sustainable abstraction going forward is quite key.
We talked about that prioritisation earlier in the previous question. When we are in that one-in-500-year drought, which we can imagine from a supply point of view and can understand from a demand point of view, but the environment has already suffered, that should come into the decision-making. If some rivers are already dry but there is still the ability to get groundwater from below, there is a question about prioritisation. You can go back to abstraction, but that has a consequence of potentially delayed recovery. It comes back to my point. In running through these scenarios and having that discussion before droughts, you can really understand where and how you prioritise your solution in that real extreme.
Lord Trees: Some witnesses told us that there is not a clear connection between groundwater and river flow, or at least it is a very delayed connection.
Meyrick Gough: Yes, that is true. It depends on the groundwater sources. There are some where there is a clear connection and others where it is a much more delayed response. When some of the ephemeral streams run dry, they will come back when the groundwater levels come up high enough and the groundwater flow comes back in. In those extremes, you are just taking out the groundwater from the aquifers below, using that as a short-term measure to help deal with the crisis that you face.
Sarah McMath: To reiterate what Meyrick said, I see this simplistically. When you look at restricting abstraction licences, let us look at farmers. Farmers are connected to the public water supply in most cases. Their preference will be to use raw water abstraction, partially because it is cheaper and it has lower carbon associated with it. If you restrict that abstraction licensing, a lot of those farmers will simply turn up the public water supply. You have to look at it as a system, otherwise all you do is take, effectively, the same water, put it through a water treatment works, add chemicals and pump it, and then that same water comes out with chlorine in and is used for irrigation purposes. The point about looking at it as a system and recognising the interaction between those drought levels and the actual impact it has on the water environment is really important.
Lord Krebs: Meyrick, do you think the price of abstracted water reflects its scarcity?
Meyrick Gough: The short answer is no.
The Chair: Short answers are good.
Meyrick Gough: We tried to put forward a way in which you could build that into the planning approach. In 2012, we presented a way of referring to it as an environmental shadow price. You could value the environment and the water you abstract from it, and for those really key streams you could have a much higher shadow price than others where there is an abundance. The idea never really caught on.
Lord Krebs: Whose job would it be to catch on? Is it Defra’s job, or is it the Environment Agency?
Meyrick Gough: We always tried to go through the regulators—the agency and Ofwat. The hardest challenge they had was setting that value at a fair approach.
Earl Russell: I have a very quick question. You might want to write to us if that is easier. I want to ask about the levels of illegal abstraction and how clear an idea you have of that, where responsibility lies and what more could be done to monitor that, particularly approaching or in drought situations.
Meyrick Gough: In terms of illegal abstraction, I do not have an idea of that. That will be down to the Environment Agency and the abstraction returns it will receive. My biggest concern—and it is not illegal—is the growing number of abstractors at less than 20 cubic metres per day who can go and drill a borehole, and get a source of water. The studies we have shown is that anything from 12% to 27% of those will fail in the one-in-500-year-type drought because the wells simply are not deep enough.
Andrew Newton: From our point of view, we agree that we need to limit the abstraction. We need water in our systems not just for abstraction but to maintain peat soils and for ecology in our water courses. How can we support farmers? I have one large grower in my area who wants to build a 500,000 cubic metre reservoir, but his application to the Environment Agency for a winter fill has taken over 12 months and he still does not have that licence. That is not good enough. These people want to invest. It is an insurance policy for them for the future. They are just waiting for that licence to build it. It is just an unnecessary delay.
We also need to look at retaining water safely. By that, I mean my assets are ageing. Some of the pumping stations are 60 or 70 years old. We need to retain water in our system higher. We need better pumps so that we can move that water in times of storm and flood events.
How do we manage the system? I do not have an automatic system. After the 1976 drought, IDBs invested in water supply. I basically have taps, for want of a better word, off-river systems. The rivers are higher. It comes into us via gravity. We have a series of small dams, and some of them are ancient. My guys go out and put wooden boards in to control the levels. We need to invest in that to make that system better and more robust.
Q86 Lord Krebs: You partly answered the question that I wanted to ask, but let us go through it again. There may be additional points that you want to raise. What other investments and interventions could increase drought resilience, such as localised storage, increased monitoring and smart meters? Both on the supply side and demand side, what recommendations would you make to increase resilience in relation to drought?
Meyrick Gough: In our regional plan, these are all the challenges that we set out that needed to be tackled. Within that, it is a twin-track approach. It is the demand-side measures: improved efficiency in how we use water within homes as well as leakage reduction. On top of that, we look at developing reservoirs, water recycling and desalination as well as moving water around the country.
The one group of options that we desperately want to start building into these plans are those from nature-based, catchment-type solutions. Instead of it just being reduce loss and develop and store more water, it is how else we can get into the catchments to retain more water within some of the catchments themselves and slow the flow. There have been lots of studies on this, particularly in Australia, where these interventions will not possibly carry you through a two-year-type drought, but during the short-duration droughts being able to retain more water in the catchments will help maintain those base flows in the river for a much longer period. Instead of water coming down and running off very quickly, we have that prolonged base flow that can help support abstractions over a much longer period. Our regional plan sets out the challenges. We can solve them with a twin-track approach. I would like to see the next plan building on that but introducing catchment solutions. One key thing here is storage and recycling.
Lord Krebs: On the demand side, what about universal metering?
Meyrick Gough: In the south-east, we are pretty much there. Portsmouth Water is doing a universal metering programme now. The other companies have all gone through their programmes. Thames Water is putting in smart meters, and they will get rolled out right across the region. We have a very good handle on metering, and that helps. Persuading people to use water efficiently is the key driver. The risk part of me, the annoying nagging voice in the back of my mind, is that if we miss the PCC target by one litre per day I will need to find 20 million litres of water per day from somewhere else. That is the size of Havant Thicket reservoir, that has just been built. That is if I miss it by one. If I miss it by five, you can scale up.
Lord Krebs: You said there is more or less universal metering in your region. What about other regions in the UK?
Meyrick Gough: The other regions are definitely getting there. Water Resources East and Anglian Water have high-level meters. They are there in the West Country as well. The industry has responded and universal metering is pretty much rolling out across the country now.
Sarah McMath: I will not repeat what Meyrick said, but I agree with those points. For me, three things need to be true to better understand demand management and reduce demand. The first is data. On your point about smart metering, I absolutely support the rollout of compulsory smart metering as quickly as possible. There is a challenge for business customers, because within the price control mechanism that Ofwat has put in there is a cost allocation for those meters. That does not cover very big meters or meters that are hard to read, and it is those ones, the ones not being read today, that we need. You need data, which we have already covered.
Customers also need to care. From some of the questions here, we note that a lot of customers do not know that they can switch or that they can engage with their retailers to understand their water consumption. Customers need to recognise that there is a role for them to play. Then, importantly, the point that we have covered less is that money needs to be available. Solutions for local demand management or storage, as Andrew said, are not technological innovations. They are not outside the realm of what is doable today. But there are lots of challenges in the way of funding those and to ensure that that is a legitimate route for customers.
On the first two, we are getting there. I also sit on the advisory committee for the water efficiency campaign that Ofwat is running. We are getting there on data with smart meters. We are getting there on customer awareness. We need to focus on clear government policy and supply chain alignment to enable non-potable solutions. The independent commission recommends a new policy, a regulatory framework, to accelerate non-potable and water reuse infrastructure, and we have to be clear on how that gets funded and who pays for it.
Andrew Newton: For too long, flooding and drought have been siloed; they are never joined together. We need to bring this together under water management. From a drainage board point of view, we are managing water levels for a whole range of reasons, not just agriculture but the environment and growth as well. We are facing the challenge of climate change. We are seeing drier summers. We are also seeing wetter winters and more intense rainfall over a short period of time, so we need to be smarter about how we manage the systems going forward to make sure we have that storage when the water is there.
The issue for us is that we have funding limitations. We raise the money through drainage rates from the farmers and the local authorities through the special levy. That is the money we need to spend on flood risk management. Not all farmers are licence payers and some say, “Why are you investing in water resources when I don’t benefit from that?” We come under the Land Drainage Act 1991, which was fit for purpose at its time. It focuses on flood risk management and land drainage, but it does not give us any remit in terms of water supply. As I said, we are a facilitator. We are not using the water, but we offer that crossover between the Environment Agency and farmers to provide the water into the systems then to irrigate. It is time that that Land Drainage Act is looked at so that it gives us the responsibility for water supply. That would probably change our name from drainage to water level management boards, to really identify clearly what we do. It would give clarity for all IDBs across the country.
On the funding mechanism, how can we get that funding? The Environment Agency gets a substantial amount of money from abstractors from their licence fees and the water that they use. We do not see any of that, as I said. We have to find it out of our own budgets. Could there be access to IDBs for that money so that we can properly invest in the assets that we need to make a robust and resilient system for water management going forward into the future, or could there be a national pot of money specifically for water management and drainage boards? That would give us drought resilience and water security, and it would be an effective use of our infrastructure. It would be a modern approach to water management and a different one from what we have seen in the past. We can use our local expertise and infrastructure to transfer water into our systems to make sure it is there when it is needed.
The Chair: Thank you. I will come to Lord Duncan because we skipped his important question on temporary use bans, et cetera.
Q87 Lord Duncan of Springbank: I will pick up, if I may, Sarah, on something that you mentioned earlier. I was a little bit confused when you were looking at the way that Government gave you information about their strategic plans around data centres. There appears to be quite an appetite right now for data centres. They are being discussed by the Government and by others. How will they communicate with you potentially about such an appetite in your area, and what would they tell you about it? I appreciate that data centres can cool in different ways, but if the Government have a strategy, how will they communicate this with you? What would you do with that? There is a difference between a strategy and an operational plan to deliver it.
Sarah McMath: On what we do with that information, I take the example of the schools work that we did with the Department for Education. Wherever we can be provided with a dataset that has georeferenced data such as the location of a building, we can map that into central consumption data. Our role working on data centres is just to identify where they are and to provide that single market segment. Back to that key point, it is about understanding who is using the water, where they use it and what they use it for. It is about taking datasets that are georeferenced and being able to provide a market segment of water consumption today. It will then be the role of water companies and others to identify future usage patterns.
Lord Duncan of Springbank: When they talk about a strategy, that would not therefore trigger anything from you until there is the actual proposal that will then come to you. You would not be anticipating or thinking ahead in that way at all.
Sarah McMath: No, our role would be simply to report water consumption as identified through the market, through meter-read data.
Lord Duncan of Springbank: There is another question here on TUBs and NEUBs, but in the interests of time we might just want to write to you about those because they are quite technical, if that is all right.
The Chair: I have a follow-up on that, about Yorkshire Water. It is the only water company now in any level of service action. I think it is level 3. Can I get your views on why you think that is?
Sarah McMath: Why Yorkshire Water is—
The Chair: Why Yorkshire Water is at level 3 of service action. I think there are four levels—1, 2, 3, 4, with 4 being the most stringent. Level 3 means a non-essential use ban, a temporary use ban and so on. At level 3 it can seek drought permits.
Meyrick Gough: Through its drought plan, it would set out the monitoring and key trigger levels. For Yorkshire, it will sit in that level. That would be because of a reservoir level, most probably. In terms of level 3, it would be exercising temporary use bans and non-essential use bans as a prerequisite, potentially, to go for a drought permit or a drought order. That would allow it to abstract more water from the environment to improve its water resource position. I do not have any further, greater detail on Yorkshire Water, I am afraid, other than that.
Sarah McMath: I can comment on the non-essential use end. I cannot comment on why Yorkshire Water is in that position. However, I can note that, from working with Yorkshire Water over this summer, we have concerns over the way in which a non-essential use ban would actually be implemented. How would you communicate with those customers? Would that be the water company, in this case Yorkshire Water, which does not have a direct relationship with those customers from a billing and a customer service perspective? Would it be the retailers? Bluntly, as I said earlier, would it save enough water to justify it?
The Chair: An NEUB is supposed to be implemented before drought permits can be issued, but that has not been the case with Yorkshire Water.
Sarah McMath: It is a question over the effectiveness of issuing those non-essential use bans. That process and laddered approach needs to be reviewed.
The Chair: It has 44 drought permits and maybe more coming. Before any more drought permits are issued and water is abstracted from the environment impacting local rivers and so on, do you think that an NEUB should be put in place?
Sarah McMath: My personal view would be that I do not think that is the right course of action.
The Chair: Why not?
Sarah McMath: Because the types of businesses that are defined under that categorisation are not consistent across companies. A number of them are small businesses. Restricting or preventing the use of water for their businesses would mean that they would, effectively, go out of business, and the volume of water that those businesses are using is probably not high enough to justify that. We need to do more work on that to understand what the actual megalitre saving would be through implementing those.
The Chair: That is a real illustration of prioritisation. At the moment, the natural environment and the river systems are at the bottom of that. There is a higher need. That is not how it is supposed to operate. We really need to try to find out and get to the bottom of how we prioritise water use. It has been clear from this one example of Yorkshire Water that we do not have a hierarchy of need established. Would you agree with that?
Meyrick Gough: I know from the National Drought Group that there is a hierarchy there when dealing with extreme droughts of where that would be. I go back to my earlier point. I am sorry to keep repeating it. This is where you could do a lot of preparation work and understand the sequencing to work out a much better trade-off that will have to inevitably come.
The Chair: We have no plan for how we make the difficult choices that a level 4 drought scenario might impose on us.
Meyrick Gough: With the companies, there is a plan. That is what they are required to put forward.
The Chair: It is not sufficient.
Meyrick Gough: Other industries and abstractors do not have the same level of preparation. That is my point. At that regional level looking at that real extreme, you have one level that understands what has happened and another set of sectors that will not but will turn to the industry.
The Chair: Mr Newton, would you like to add anything to that?
Andrew Newton: Not at this stage, no.
Earl Russell: I go back to that idea of crisis gaming and better preparedness. People have plans, but it is the interaction of all the different agencies and who is responsible when time is short and you are in a critical situation. Just as a comment for you, do you think there is much more that the Government should be doing in this space in examining these plans in a more joined-up and critical way? Let us put it like that.
Meyrick Gough: There is. The five regional groups that have been established can also help contribute to that. We have the models expertise to try to help go through and understand how these interactions work.
Earl Russell: One possible recommendation might be to bring all those together.
Meyrick Gough: Yes.
The Chair: Excellent. Thank you all very much. With that, I bring this formal session to an end.
