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Turn on the investment taps

Nick Baveystock

Cyclical funding damages the water sector.

Uncertainty of investment caused by “stop and start” funding has always been counter-productive; for civil engineers and for infrastructure delivery.

Sadly, it still permeates many of our key economic infrastructure sectors. If we are to encourage greater investment into UK infrastructure networks, thereby managing these assets more effectively, reversing this trend is fundamental.

Stop and start investment patterns can also result in significant numbers of engineers and technicians leaving the supply chain owing to deep troughs of workload between investment cycles.

Addressing this cyclicality will provide a platform to grow skills and capacity, leading to greater value for money in the long term.

The water sector is one which has been severely hindered by the stop and start investment culture. British Water estimates that approximately 40,000 jobs are lost throughout the water supply chain during these lengthy transitional periods.

Such a sector skills loss is destructive at any time, but is even more significant and worrying when the needs of economic growth dictate that we must retain and grow our civil engineering workforce in the UK.

Long standing issue

The ICE has consistently appealed to water regulator Ofwat and the government to address these long standing issues and extend the capital investment window to allow a smoother flow of workload.

The Institution first raised its concerns nearly 10 years ago, in our 2004 State of the Nation report. Successive State of the Nation reports have reiterated the point.

Recently we have been fortunate to have former ICE President Richard Coackley at the helm of an implementation group specifically set up to deliver the recommendations from a study by Infrastructure UK (IUK) and Ofwat into smoothing investment cycles in the water sector.

I am extremely encouraged therefore by the recent news (NCE 31 October 2013) that Ofwat will now allow English and Welsh water companies to bring forward work originally planned for the next Asset Management Plan cycle - which starts in 2015 - to next year.

Early indications suggest this could amount to £100M of investment in improvements and maintenance.

This change should reduce the peaks and troughs we traditionally see at the outset of every new spending review period, and enable the sector to manage skills capacity more effectively.

Infrastructure UK and Ofwat have rightly recognised the importance of addressing this issue.

We must all now seize the opportunity and maximise the potential benefits. We have the chance to reduce costs, deliver increased value, and build sector capacity and skills: we must rise to the challenge.

  • Nick Baveystock is director general of the ICE

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