Philip Barnes – Blog

HOUSING CRISIS – WATER PALAVA?

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A lot of organisations get blamed for the housing crisis. Inter alia, housebuilders, planners, housing associations, landowners, land promoters, politicians etc. One group tends to emerge unscathed but, sometimes causes huge frustrations to housebuilders and local councils wanting to deliver new homes. Namely the privatised water companies.

But having said that I must immediately narrow the scope down to just 3 or 4 businesses who, in my opinion, can frustrate housing delivery and damage the reputation of the whole water industry sector.

As we all know water companies have a legal obligation, under the Water Act, to provide water and sewerage to the the population in their areas. Not just the current population but also the new residents as projected by ONS. The privatisation deal in 1989 was predicated on this civic responsibility being transferred, alongside the ability to make profits and pay shareholder dividends.

Adhering to this responsibility sometimes requires investment in system upgrades, especially in areas of lower capacity and higher population growth. Again the requirement to fund this ongoing investment was part of the privatisation deal. At privatisation all debts were written off and Government provided the sector with a £1.5bn dowry.

Unfortunately housebuilders often face difficulties in that water companies assert that there is no local capacity for extra homes and then request funding to prepare a ‘Network Analysis’  to identify whether a system upgrade is required. Housebuilders feel that the Water Company should be funding this having already made projections of local population growth and having already fed into the local plan process. It is not unusual to be faced with a bill to fund a Network Analysis at the pre-application stage with limited ability to go forward until it has been completed.

Even worse the Network Analysis sometimes then shows a need for sewage treatment work upgrades which the water company claim must be funded prior to the development being occupied. It is not unusual to be hit by Grampian Conditions preventing development or S106 requests (on top of CIL) for c£10k/dwelling in order to contribute to system upgrades.

All very frustrating if there is actually no commercial ability to provide the required payments due to other S106, CIL or affordable housing requirements. The poor LA then cannot bring forward an allocated site because of late demands from a private water company, which has previously been consulted on the feasibility of the local plan. Thus opening up the possibility of speculative off-plan smaller proposals which may fly under the water company radar nd hence secure consent.

Since privatisation housebuilders have given these private companies £2.6bn in infrastructure charges. How it is used is not audited and we housebuilders sometimes wonder what has actually happened to the money!

As an old time planner I would much welcome a return to a plan, predict and provide approach to water infrastructure provision rather the what feels, in places, more like a risk management approach to major housing schemes as and when they arise.

Final point is to repeat that most Water Companies are positive and great to deal with. But as in all sectors the actions of a few can sully the whole sector. Same with housebuilding I guess…..

Author: philipbarnesblog

Group Land and Planning Director for Barratt Developments PLC. FRTPI, FRICS

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