Response to Scottish Water draft Long-Term Strategy consultation

Consumer Scotland is the statutory body for consumers in Scotland. Established by the Consumer Scotland Act 2020, we are accountable to the Scottish Parliament. The Act defines consumers as individuals and small businesses that purchase, use or receive in Scotland goods or services supplied by a business, profession, not for profit enterprise, or public body.

Our purpose is to improve outcomes for current and future consumers, and our strategic objectives are:

• to enhance understanding and awareness of consumer issues by strengthening the evidence base
• to serve the needs and aspirations of current and future consumers by inspiring and influencing the public, private and third sectors
• to enable the active participation of consumers in a fairer economy by improving access to information and support

Consumer Scotland uses data, research and analysis to inform our work on the key issues facing consumers in Scotland. In conjunction with that evidence base we seek a consumer perspective through the application of the consumer principles of access, choice, safety, information, fairness, representation, sustainability and redress.

The Consumer Principles are a set of principles developed by consumer organisations in the UK and overseas.

Consumer Scotland uses the Consumer Principles as a framework through which to analyse the evidence on markets and related issues from a consumer perspective.

The Consumer Principles are:

• Access: Can people get the goods or services they need or want?
• Choice: Is there any?
• Safety: Are the goods or services dangerous to health or welfare?
• Information: Is it available, accurate and useful?
• Fairness: Are some or all consumers unfairly discriminated against?
• Representation: Do consumers have a say in how goods or services are provided?
• Redress: If things go wrong, is there a system for making things right?
• Sustainability: Are consumers enabled to make sustainable choices?

We have identified access, fairness and representation as being particularly relevant to this consultation.

Consumer Scotland welcome the opportunity to respond to Scottish Water’s proposed Long-Term Strategy.  In brief, Consumer Scotland broadly supports the ambitions and outcomes which have been set out in the strategy.

There are some areas where Consumer Scotland believes that further detail or clarity could make the intention or aim of specific sections clearer, or support understanding of the strategy as a whole. 

With this in mind, our response aims to set out some constructive proposals to support development of the final version of the Long-Term Strategy.   

Demographics

Question 1. Are you responding as an individual or an organisation?

Organisation

Question 2. What best defines the core activity of your organisation?

Other – Non-Ministerial Office

Strategic Ambitions

Question 3. Do you understand our strategic ambitions?

Yes

Question 3. Additional commentary

Consumer Scotland understands and supports the broad scope of the strategic ambitions set out within the draft document. Currently these ambitions are set out at a very high level. There would be significant benefit in building consumer understanding and support for the strategy, if Scottish Water could more fully set out what it is aiming to achieve for each of the strategic ambitions. As some examples:

-          It would support understanding of the strategy’s ambitions if Service Excellence could be set out as tangible goals and measures.

-          The ambitions allude to meeting ‘customers’ evolving expectations’. However, it is unclear if this refers to customers’ expectations of their usage of water and sewerage services, or if it refers to their expectations of Scottish Water as an organisation evolving, or both. Further clarity would be welcomed – both on the focus and Scottish Water’s evidence which suggests that expectations have evolved.

-          It is unclear from the Long-Term Strategy document itself what work is encompassed in the ‘Beyond Net Zero’ element, and it is difficult to understand where this intersects with climate change adaptation more generally, which is included in Service Excellence. Furthermore, while Scottish Water provides substantial detail around the climate challenge in later sections, the terminology of ‘Beyond Net Zero’ needs to be more fully defined. Given the broad variability across sectors and organisations of communicating net-zero objectives, it is important to provide sufficient context to aid understanding and manage expectations.

-          It is unclear what Scottish Water means by delivering ‘great value’ for customers, or what it defines as a ‘financially sustainable’ company. Further information on these points would be welcomed.

While we recognise that Scottish Water is attempting to keep the document concise and digestible, further detail should be provided to build out the ambitions themselves as the document progresses - as these relate to how consumers and others will judge the success of the Long-Term Strategy.  Some of these areas are further defined when we move into outcomes, but several are not.

Our Challenges

Question 4. Do you understand the challenges Scottish Water will be focussing on over the next 25 years?

Yes

Question 5. To what extent do you agree with the challenges Scottish Water will be focussing on over the next 25 years?

Agree

Question 6. Please use this text box to tell us why you think this?

As a general comment, we would suggest that some chapters of the Long-Term Strategy should have a more explicit subheading explaining what the challenge is referring to in simple terms. As an example, “For a Changing Scotland” refers to the challenges faced by the sector, but it would support understanding and readability if this was set out more directly. This is not necessary for all sections in the document (e.g. Long-Term Outcomes) but most chapters would benefit from a subheading with some explanatory language on its focus.

On sector challenges, the Climate Crisis issue is explained well, including the delineation between climate mitigation work and adaptation work. There is also significant detail available for those who want to understand more via the specific plans Scottish Water has published on this issue and these are highlighted in the strategy document itself.

On the ‘Population change’ section, the actual challenge is well explained, but its implications for Scotland’s water resources are inferred rather than directly set out. Very clear expectations of population growth or demographic shifts are set out, but the implications for water resources are only set out in the broadest terms. It would improve readability if the impact on water resources and services from these population changes was more directly attributed.

This is equally the case with the Assets challenge. A high-level description is provided of the issue but is demonstrably less detailed and much higher level than the Climate Crisis challenge, despite asset maintenance alone accounting for almost half of the expected £50bn investment requirement set out later in the document. One consideration could be to set out a specific issue (e.g. asbestos cement pipe replacement) – its scale, and what is required to replace these with a more sustainable future solution.

Long-Term Outcomes

Question 7. To what extent do you agree with the outcomes Scottish Water has identified?

Agree

Question 8. Please use this text box to tell us why you think this?

The Long-Term Outcomes section is helpful as it provides the most detail on where customers are likely to see the strategy translate into their experience of water services. Some points that could be considered are the following:

-          “Scotland’s Tap Water Remains a Source of National Pride” seems like somewhat of a misnomer when looking at the broader focus areas, which emphasise leakage reduction and resilience. It is of course reasonable to focus on preserving the quality of Scotland’s tap water, which consumers value, but the framing of the outcome suggests a more passive or ‘ongoing’ aim, in contrast to the focus areas beneath it, which require significant change both by Scottish Water itself and the consumers it serves.  

While the outcome is reasonable and important to consumers, the framing of it perhaps understates the level of change required.

A shift in emphasis and tone from solely what Scottish Water will do to greater focus on partnership working with its customers puts greater emphasis on the fact that without the support of consumers, aspects of Scottish Water’s ambitions will be more difficult to achieve.

-          In some areas, Scottish Water sets out very specific targets (e.g. leakage + abstraction) but in others, it sets out only very broad ambitions such as ‘accelerating’ replacement rates. Another example could be the ‘growth’ of Scottish Water Horizons. Setting out more detail on some of these outcomes could be helpful.

-          Providing understanding of the current baseline would also help customers understand the scale of many of the long-term outcomes. As an example of this, it is unclear how much change is required to ensure that ‘no customers experience repeat sewer flooding by 2050’.

-          Consumer Scotland recognise that this strategy is a 25-year document and cannot set out exhaustive detail. However, it may be worth considering in future, the potential to illustrate what customers can expect in terms of progress linked to these outcomes within the specific SRC period by making an explicit link between Scottish Water’s business plan for the 2027-33 Charging period and this document. A document setting out how Scottish Water’s SR27 business plan contributes to the fulfilment of the Long-Term Strategy could perhaps be published by Scottish Water in response to the Final Determination by the regulator.

Long-Term Steps

Question 9. To what extent do you agree with the steps Scottish Water has identified?

Agree

Question 10. Please use this text box to tell us why you think this

The broad phasing set out on the Long-Term Steps is appropriate to deliver value for money for customers and ensure that high cost, infrastructure driven interventions are only considered when other reasonable options have been explored.

However, within specific areas, such as the household and business consumption section, the anticipated actions require to be explained in more detail. Scottish Water generally sets out what needs to change, and the current position, relatively well, but the scope of intervention, the timescales for this and how it will be achieved can be difficult to understand.

Furthermore, within the household / business consumption focus area, some of the objectives would benefit from more closely reflecting the long-term ambitions of the comparators provided. For example, this section sets out the current position / comparison between Scotland and the rest of the United Kingdom. However, in England, water companies have a range of per capita consumption targets for usage by 2050 which are significantly lower than the 140L ambition for Scotland - (110L per day on average, as low as 98 litres per day for some water companies)[i].

It is reasonable to recognise that, to date, Scotland has placed less focus on high water usage compared to other parts of the United Kingdom which have experienced drought and other negative impacts more frequently and severely. Consumer access to household-level consumption information is also much more widely available in some parts of the UK.

Even while acknowledging these points, Scottish Water and the sector should consider whether this ambition appropriately recognises ongoing progress in other jurisdictions. Currently, even if this ambition was to be achieved as set out, if progress is also made as intended in England, the ‘gap’ in usage would reduce, but remain significant (moving from 40L per day to 30L by 2050). While this may be sufficient for the challenges facing Scotland’s water resources, there could be value in explicitly addressing this point.

Generally, on water efficiency, particularly when it comes to consumer facing interventions, significant development is required in this area addressing several challenges. We acknowledge Scottish Water is progressing steps to explore the benefits of arming customers with greater awareness of their usage (via the domestic monitoring pilot and the intention to progress smart metering for non-household customers). However, Scottish Water should consider which other steps the sector could take to advance other interventions and work in partnership with its customers to reduce water usage.

This could include the development of initiatives similar to the ‘Water Efficiency Fund’  managed by Ofwat – which is designed to encourage large scale, transformative water usage initiatives. Further consideration should also be given to the role of partnership with Licensed Providers, and deeper consideration of how households could be encouraged to make use of water efficient fittings / appliances.

This could provide additional leverage to the imminent ‘water efficiency’ appliances mandatory labelling scheme and, particularly in a context where consumers are not billed on a usage basis, messaging which emphasises the reduction in energy bills achieved by households using water wisely. This reflects recommendations previously made by Consumer Scotland following our deliberative Climate Change research[ii].

Consumer Scotland’s deliberative research illustrated that, when informed about the challenges the sector faces, participants recognised the issues and the importance and urgency of changing how they use water. However, the process under which this research was conducted allowed for deeper engagement with the issues at play, which would be challenging to replicate via some type of nationwide engagement process with customers.

Quantitative survey research from Consumer Scotland illustrates that there are still embedded challenges in communicating to broader household consumers, with 53% of respondents unconcerned with water use in the home. In the same research, 27% of respondents suggested they would only reduce water use if it saved them money. Over a third (37%) also agreed that it rained so much in their area that there was no need to save water. Although the same proportion disagreed with this statement, this still illustrates both the substantial practical challenges and misconceptions that Scottish Water will need to overcome[iii].

As per the quote from Consumer Scotland referenced on page 56 of the consultation document, a cultural shift is required to deliver changes in water consumption in Scotland. Currently however, for household consumers, the Long-Term Strategy predominantly sets out the initial exploratory work taking place linked to monitoring rather than clear, longer-term outcomes.

While exploring the role of consumer-level usage information is a completely reasonable step, given the importance of changes in water use to Scottish Water’s ambitions, Consumer Scotland would expect Scottish Water to set out a broader vision for how this could be achieved. As an example, this could include more detail on how Scottish Water intends to transition its relationship with consumers in order to more effectively communicate water-saving behaviours. The Long-Term Strategy document should explain what ambitions Scottish Water has for how its relationship with customers may evolve over the next 25 years and its preferences for doing so. As one example, would Scottish Water expect to communicate directly (and proactively) with consumers as a matter of course, across a range of service issues, by 2050?  Would it expect to collect more comprehensive data on individual household customers – both in terms of usage data to inform customers, and personal data to engage with consumers on water efficiency? Equally, does Scottish Water expect to invest more significantly in behaviour change communication and resource, to reflect this ambition?

This is similar with the ‘Water Citizens’ section earlier in the document where what is set out is more about current activity and less about the shift in strategic direction over the next 25 years that Scottish Water should consider to support more informed and engaged consumers.

Scottish Water does not have sole responsibility for driving more efficient water usage, but it will be a critical and leading voice in shaping consumer views. Linked to this, a deeper understanding of where Scottish Water expects to champion certain issues, as opposed to other key stakeholders such as the Scottish Government, would aid in providing further clarity on this objective.

Scottish Water may wish to consider Consumer Scotland‘s forthcoming publication which will set out a consumer principles and outcomes framework focused on issues linked to climate change. This will emphasise the importance of considering four key factors (cost, convenience, clarity and confidence) when engaging with consumers on these challenges.

Furthermore, Consumer Scotland will imminently publish some additional research which re-engaged with some participants of the aforementioned deliberative Climate Change research. This should provide an additional source of evidence to ensure that future engagement with consumers on their water usage reflects the information and messages seen as most influential and credible.

Question 11. If you are responding on behalf of an organisation, do you understand your role in helping us achieve these outcomes?

No

Question 12. Further detail to support answer for Q11

While Consumer Scotland expects to undertake work in its own right to support some of these outcomes, we would not currently agree that there is a coordinated plan of action across sector stakeholders to meet all of the challenges set out in the Long-Term Strategy document, albeit it is reasonable to say that in certain specific areas (e.g. the ongoing Policy Development work referenced within the document) there is sectoral coordination. There may be value in considering whether an action plan could be developed through the process of the proposed ‘National Conversation’. Such a plan could allocate the shared ambitions of sector stakeholders that align with Long-Term Strategy goals to specific ‘lead’ and contributing organisations.

Equally, for issues such as usage reduction and behaviour change, it is challenging to see how individual consumers (either in household or non-households) could fully understand the contribution they might make to support this, except for in very broad terms. Although a wider approach is needed to address this issue across the sector, it is clear that significant additional work and engagement is required to support consumers in this goal. The Long-Term Strategy should more firmly set out the direction of travel to deliver this.

Supporting a Flourishing Scotland

Question 13. Do you feel our Long-Term Strategy is easy to understand?

Yes – with the caveats set out in our prior answers.

Question 14. Overall, are you supportive of our Long-Term Strategy?

Yes

Question 15. Please provide further detail to support your answers to Question 13 + 14 and any other feedback you wish to share?

Consumer Scotland broadly support the overall intent set out within the Long-Term Strategy. However, the document as it stands would benefit from further detail within some of the sections, as we have set out in our preceding answers.

There are some general points linked to referencing or evidence in the document that should be further considered. As some examples, the timeline for the “5,000 customers” spoken to on the development of the Long-Term Strategy should be explicit, alongside the different sources and types of evidence this encompasses. This is also the case with certain references throughout the document which refer to studies which are not openly available (e.g. YouGov polling on pg.23, Progressive Research on usage referenced on pg. 54). In order for consumers to have confidence in the strategy, the evidence used to inform it must be accessible and available.

Given the scale of the challenges set out within the Long-Term Strategy document and the potential impacts to customers from both an experience and financial perspective, there are some areas where further detail (or a reflection of where Scottish Water would expect other stakeholders to develop their own policy) would be helpful. Some of these areas are set out below.

Further consideration is needed by Scottish Water as to its role to support consumers in vulnerable circumstances. The potential risks to homes in future from flooding is set to increase. Additionally, increased risks of bursts, interruptions to supply and other challenges will impact society’s most vulnerable. Consumer Scotland would strongly suggest that Scottish Water works with WICS as the regulator to develop firmer expectations for Priority Service Register (PSR) sign-ups and PSR delivery in practice. Currently, Ofwat have far clearer expectations in this regard and it is vital that Scottish Water puts the right structures in place to support consumers in vulnerable circumstances as the sector begins to face a greater level of risk from asset failure or climate-related issues.

Scottish Water should commit to deliver a Vulnerability Strategy which sets out how it will better support consumers in vulnerable circumstances as the sector’s operating context evolves. This is already a regulatory expectation in England and Wales[iv] and it would be a prudent step to ensure that Scottish Water is responding to the potential for greater risk to the resilience of water resources in future.

The issues of how bills are kept affordable to general consumers, cost-control measures and the evolution of specific affordability interventions are given little explicit consideration within the document. Although the ‘long-term steps’ provide some reassurance that Scottish Water will only seek additional funding after exhausting other options, this is an issue of key relevance to consumers. Although responsibility for this area is shared across Scottish Water and the Scottish Government, there is value in Scottish Water setting out more detail on its own expectations in this area.

Furthermore, linked to confidence over future costs, a greater understanding of how the £50bn figure was reached, in addition to the steps Scottish Water would need to take to arrive at alternative figures (as in a contingency scenario) would support clarity, transparency and understanding. Scottish Water explains that £50bn is the best estimate “Without major changes to how we currently operate the water and wastewater system in Scotland”. It would be helpful to clarify further what is meant by this, in the sense that some of the steps outlined within the document could be seen as significant changes in themselves. It would therefore be helpful if further clarity could be provided on the relationship between the £50 billion figure and the outcome steps in the document. For example, what level of progress on these steps might help to reduce the figure, or are there other actions that Scottish Water or consumers might take to achieve this?  

Setting out some of the alternatives could help to provide confidence that Scottish Water is taking a reasonable approach which strikes the right balance between investing in services and future resilience, while avoiding unreasonable disruption or radical shifts for consumers.

A clearer explanation of how ministerial objectives, which drive much of the sector’s priorities during individual strategic review periods, are integrated into the Long-term Strategy, would contribute to clarity about the overall direction of the sector.  

There may also be value in being clear where certain goals may have evolved or changed from the previous Strategic Plan. As one example, although the removal of lead from Scottish Water’s network (alongside supporting household-level removal) is clearly signalled as a key action in the Long-Term Strategy, the target date appears to have changed (from 2045 in the prior Strategic Plan to ‘over the next 25 years’ in the Long-Term Strategy) - implying a new target date of 2050. For key commitments such as this, setting out explicitly if previous commitments have changed, and why, is important.

Finally, a more open approach overall to data and transparency of information would also give customers greater confidence that Scottish Water is making the right decisions and delivering better outcomes for them. This should build on recent developments to make information available to consumers, such as the recently launched ‘overflow map’.

Scottish Water could commit to providing more performance level data at a scale which is relevant to general household consumers – such as postcode level data on service quality / reliability. A straightforward comparison would be Royal Mail’s quality of service report[v] (a regulatory expectation of Ofcom), which provides transparency on performance for individual postcode areas.

Consumer Scotland will shortly be publishing a review paper which sets out some comparative differences between various markets when it comes to publishing complaints data, highlighting best practice in areas such as energy. Scottish Water may wish to consider this forthcoming paper if they opt to strengthen their commitments to information transparency as the strategy is further developed.