Updated CapEx - England & Wales

Shown in this post is an update of a figure I have shared before of Annual Capital Investment in Water and Sanitation, England and Wales. This figure includes proposed expenditure to 2030 based upon regulator Ofwat's Final Determinations (earlier figures showed 'Draft Determinations').

The 'y' Axis is in 'thousand millions', therefore the scale is showing a peak of around $15 billion dollars CapEx per year in the middle of the just started 'AMP 8' period. As you can see, there is always a tendency to start the Asset Management Plan investment a bit slowly due to uncertainty in the regulatory process but you could have imagined they would still be spending at the higher level in the final year of the five year price review period.

And because of an unusual number of water companies (6) appealing their price review determination to the Competition and Markets Authority (the 'regulators's regulator') these numbers remain provisional even a couple of weeks into this AMP. The companies wanting permission (and price rises to fund) even more Capital Expenditure than already anticipated.

You can see the extent to which planned CapEx has already been increased in this coming five years - to meet environmental obligations and to meet citizen's/customer's desire to reduce the effects of storm sewer overflows - the horrible effects of which which have been shown in the recent BBC programme focusing upon Thames Water.

On this figure you can see the reduced investment during the two World Wars, I have included GDP per person in 2020 'Purchasing Power Parity' prices to give a sense of scale for comparison with other countries now. Then the big increase which delivered SDG 6.1 & 6.2 by 1973. It could be argued SDG 6.2 came earlier than that by including the container based sanitation 'free at the point of collection' which was being used in at least some rural districts at scale from 1950 onwards.

Then came the time of 'regionalisation' of watsan where public 'Regional Water Authorities' took over responsibilities from local Councils and Water Boards. The 'dip' illustrates where national government had yet another funding crisis leading to the 'Public Sector Borrowing Requirement' limits constraining borrowing by RWA's.

Followed by privatisation in 1989, to overcome the funding challenge required to meet the wastewater treatment directives (amongst other demands on CapEx) in addition to delivering an efficiency requirement 'X' factor on the private companies.

But then price rises were constrained by 'government advice' to the regulator in succeeding price reviews such that capital maintenance expenditure was constrained and aspects of the system have clearly begun to run down again.

So we have another uplift - please note that all these numbers are in 'real terms', 2020 prices - the effects of inflation have been removed.