Negative impact of AMP cycle on water sector

Photo source: De Nora
There has always been a lot of concern by suppliers to the water utilities about the negative impact of the 5 year AMP investment cycle. Now hard figures obtained by British Water have quantified the impact on employment in the water industry. The effect of the downturn in work at the end of AMP4 has been more severe than many had realised. The British Water figures suggest the number employed have dropped by about 45%. The latest official estimate of the numbers employed in the water sector supply chain is 90 000 (EU Skills survey 2004). This suggest that a staggering 40 000 jobs may have been lost.


This loss of experienced people will have a major negative impact on the water industry. Many will have sought other employment or retired early meaning that they will be lost to the industry. There is also the considerable cost of making experienced staff redundant. All this comes at a time when water companies are facing huge challenges to become more efficient, and to find clever ways to deliver the capital programme outputs mandated by Ofwat. When the inevitable upturn in work that the £22 billion AMP5 investment programme will require finally arrives at sooner or later this skill shortage will impact on the capability of suppliers to deliver.

It is hard to be critical of individual water companies who have only acted in their own best interest. However economists have long recognised that the action of individuals can be damaging to the group – that’s one of the fundamental reasons for regulation. Suppliers calls for concerted group action across the water sector have largely been ignored, perhaps because its been hard to quantify the impact.

The British Water is to be congratulated on providing hard evidence of the damage the downturn is causing. But to make the case more robust it needs all suppliers to the water sector to take part in the survey. If your company has not already done so please complete the survey at British Water Survey






The water sector is likely to feel the consequences of this latest downturn for years to come. While it is too late to avoid the damaging impact of this latest downturn action it is not too late to act before the next cycle in 2015.