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Water Works: the Regional Economic Impact of Dŵr Cymru Welsh Water

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Water Works: the Regional Economic Impact of Dŵr Cymru Welsh Water Water Works Welsh Economy The Regional Economic Impact of DCWW Research Unit Water Works: The Regional Economic Impact of Dŵr Cymru Welsh Water 1 Water Works Welsh Economy The Regional Economic Impact of DCWW Research Unit Water Works The Regional Economic Impact of Dŵr Cymru Welsh Water Report by: Jane Bryan, Calvin Jones, Max Munday, Annette Roberts and Neil Roche Welsh Economy Research Unit Cardiff Business School For: DCWW Contact: 02920 875089 [email protected] Cardiff Business School Colum Drive Cardiff CF10 3EU, UK www.weru.org.uk 10th June 2013 2 Water Works Welsh Economy The Regional Economic Impact of DCWW Research Unit Contents 1 Introduction ........................................................................................................................................................... 6 1.1 Background ...................................................................................................................................................................... 6 1.2 Dŵr Cymru – A summary of activities and responsibilities. .............................................................................. 6 1.3 The Not-for-Profit Business Model – Focusing on the future ............................................................................. 6 1.4 Dŵr Cymru operating area .......................................................................................................................................... 8 1.5 Dŵr Cymru’s procurement .......................................................................................................................................... 9 1.6 Research Objectives ................................................................................................................................................... 10 1.7 Structure of the report ................................................................................................................................................ 10 2 Methodology ...................................................................................................................................................... 11 2.1 Research parameters ................................................................................................................................................... 11 2.2 Research method – analysis of spending ............................................................................................................... 12 2.3 Research method – estimating economic impact ................................................................................................ 13 3 Dŵr Cymru’s income, spending and employment. .................................................................................. 14 3.1 Introduction .................................................................................................................................................................. 14 3.2 Dŵr Cymru’s Income ................................................................................................................................................ 14 3.3 Dŵr Cymru’s spending and employment ............................................................................................................. 15 3.4 Spending with suppliers outside Wales ................................................................................................................. 17 3.5 Conclusions .................................................................................................................................................................. 18 4 The Economic Impact of Dŵr Cymru ......................................................................................................... 19 4.1 Introduction .................................................................................................................................................................. 19 4.2 The Regional Economic Impact of Dŵr Cymru ................................................................................................. 19 4.3 Dŵr Cymru’s Economic Impact in Context ......................................................................................................... 21 5 Conclusions ........................................................................................................................................................ 23 5.1 Introduction .................................................................................................................................................................. 23 5.2 Economic impacts ....................................................................................................................................................... 23 5.3 Wider impacts .............................................................................................................................................................. 23 5.4 Appendix: The Input-Output Method .................................................................................................................... 26 3 Water Works Welsh Economy The Regional Economic Impact of DCWW Research Unit Executive Summary Introduction The Welsh Economy Research Unit of Cardiff Business School was commissioned by Dŵr Cymru Welsh Water (DCWW) to estimate the economic impact of Dŵr Cymru activity on the Welsh economy. Dwr Cymru as a business DCWW is the trading name of Dŵr Cymru Cyfyngedig (DCC), which is the regulated company that provides water and sewerage services to over 3 million people. It is among the largest companies operating and headquartered in Wales. According to the Western Mail’s ‘Top 300’ Dŵr Cymru is the fourth largest company in Wales. DCC is owned by Glas Cymru, a “not for profit” holding company. Dŵr Cymru’s area extends into England, and some parts of mid/north east Wales are served by other water companies. As part of its activities, Dŵr Cymru operates 67 impounding reservoirs, 66 water treatment works and supplies an average 828 million litres of water every day through a network of 27,000km of water mains, including 728 pumping stations and 645 service reservoirs. Dŵr Cymru also collects (and then treats) wastewater (and surface drainage) through a network of sewers. Following a change in Government legislation in 2011, Dŵr Cymru took on the responsibility of maintaining over 17,000km of sewers that were previously the responsibility of private households. This doubled the size of the company’s sewer network, to more than 30,000km, incorporating 1,861 sewage-pumping stations and 3,201 combined sewer overflows. Most of Dŵr Cymru’s income derives from households (within and outside Wales). The other main category is business customers, with Dŵr Cymru supplying potable and non-potable water. Total income was £727m in 2012-13. Table 1: Dŵr Cymru’s income 2012-131 Category £m Households 533.5 Non-households (Business and other sources) 184.2 Income from capital account2 9.2 Total 726.9 Notes: 1. These figures were based on estimates for the financial year 2012-13, hence will not be fully consistent with data as presented in the Annual Report. 2. This includes, for example, a contribution towards costs by developers for work undertaken by Dŵr Cymru on new building developments (new connections, diverting pipes etc). For accounting purposes these are offset from capital spending. Dŵr Cymru is in the midst of a five year capital spend programme of around £1.5bn. As part of this programme, Dŵr Cymru spent an estimated £329m on capital projects during 2012-13. In addition to this, a further £290m was spent on operating costs (see Table 2). 4 Water Works Welsh Economy The Regional Economic Impact of DCWW Research Unit Total Dŵr Cymru spending on direct labour, operating spend and infrastructure projects was an estimated £619m in 2012-13. The company paid nearly £100m in wages and salaries associated with direct employment of 2,664 (full time equivalent (fte) jobs, of which around 2,400 are in Wales). Total non-wage spending was £519m for 2012-13, and around 40% of this spending is retained in Wales, largely with the construction related sectors of the economy. Dŵr Cymru’s has around 2,100 suppliers, of which around half are based in Wales. Of the remainder, some have a Welsh presence (e.g. a sub-office) and others have no presence in Wales. Table 2: Dŵr Cymru’s spending and employment 2012-131 £m Operating spend2 289.8 Capital spend3 329.3 Total spending on direct labour, goods, services and infrastructure projects 619.2 of which Spending on salaries and wages4 99.8 Non-wage spending 519.3 Employment (ftes)5 2,664 Notes 1. These figures were based on estimates for the financial year 2012-13, hence will not be fully consistent with data as presented in the Annual Report. 2. Excluding financial/accounting transactions, largely depreciation 3. This does not sum to the capital account total, due to income received (see Table 1, note 2). 4. This is total/gross wages and salaries for Dŵr Cymru staff and for Dŵr Cymru Customer Services (DCCS). 5. Dŵr Cymru and DCCS, some of these employees live outside Wales. Economic impact on Wales? The report estimates that Dwr Cymru directly and indirectly (i.e. through supply chain and household effects) supports nearly £1.1bn of economic activity and around £360m of gross value added in the Welsh economy. Dŵr Cymru is, in regional terms, a billion pound business. The report reveals that every £1 of Dŵr Cymru’s spend generates more than 56p in the rest of the Welsh economy. While the company employs
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