Our approach and short, medium and long-term planning horizons help us continue fulfilling our purpose in a sustainable and resilient way.

Our approach to planning

We take an integrated approach to everything we do. To help us create and prioritise our plans, we consider:

  • What the material issues are, to stakeholders and to our ability to create value;
  • Our assessment of principal risks and uncertainties;
  • Our environmental, social and governance (ESG) commitments; and
  • How our plans will fit with our Systems Thinking approach.

We undertake planning for long, medium and short-term horizons.

Long-term (25+ years) planning helps us identify what we need to do to address challenges and opportunities that may arise, so we can ensure resilience in order to continue to fulfil our purpose.

These long-term plans influence our medium-term (five years) planning, which sets out how we will deliver the commitments of our final determination for each regulatory period, as well as our non-regulatory activities, such as renewable energy.

Short-term (one year) planning enables us to monitor and measure progress against our five-year plans and regulatory targets. We retain flexibility in our one-year plans to meet our five-year targets in the most effective and efficient way as circumstances change.

Materiality and risk assessment

Our plans take into account the issues that have been identified as material, and our assessment of principal risks and uncertainties.

Read more about our material issues in Delivering our purpose and our risk management in Our risk management.

Monitoring performance

We continuously assess our performance against our plans using key performance indicators (KPIs) and other performance metrics of interest to our stakeholders.

Read more about how we measure our performance here.

Our planning horizons

  • Our business is very long term by nature and we must build resilience to ensure we can continue to provide this essential service.

  • Medium-term planning reflects our five-year regulatory periods, and aims to help us work towards our long-term plans.

  • We set annual targets but retain flexibility in these short-term targets to respond to challenges and meet our five-year goals in the most effective and efficient way possible.

  • 1 year

  • 5 years

  • 25+ years

2022

We will extend our integrated water supply network into West Cumbria

2025

We aim to lift 66,500 more customers out of water poverty through financial assistance

2025+

We will work to enable future national water trading

2030

We will work with others to achieve 'Blue Flag' beaches along our coastline

2045

We will install additional water meters to achieve coverage of around 75 per cent of households

2045

We aim to reduce leakage by over 40 per cent

Long-term planning (25+ years)

In order to maintain a reliable, high-quality service for customers far into the future, we have to look a long way ahead to anticipate and plan for the changes and core issues that are likely to impact on our activities.

This involves looking at a lot of current and predictive data from various sources, such as economic forecasts, expectations for population growth in certain areas, climate and weather predictions, legal and regulatory consultations and changes, as well as the age and condition of our assets, and keeping track of innovations and technological advancements. We review this information as part of our long-term planning and our risk management process.

Over the next 25+ years we have identified many challenges and opportunities that we are likely to be faced with, including:

  • Climate change;
  • Population growth;
  • The UK's exit from the European Union;
  • A more open, competitive market;
  • More stringent environmental regulations;
  • Developments in technology; and
  • Combining affordable bills with a modern, responsive service.

There is a section of our website dealing with our future plans, where we examine the challenges ahead and how we will focus our resources and talents in order to meet them.

This includes our 25-year Water Resources Management Plan (WRMP) covering the 2020–45 period, which was developed and published in 2019 following consultation with stakeholders, and our drought plan, which was published in 2018 with an amendment appendix in 2018/19. These long-term plans set out the investment needed to ensure we have sufficient water to continue supplying our customers, taking into account the potential impact of climate change, and the actions we will take to manage the risk of a drought.

We create long-term value for stakeholders by:

  • Systems Thinking and innovation;
  • Long-term planning and responding to challenges and opportunities, including management of water resources;
  • Sustainable catchment management;
  • Disciplined investment, based on a sustainable whole-life cost modelling approach, to ensure the resilience of our assets and network;
  • Investing in our employees to maintain a skilled, healthy and motivated workforce;
  • Close collaboration with suppliers; and
  • Maintaining a robust and appropriate mix of debt and equity financing.

Our five-year plans centre around regulatory targets. We set one-year targets but maintain flexibility in these to adapt to meet challenges that arise in the year.

Medium-term planning (5 years)

The majority of the group's activities sit within our regulated water and wastewater business, therefore our medium-term planning predominantly sets out how we will deliver against the final determination (FD) we receive from Ofwat for each five-year period.

It is important that our ambitions align with those of our regulator, therefore we carefully evaluate all consultation and methodology publications from Ofwat and engage with them to put forward our views and help ensure a balanced approach that creates value for all stakeholders.

The business plans we submit for each five-year period are designed to help us work towards our long-term plans, build and maintain resilience, and ultimately fulfil our purpose. We engage in extensive research to ensure the plans we put forward are robust and balanced, targeting the best overall outcomes for all our stakeholders.

Following scrutiny and challenge from Ofwat we receive the FD, which sets the price (in terms of total expenditure and customer bills), level of service, and incentive package that we must deliver over the five-year period, and an allowed return we can earn (expressed as a percentage of Regulatory Capital Value). When we receive the FD, we refine our company business plan for any changes, such as in allowed expenditure or performance level targets, and we must decide whether to accept the FD.

The improvements we delivered in operational performance, efficiency, bad debts and cash collection over the 2015–20 period helped us put forward efficient totex proposals in our business plan for 2020–25, and this was reflected in Ofwat's assessment in which we were awarded fast-track status and given one of the lowest cost challenges in the sector. This gave us time to get a flying start on our plans for 2020–25. We accepted the FD in January 2020 and are well prepared for this next period, having invested £100 million over 2019/20 to accelerate planned improvements and achieve a flying start.

Our strategy of delivering the best service to customers at the lowest sustainable cost in a responsible manner helps us create value for our stakeholders by delivering or outperforming the FD, as set out in Delivering our purpose. Since 2015 we have published an Annual Performance Report (APR), which reports our regulatory performance in a format that helps customers and other stakeholders understand it and compare it with other companies in the sector. This includes reporting of Return on Regulated Equity (RoRE), which is made up of the base allowed return and any outperformance/underperformance, on an annual and cumulative basis for each five-year period.

Short-term planning (1 year)

Short-term planning helps us work towards our medium and long-term goals and provides us with measurable targets so that we can continually monitor and assess our progress, which helps us ensure the long-term resilience and sustainability of our business.

Before the start of each financial year, we develop a business plan for that year, which is reviewed and approved by the board. This sets our annual targets, designed to help deliver further improvements in service delivery and efficiency, and to help move us towards achievement of our five-year goals. Performance against these annual targets determines annual bonuses for executive directors and employees right through the organisation, who are remunerated against the same bonus targets as the executive team.

To avoid short-term decision-making and ensure management is focused on the long-term performance of the company, as well as these annual targets executive directors are remunerated through long-term incentive plans that assess three-year performance, measured during the current period through total shareholder return, sustainable dividends and customer service.

See details of the 2019/20 annual bonus and vested long-term incentive plans for our executive directors in the Corporate governance report

The executive directors hold quarterly business review meetings with senior managers across the business to monitor and assess our performance against our annual targets, helping to ensure that we are on track to deliver our targets for the year, and longer term.

It is vital that we retain flexibility within this short-term planning so we can adapt to meet challenges that may arise during each year, and deliver high-quality and resilient services to customers in the most effective and cost-efficient way possible. This may involve bringing enhancements forward to deliver improvements for customers early, investing further into the business to maintain service, or delaying projects to occur later in the regulatory period in order to prioritise expenditure and allow our people to spend their time dealing with any unexpected challenges that arise.

The challenges presented by COVID-19 and its impacts in the latter part of this financial year and continuing into 2020/21 are a clear example of why this flexibility is crucial. We enacted our robust contingency plans, enabling us to quickly and efficiently move thousands of our people to home-working and introduce additional safeguarding measures for those that remained on sites or in the field, while maintaining reliable water and wastewater services that are critical for public health at this time.

What Matters

Securing resilience in our largest aqueduct


It took over ten years of planning and preparations to be able to drain and inspect the aqueduct.

The Haweswater Aqueduct (HA) is the most significant supply of potable water to Manchester and critical to other supply areas. Completed in the 1950s, the aqueduct is capable of transporting 500 million litres of potable water, by gravity alone, to customers in our region. Having served us well for over half a century, we needed to get inside it and carry out inspections of the structure.

It took over ten years of planning and preparations to keep customers supplied while the HA was temporarily drained for inspection and essential repairs. More than 400 workers delivering 45 separate projects ensured the network of supporting treatment works could take the strain while the HA was offline. This included building a brand new pipeline (the WestEast Link Main) to allow us to move water from North Wales into Manchester if needed. We started pre-construction work on this pipeline in 2006, and by 2010 it was operational. This was a crucial step in allowing us to drain and shut down the HA for the first time in its history in 2013 and again in 2016.

The inspections revealed a number of issues that could potentially lead to service failures in the future. We undertook an extensive risk analysis and mitigated those risks where we could by carrying out localised repairs, but it was clear that significant further investment is needed. We took the decision to immediately address one section of the existing aqueduct that was in more urgent need of attention. Construction is well underway and this section will be commissioned at the start of AMP7.

We established the Haweswater Aqueduct Resilience Programme (HARP), which will be one of the largest infrastructure projects in the UK, to manage the replacement of six separate tunnel sections of the aqueduct, totalling 50 kilometres in length and up to 3.5 metres in diameter. This will be delivered through a new delivery model, Direct Procurement for Customers (DPC), and this is the largest scheme being undertaken using this approach during AMP7 by any water company. Under this model we will appoint a third party to design, construct and finance the scheme under a long-term contract. We anticipate that this will allow more innovation from the market to deliver even better value to customers for this critical project.

Generating value for:


In its initial assessment of our business plan for 2020–25, Ofwat commended our approach to resilience as sector leading.

Our approach to resilience

Innovation is a critical enabler for resilience, and our Systems Thinking approach gives us an advantage. Sensors across our network and remote monitoring and control from the Integrated Control Centre at head office allow us to spot issues and respond proactively before customers are impacted and/or the issue becomes more serious. For example, spotting changes in pressure in the network to identify issues so that we can send a team out to repair them before customers are affected.

As well as our use of innovation, we have enhanced our approach to resilience through lessons learned from previous events. We introduced new incident management procedures with detailed contingency plans and a director-led incident review board in response to events in 2015 and 2016. Another development in our approach as a result of lessons learned was the introduction of Priority Services, which offers tailored support to the more vulnerable members of society in emergencies.

Operational resilience

The main risks to the resilience of our operational assets are the potential for failure of ageing infrastructure and the challenges presented by climate change and population growth forecasts.

Our 2019 Water Resources Management Plan considered a range of future challenges, including:

  • Extreme drought, freeze-thaw, and flooding;
  • Climate change (100 scenarios under the latest UK climate projections (UKCP09) at the time of creating the plan); and
  • Demand (population growth, economic trends and patterns of water use).

We assessed risks over the 2020–45 planning period and looked beyond this into the 2080s. We published two adaptation reports, in 2011 and 2015, which outline our holistic, integrated and partnership approach to a range of short and long-term challenges, including a changing climate.

Our plans for 2020–25 include engaging with suppliers on a Direct Procurement for Customers (DPC) project to address our biggest operational asset risk: the Haweswater Aqueduct.

Skills resilience

We have some key highly skilled roles, and our talent succession pipeline is critical to the seamless transfer of skills from one generation to another.

We have active graduate and apprenticeship programmes, we have partnered with Teach First, and we are an active participant in the STEM (science, technology, engineering and mathematics) programme encouraging the younger generation to study and pursue careers in these fields.

Corporate and financial resilience

As a public listed company, we consistently adhere to the highest levels of governance, accountability and transparency.

Long-term financial resilience starts with a strong and robust balance sheet and a prudent risk management approach, and we believe we are at the frontier in this respect. We have maintained a responsible level of gearing and well-controlled pension position for many years, and our prudent financial risk management is one of our competitive advantages.

What Matters

Building skills resilience


We train and develop our employees as well as recruiting for the future through active graduate and apprentice programmes.

Every year we offer dozens of the North West's brightest talents a place on one of our sought-after training schemes.

Investing in new talent is essential to ensure we have the skills and leaders we need for the future.

We're proud of our contribution to the wider economic health of our region. We're responsible for around 1 per cent of all jobs in the North West and every year help to launch successful careers with our award-winning apprenticeship and graduate schemes and our scheme for young people who are not in education, employment or training.

As part of our skills agenda, we deliver tens of thousands of training days for our staff and support hundreds more in further education.

This year, we added some new roles to our apprenticeship scheme and promoted the programme more widely with LearnLive.

We delivered two separate youth programmes in partnership with the Department for Work and Pensions, and our supply chain, to targeted communities in the North West.

We've supported more than 20 young people, who are not in education, employment or training, to become work ready. Our scheme provides under-represented communities with opportunities, aims to break down existing barriers and support participants into the workplace.

This year, we hosted five mentoring circles sessions in partnership with our recruitment provider Rullion. The sessions were targeted at unemployed 18–24 year olds who are black, Asian and minority ethnic (BAME), or living with disabilities or long-term health conditions.

Our graduate recruits have made an invaluable contribution to our COVID-19 incident team.

Generating value for: