Lord Smith: The man who hopes his flow of ideas will save us from drought

Rain finally fell at the weekend but much of the UK remains parched. Lord Smith, chairman of the Environment Agency, tells Michael McCarthy how moving water around is the answer

Sooner or later, they'll be calling him the Drought Tsar. And Lord Smith of Finsbury, the chairman of the Environment Agency, has a clear idea of what should be done about the chronic water shortage which is already affecting southern England, and may get progressively worse despite occasional days of rainfall.

Water companies should build interconnecting links so that they can share water easily, and move it around the country in drought periods, he feels.

Such a system would be as effective as the expensive national water grid which is sometimes proposed to deal with Britain's north-south rainfall imbalance, but far quicker to put in place, and far less costly. Lord Smith, who, as Chris Smith MP, was Labour's Culture Secretary in Tony Blair's first administration from 1997 to 2001, is somebody we will be hearing a lot more from, now that south-east England and much of the Midlands are officially in drought, after two of the driest winters on record, and with no sign of the heavens opening to replenish reservoirs. As the environmental regulator of the water industry, he will be the public face of drought control if an emergency arises during the summer.

There are fears the current drought may equal or exceed that of 1976, which was so severe that some consumers had to take water supplies from standpipes.

Lord Smith does not think it will get that bad. "The water companies have learned a lot of lessons over the last 10 years, and I'm pretty certain we'll be able to keep domestic water supplies running," he says. But he is concerned about the impact of serious water shortages on agriculture and industry, and in particular on the level of flow in rivers.

Furthermore, he is aware that, with climate change, drought is likely to be encountered with increasing frequency in Britain, so a long-term solution is needed to our highly-differentiated precipitation pattern, which involves rainfall being plentiful in the north and west, but often in short supply in the south and east, where water-dependent arable farming is concentrated.

In the past, the solution mooted has been a national grid for water, like the national grid for electricity. But this, he says, would not only be logistically difficult but hugely expensive. "We need not a national grid, but to build interconnectors between different water companies and water regions, so that water can be shared more readily," he says. "I would like all water companies to start talking to each other, to start talking to their neighbours, from now on, so that interconnection can be part of the next capital spending round."

The water industry's capital spending is agreed for five-year periods with the Government and the economic regulator, Ofwat, with prices decided at the same time; discussions for the next round, to be set out by 2014, and run from 2015 to 2020, are about to begin.

An interconnection system would cost money, resulting in higher water bills. "But if the choice is building a bunch of new reservoirs, or paying a lot more to abstract more water, then sharing water from a neighbouring company may be a lot more cost-effective," Lord Smith says.

At the moment, he is hoping for rain. Yet if the heavens unexpectedly open, as they did in May 2007 in downpours which presaged Britain's wettest-ever summer and a period of disastrous flooding, Lord Smith the Drought Tsar will be Lord Smith the Floods Tsar.

Flood control occupies the time of nearly half of the Environment Agency's 11,500 staff, and half its £1bn budget, and the chairman is aware of the Government's recent Climate Change Risk Assessment, which pinpointed flooding as the biggest threat to Britain posed by global warming. But the two may even combine.

"One of the problems is that weather patterns will become more extreme, and so it won't just be drought in one part of the country and floods in another; there will almost certainly be a pattern of drought and floods in the same part of the country in quite a number of instances."

He has been familiar with problems of climate change for two decades, for Chris Smith, as he was during 22 years as MP for Islington South and Finsbury, was Labour's first real environmental politician. Elected in 1992 to the Shadow Cabinet of mentor John Smith, Labour's leader who died of a heart attack in 1994, to be succeeded by Tony Blair, he asked for the environment portfolio and produced the party's first green policy document, In Trust for Tomorrow, which talked of carbon emission cuts, as well as traditional concerns, such as the Right to Roam.

His interest in the environment was sparked by a love of hill-walking in Scotland, where he spent the second half of his childhood (in Edinburgh) after being born in north London, and by a passion for Wordsworth and Romantic poets: he wrote a PhD thesis on Wordsworth and Coleridge at Cambridge and could have been an academic if he had not entered Parliament in 1983 after five years on Islington Council.

With Labour in power in 1997 he became Secretary of State for Culture, Media and Sport. He brought back free admission to national museums and galleries and founded the UK Film Council. But Tony Blair returned him to the back benches in 2001 (they were not mutual admirers) and he played a role in opposing the Iraq War.

He has a strong claim to fame as Labour's, and Britain's, first openly gay politician, telling a rally in Rugby in November 1984: "My name's Chris Smith, I'm the Labour MP for Islington South and Finsbury, and I'm gay." It made him, said the gay former Tory MP Matthew Parris, "a hero of our time".

Cross-party appreciation is not uncommon for a man reappointed last July for another three-year term at the Environment Agency by a Tory-run Environment Department. At 60, he might be a Labour grandee, except that there is nothing grand about him – his sharp mind is leavened with humour – and for the fact he sits on the cross-benches in the Lords, to be impartial.

But he is a key name in the list of Britain's Great and Good: he chairs the Advertising Standards Authority, the Donmar Warehouse Theatre, and also an institution that is very close to his heart, the Wordsworth Trust.

Lord Smith of Finsbury: a life in brief

Born: 24 July 1951, north London

Education: George Watson's College, Edinburgh; University of Cambridge (First-class honours degree in English, 1972; PhD, 1975); Harvard University (Kennedy Scholar, 1975-76).

Career: Member, Islington Council, 1978-83; MP for Islington South and Finsbury, 1983-2005. Member of Shadow Treasury team of John Smith, Shadow Chancellor, 1987-92; Shadow Environment Secretary, 1992-94, subsequently Shadow Health Secretary. Secretary of State for Culture, Media and Sport, 1997-2001.

Peerage: Made Lord Smith of Finsbury in 2005.

Current offices: Chair of the Environment Agency, Advertising Standards Authority, Donmar Warehouse Theatre and the Wordsworth Trust.