Plan for Water outlines holistic approach to water management in England

The Plan for Water, published by the Department for Environment, Farming and Rural Affairs (Defra) earlier this month, sets out proposals to transform and integrate the water system in England, reduce sources of pollution and improve water supplies through higher investment, increased regulation and more effective enforcement.

One key priority outlined in the Plan for Water is tackling pollution. According to Defra, the plan sets out a “systematic, local, catchment-based approach” for using “both nature-based solutions and investment in infrastructure involving communities, water companies, and businesses”. The catchment-based approach will be underpinned by “streamlined policy and legal framework” that better integrates water and flood planning, and targets actions where they will deliver the greatest impact for water quality, flood management and nature recovery.

The plan also proposes to give the Environment Agency (EA) the power to issue greater penalties for water companies when they pollute. Ofwat, through the new powers of the 2021 Environment Act, will be empowered to link water company dividend pay-outs to environmental performance. Ofwat can also ensure that shareholders, rather than customers, pay for water and sewerage company executive bonuses “when these companies are unable to demonstrate their pay award decisions reflect performance expectations”. If water companies fail to comply with pollution targets, both Ofwat and the EA will be given more powers to impose larger penalties for polluters without needing to go to court. Penalties will be invested in a new Water Restoration Fund to “support more projects that improve the environment”.

Defra is currently consulting on penalty cap options, including the government’s preferred proposal to remove the cap to enable the EA to issue unlimited penalties. The government will also look to expand penalties to include a wider range of environmental offences and review permit charges with a view to funding more inspections with new oversight targets for the EA in the regulation of water companies.

Ministers plan to reinforce these changes with “a clear and streamlined policy and legal framework”, delivered by regulators and arm’s-length bodies “working smartly together”. They said the framework will “improve delivery and coordination at a catchment level with tailored long-term catchment plans that cover all water bodies – catchment plans will set out the key issues and priorities for action, including priorities identified in Local Nature Recovery Strategies”. There will also be increased funding for catchment groups and government wants to “unlock more green finance to manage water in an integrated way by removing barriers which limit investment in nature-based solutions”.

Defra said nature-based solutions can “deliver multiple benefits for the environment” and catchment-based decision making that is “supported by the right data” will be critical to identifying locations and facilitating “direct investment where it can deliver the most”. For nature-based solutions to work, it is “essential to bring together the different sources of funding available” from environmental land management schemes to ‘biodiversity net gain’ delivery. The Strategic Policy Statement to Ofwat, updated last year, also makes it clear that water companies should increase their use of nature-based solutions to improve the water environment.

Water companies will spend around £1.1 billion as part of a new package of investment to eliminate around 10,000 storm overflow discharges into rivers and beaches each year. At the same time, regulators will be able to require water companies to complete installation of event duration monitors on all storm overflows and ensure they deliver over 800 improvements to storm overflows throughout England by 2025.

The government plans to tighten permits issued to water companies for storm overflows and commission water companies to provide action plans on all permitted storm overflows across the country. It said it will also introduce an “enhanced and world-leading” monitoring programme. The programme will require water companies to “monitor and report, in near-real time, the impact that storm overflows and sewage treatment works have on water quality to inform swimmers and other recreational users of our rivers and beaches.”

In line with the National Infrastructure Commission’s findings that around 4bn litres of additional water a day will be needed in England by 2050, the government will focus on speeding up the delivery of water resources infrastructure while reducing leakage and improving water efficiency. To ensure efficient water supply, the government said it is “supporting Ofwat to ensure water companies invest in new, large-scale water supply infrastructure through the Regulators Alliance for Progressing Infrastructure Development”, which brings together the water regulators in a way intended to speed up processes. Water companies are investing £469 million between 2020 and 2025 to develop these water supply options.

The government said it will “streamline the planning framework for consenting nationally significant water resources infrastructure” through a national policy statement (NPS) for water resources infrastructure that sets out the needs and policy framework for relevant major infrastructure projects in England. This will, according to the Plan for Water, lead to “faster decision making and fewer delays for water resources projects”. Ministers will also assist large projects by “supporting the use of innovative financing arrangements” such as those used for the Thames Tideway Tunnel, and encourage water companies to use more competitive tendering.

Major infrastructure planning expert Robbie Owen of Pinsent Masons said: “The NPS is eagerly awaited and will comprise a critical set of planning policies against which applications for consent for each nationally significant water resources infrastructure project will have to be judged. A lot has changed since 2018, when the draft NPS was prepared, and so it will be vitally important for those companies taking these projects towards and through consenting to understand and engage with the key differences in the final NPS. They will also need to rise to the very real challenges the NPS will present in developing consentable projects in a sector which, with a handful of exceptions, has not had to deliver projects like these for well over a generation.”

Owen added that it would also be interesting to evaluate the NPS against the National Infrastructure Commission’s review of the nationally significant infrastructure projects planning regime generally. The Commission’s report is expected very soon, and to focus on NPSs and the effectiveness of the role they serve in the regime.

Water industry expert Gordon McCreath of Pinsent Masons said: “There is a fair amount of recycled content but there are also new measures to welcome in this Plan for Water. For example, recognition of the breadth of businesses and communities responsibility for pollution and its reduction, further steps to improve water efficiency – including crucial minimum product standards – and greater emphasis on the need for regulators to collaborate, on a catchment basis. However, there is also some potential cause for concern.”

McCreath said it is still unclear what the refreshed memorandum of understanding (MoU) between the EA and Ofwat will add, adding that the MoU should avoid ‘double jeopardy’ for water companies by restating a clear lead on pollution matters for the EA. He also questioned how amended catchment plans will interact with the current ongoing regional and water-company-specific resource planning, adding that “careful and focused design will be key”. 

“What precisely does the government have in mind to direct water companies to collaborate on via regional planning, under section 78 of the Environment Act, beyond the joint proposals that are already being progressed via the RAPID process? Any direction will need to take careful account of the fact that the plans are close to finalisation,” McCreath said.

He added: “Specifically in relation to the biggest issue of the day – storm water discharges – there are encouraging signs of a level-headed yet ambitious approach. Water companies and the EA need to agree challenging but achievable action plans, prioritised and programmed according to the principles of the previously issued Storm Overflows Reduction Plan.”

“Having said that, the political reaction to the Plan for Water only serves to re-emphasise that we are long way off a level-headed discourse on the most efficient and effective way to solve these problems. It will take years of careful messaging by the water industry around what is necessarily a joint enterprise involving a wide variety of sectors before that is achieved. For the moment, though, on this point, the Plan for Water is a pragmatic start,” McCreath added.