Water policy reforms to deliver ambitious environmental agenda

The Government and water regulators (Environment Agency and Ofwat) have today (22 July) set out an ambitious programme of reform to build back greener from the pandemic through the review of the Water Industry National Environment Programme (WINEP).

The WINEP, which sets out the actions water companies need to undertake to improve the environment, has delivered significant benefits to water quality, biodiversity and water resources over the last 30 years, including increasing the proportion of “excellent” bathing waters from less than a third to over two thirds.

In recent years, however, improvements to the overall quality of the water environment have plateaued. The challenges of climate change and biodiversity, as well as population growth and emerging chemical contaminants, are further offsetting progress.

New reforms set out the ambition – shared by the Government and regulators – for a water sector that delivers for customers, the environment and wider society. They reflect the Government’s aims for clean and plentiful water in the 25 Year Environment Plan which will be enshrined in law in the Environment Bill, better protecting the water environment we all rely on.

The Government’s new draft Strategic Policy Statement (SPS) for Ofwat has also been published today for consultation with industry and stakeholders, outlining the key priorities for the independent regulator to deliver on, including:

  • Protecting and enhancing the environment – Better protecting chalk streams and other rare habitats, and delivering the ambition of the 25 Year Environment Plan, with a focus on improving water quality by promoting nature and catchment-based solutions. Continuing to work on water companies’ day-to-day environmental performance, with a focus on meeting government’s ambitions to significantly reduce the frequency and volume of sewage discharges from storm overflows.
  • A resilient water sector – Challenging water companies to plan strategically to tackle long term risks of drought, flooding, and pollution. Continuing to work with companies to drive down leakage and improve water efficiency for the benefit of current and future customers.
  • Serving and protecting customers – Driving companies to treat all customers fairly, including through their complaints processes and wider customer service. Continuing to press for improved support for customers requiring extra help, both financial and non-financial.
  • Driving markets to deliver to customers – Considering where markets can play a role in driving innovation, efficiencies, and promote longer term sustainable investment across the sector.

Environment Minister Rebecca Pow said:

We need water companies to take much more robust and ambitious action to improve the water environment and protect the nation’s water supplies in response to the risks posed by climate change. That is why I am clearly setting out the Government’s expectations through our strategic statement to Ofwat.

Water companies have a holistic role in delivering improvements to our environment – through delivering greater flood resilience, protecting water resources and addressing water quality issues. We want to see them deliver on this in the round through work to tackle climate change.

Our priorities for Ofwat build on the work I have already undertaken to reduce harm from storm overflows and sets a clear expectation for water companies to significantly reduce the frequency and volume of sewage discharges from storm overflows.

The Government and water regulators including Ofwat and the EA have also undertaken a review of the WINEP. Water company actions driven by this programme have the potential to greatly enhance the natural environment, ultimately helping to protect the health of rivers and waterways in England and support sustainable growth. Proposed changes include:

  • Moving to a programme that is outcome rather than output focused – this means water companies will be expected to deliver wider environmental outcomes that go beyond their statutory duties, such as contributing to habitat restoration and sustainable water management. This shift reflects the changing challenges of the environment, and will enable companies to deliver environmental improvements in a more flexible and efficient way.
  • Allowing a more flexible planning approach, where measures will have up to a 25-year scope for delivery, with an update taking place every five years to account for new information and technologies.
  • Using more catchment and nature-based solutions – such as establishing wetlands for water treatment – in light of growing recognition that these offer lower-carbon solutions and wider benefits for biodiversity.
  • Drawing more on the expertise and resources of other catchment partners, such as wildlife trusts, landowners and local authorities which are trying to achieve the same environmental improvements as water companies. This means working on co-development, co-delivery and co-funding of environmental solutions.
  • Greater role for the water sector in developing the WINEP so water companies work in closer partnership with the Environment Agency and Natural England to develop the WINEP for their area to give more effective and innovative solutions.

Emma Howard Boyd, Chair of the Environment Agency, said:

The water sector has expertise in nature-based solutions, engineering and raising finance. Over 30 years, the Water Industry National Environment Programme (WINEP) has driven £25 billion of investment in the water environment and some huge improvements, notably to bathing waters. The Environment Agency urges water companies to move further and faster in delivering rivers that are clean and support recreation. Now is the time for innovation and ambition to deliver a low carbon high quality water environment that promotes nature.

Ultimately the country will get the environment it is prepared to pay for. We want water companies to use the new WINEP to test themselves and ensure they are delivering clean and plentiful water in a nature positive future.

The ambitious environmental agenda set out in both consultations today follows Ofwat’s approval for a package of £2.8 billion investment from water companies as part of their green recovery plans to build back greener from the pandemic.

Ofwat’s interim Chief Executive David Black said:

The WINEP has delivered great improvements by investing billions of pounds to deliver long-term benefits for the environment, customers and communities across England.

Given the significant challenges we face as a sector and as society, including on river quality, net zero, biodiversity and flood resilience, we need to ensure the WINEP evolves to best meet these challenges. We must be ambitious and flexible in our approach, focusing on the outcomes we want to see and achieving the greatest value for every pound invested. We want to facilitate greater use of nature-based solutions, as well as more collaborative and partnership working to help us deliver on shared ambitions.

In that spirit, I encourage all interested parties to pitch in their views at this consultation stage to help us shape the programme so it delivers maximum benefit for society and the environment.

Water UK Chief Executive Christine McGourty said:

Water is a precious natural resource, and over the coming decades, society will need water companies and policy makers to work together to deliver the best possible outcomes for our environment, customers and communities. Water companies are already playing a leading role and are investing more than £5 billion on environmental improvements over the next few years as well £2.7 billion on Green Recovery projects.

However, we know there is much more to do and the WINEP and SPS represent an incredibly important opportunity to set in train the ambitious reforms we need to see in the next price review and beyond. We look forward to working with government and regulators to ensure the final documents provide the best possible foundation for water companies to deliver the investment needed to help meet the significant environmental challenges ahead, while working towards a shared vision for the future.

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