Policy paper

September 2021: Water factsheet (part 5)

Updated 1 April 2022

Headlines

1. This Environment Bill will put in place measures to tackle storm overflows and their adverse impact on the environment.
2. It will mean more collaboration between water companies to deliver the infrastructure we need to ensure we have clean and plentiful water now and for the decades to come.
3. It will ensure that we no longer compensate water users whose licence to remove water is amended or revoked to prevent environmental damage.
4. It will allow our monitoring and tackling of the most harmful substances in our water to keep pace with the latest scientific and technical knowledge.
5. And it will allow for the creation of new, or expansion of existing, internal drainage boards, local organisations to manage water levels, where this is needed and supported locally.

Context

We need to update aspects of legislation and regulation to ensure water and wastewater is managed as effectively as possible in the future, including ensuring we take water from the environment in a sustainable way to prevent environmental damage and protect our precious rivers and streams.

In the 25 Year Environment Plan, we set out our goals for clean and plentiful water and to reduce the risks of harm from environmental hazards. There is more to do to achieve our commitments to restore our waters to as close to a natural state as possible and to improve water and flood resilience.

We must therefore strengthen the resilience of our water and wastewater services by enhancing the water industry’s long-term planning regime; reforming the process for managing water taken from the environment, linking this more tightly to our 25 Year Environment Plan commitments; and modernising the regulation of water and sewerage companies to make it more flexible and transparent.

We must also support further the important work of internal drainage boards, enabling them to be created or expanded where there is local support to do so, and enabling future updates to water quality standards in light of the latest scientific evidence.

What does the Bill do?

Part 5 of the Environment Bill brings together measures to strengthen and update the existing regulatory and long-term planning framework for water, helping to reduce environmental risks. Our existing water management, water quality and water industry legislation is extensive. Some legislation, such as that covering water abstraction, has evolved over more than fifty years. In that time, our understanding of such activity and its potential impact on the environment has changed considerably, as has our understanding of the planning and regulatory processes we need to tackle emerging challenges like our changing climate.

At each stage of the water cycle, these measures complement non-legislative action planned or already underway, such as through our 2017 Abstraction Plan and our recent consultation on measures to reduce personal water use.

The measures in the Bill address eight elements of our stewardship of water in the environment:

• Water resources management plans: have existed since 1999. We are amending the current statutory water resources planning process to ensure there is more effective collaboration between water companies and other sectors to manage supply and demand, deliver resilience against droughts, and facilitate environmental improvement through a better understanding of environmental need. Drawing on lessons learnt over this period, the Bill will make the process more adaptable and help foster greater cross-sector collaboration and a better understanding of the needs of the environment and of all water users.

• Drainage and sewerage management: for the first time we are making drainage and sewerage management planning a statutory duty. Such planning, through which companies examine and investigate the capacity of their networks, will enable better risk-based assessments of current drainage and wastewater issues, impacts on the environment, and long-term planning, improving our resilience to extreme weather events and risks of sewer/ surface water flooding. Understanding of our long-term and current drainage and wastewater needs is already changing as extreme weather events occur more frequently. This planning will enable companies to target investment more effectively and provide customers with better information. Developing this planning will require engagement and involvement from other Flood Risk Management Authorities, through which joint solutions and approaches can be developed.

• Storm Overflows: Reducing the harm from discharges of storm overflows in England is a UK government priority. We are therefore requiring government to publish a statutory plan for the purpose of reducing discharges from storm overflows of sewerage undertakers whose area is wholly or mainly in England and for reducing the adverse impact of those discharges. Government is also required to report to Parliament on the progress towards implementing the plan with the first progress report within 3 years of the publication of the plan. The plan must be in place by 1 September 2022. Water companies and the Environment Agency are also required to report annually on storm overflow activity. In addition, amendments tabled at Lords Report will require water companies to monitor storm overflows and publish notification of the overflow occurring and ceasing within 1 hour of operation. They will also be required to monitor the water quality upstream and downstream of the discharge. In addition, we are introducing a requirement for government to publish a report by 1 September 2022 setting out the actions required to achieve elimination and the cost and benefits of doing so. This will inform future policy decisions made in this area.

• Water industry regulation: we are modernising the process for modifying water and sewerage company licence conditions enabling Ofwat to improve its regulation of water companies through a more modern licence modification process, like the process in place for other utilities. The current process can constrain responsiveness to government priorities; increase regulatory uncertainty for the industry; and create divergence between individual companies’ licence conditions. Bringing the process in line with other utility sectors will strengthen Ofwat’s ability to improve the way water companies operate. The measures will also improve the information Ofwat receives from those companies about their operations and update the process for serving documents under water industry legislation.

• Water abstraction: we are taking steps to further minimise the risk that water abstraction may damage the environment from which it is being taken. The measure will enable the revocation or variation of permanent abstraction licences, many dating back to the 1960s, without liability for compensation where the change is necessary to protect the environment or where the licence is consistently under-used. Some older abstraction licences do not take account of fluctuating water availability and may enable too much water to be taken from the environment. The Bill will address the environmental risks this poses by enabling the Environment Agency to vary or revoke licences without a liability for compensation from 1st January 2028, which will give licence holders and the Environment Agency at least 6 years to find alternative solutions before these powers come into force. We will set out in guidance that we expect the Environment Agency to seek to find collaborative solutions with licence holders which do not involve variation or revocation of their licences, such as habitat restoration initiatives, and mutually agreeable voluntary solutions wherever possible. We will also set out in guidance our expectation that the Environment Agency should only use these new powers as a last resort, after all other options have been exhausted.

• Water quality: we are providing powers to enable the Secretary of State to maintain the list of priority substances used to assess the chemical status of water bodies in line with the latest scientific and technical knowledge, now that previous powers to update it (section 2(2) European Communities Act 1972) have been revoked at the end of the transition period.

This measure will enable technical annexes referenced in the Water Environment (Water Framework Directive) (England and Wales) Regulations 2017 that outline the substances and standards used to assess the chemical status of water bodies to be updated to reflect the latest scientific and technical knowledge.

Similar legislation in Northern Ireland and the cross-border areas shared with Scotland may also be updated.

Similar powers are provided to the Welsh Ministers and Northern Ireland Department for their respective areas.

• Solway Tweed river basin district: we are taking powers that will allow future simplification of the way in which the cross-border Solway Tweed river basin district is administered by UK and Scottish Ministers and their respective agencies, in order to better reflect devolved competence and bring administrative efficiencies.

• Land drainage: we are addressing a technical barrier preventing existing internal drainage boards from expanding and new ones being established, where there is local support to do so. This is due to the issue of missing or incomplete data that currently prevents internal drainage boards from being created or expanded because they cannot update the calculations used to apportion their expenses. Current valuation calculations for internal drainage boards are set out in primary legislation from 1991. The Bill will amend the Land Drainage Act 1991 and The Environment (Wales) Act 2016 enabling certain valuation calculations to be stipulated (and updated) in secondary legislation, future-proofing the calculations as land drainage needs change.

Further information

Water resources

Next steps for water efficiency

We consulted on measures to reduce personal water use between July and October 2019. The majority of the measures we consulted on can be taken forward without the need for new primary legislation. The 1 July 2021 Written Ministerial Statement on reducing demand for water announced measures that government will take forward in response to the 2019 consultation. This includes plans to:

• Make regulations to introduce a mandatory water efficiency label to inform consumers and encourage the purchase of more water efficient products for both domestic and business use.
• Encourage local authorities to adopt the optional minimum building standard of 110 litres per person per day in all new builds where there is a clear local need, such as in water stressed areas.
• In 2022, develop a roadmap towards greater water efficiency in new developments and retrofits, including the exploration of revised building regulations and how the development of new technologies can contribute to meeting these standards. We will ensure that the underlying legislation can, where appropriate, accommodate any potential future expansion of rainwater harvesting, water re-use and storage options.

Water meters

The government will make no changes to existing rules around when people can be charged for their water use through water meters.

Water companies in seriously water stressed areas may implement wider water metering programmes where it is shown within their Water Resources Management Plans that there is customer support and it is cost effective to do so. Using the latest evidence, the Environment Agency has published its recommendation that additional areas in the South East and the Midlands should be designated as in ‘serious water stress’.

Metering programmes must nevertheless be justified by water companies and achieve customer support. This strikes the right balance between the need to protect water supplies and the importance of water companies reducing leakage before expanding the use of water meters. This protects unmetered family homes from unexpected large increases in bills.

Dealing with water pipe leaks

The government believes that water companies should take stronger action on leakage, which is why we have set a long-term target of 50% reduction by 2050. We are pleased that the water industry has committed to this target and has gone further in its ambition through the “Public Interest Commitment”, which commits to ramp up leakage reduction further by tripling the rate of reduction.

Additionally, in the 1 July 2021 Written Ministerial Statement, government has announced plans to ask water companies to develop a consistent approach to address leakage on customers’ own pipes, as, over the last 10 years around 25% of total leakage has been from customer supply pipes.

The government and regulators already have powers to monitor and take appropriate action on company leakage levels where this impacts water companies’ performance commitments and supply duties. Further, the water economic regulator, Ofwat, sets water companies targets for reducing leakage and gives financial rewards or imposes penalties according to their performance in meeting those targets, such as in August 2018 when Thames Water received a £55 million leakage performance penalty and a further fine.

Water abstraction

Abstraction reforms: effect on farmers

Farmers hold more abstraction licences than any other sector and so a higher number of farmers may be affected than other sectors. However, the government expects the Environment Agency to work with affected licence holders to find alternative solutions which balance the needs of the environment and the needs of farmers. We expect these powers to be used by the Environment Agency only after all other options have been exhausted.

Management and storage of water

The abstraction clauses in our Environment Bill complement the ambitions we set out in our Abstraction Plan 2017 and agri-environment schemes. One of our approaches to provide more sustainable access to water is to explore how we can better support management and storage of water at high flows, amongst other measures, in order to achieve our commitments in the 25 Year Environment Plan to ensure clean and plentiful water and reduce the risks of harm from environmental hazards.

The government is committed to supporting the long-term resilience of our agricultural sector. We supported on-farm reservoirs in 2017-18 Countryside Stewardship Grants, providing up to 40% of the capital cost. However, we recognise that further improvements to water management are needed, and the important role farmers will play in this. Through our Abstraction Plan 2017, we are developing a stronger catchment focus – bringing together the Environment Agency, abstractors and catchment groups to develop local solutions to existing pressures and to prepare for the future. This includes a project to improve natural processes to store more water, and slow down run-off rates. One of the public goods that the three new Environmental Land Management schemes will incentivise delivery of is the reduction in and protection from environmental hazards. To deliver this public good, the schemes could pay farmers and land managers for land management practices that can help to prevent, or reduce the risk and impacts of, flooding. Further details of the three new Environmental Land Management schemes were set out in the Agricultural Transition Plan update, and we will continue to publish updates as the schemes develop before their full roll out in 2024.

Abstraction reforms: implementation timelines

These measures will only apply to licence variations or revocations made on or after 1 January 2028. This is for four key reasons. It will give time for the Environment Agency to work with potentially affected licence holders to resolve situations without need for the new measures; allow time for the catchment-based approach to water resources to embed and produce results; allow for government to implement the transposition of abstraction licensing into the Environmental Permitting Regulations regime (EPR); and allow the Environment Agency to license previously exempt abstractions.

Abstraction reforms: licence variation or revocation process

Defra would expect that these new powers will only be used after all other solutions have been exhausted: partly for this reason, they will not be available until 1st January 2028. We expect the Environment Agency to work closely with the affected licence holder and on a case by case basis; provide data and evidence as to why a licence needs to be varied or revoked to protect the environment; and consider the type of abstraction when making decisions.

The Environment Agency should take a risk-based approach before varying or revoking a licence. For example, when abstraction water is used and then returned to the environment near the abstraction point, this is low risk for the environment. Additionally, before varying or revoking a licence the Environment Agency would need to consider what an abstraction is being used for. For example, an abstraction may support another water body, and preventing that abstraction could damage the environmental health of the recipient water body.

For licences which are consistently underused the Environment Agency will only seek to vary a licence using these new powers if the licence holder has abstracted 75% or less of the annual licensed volume in each of the years in the previous 12-year period and the Secretary of State is satisfied that the variation would not reduce the quantity of water the holder is authorised to abstract to a level below that which the licence holder reasonably requires.

We recognise fully that there are a number of scenarios where it is appropriate for headroom to be safeguarded, for example to manage higher demands during dry weather and droughts and planned future business growth. The Environment Agency will take justifiable needs into account in cases of under-use and will assess licences on a case-by-case basis. The Environment Agency would need to consider business need for maintaining the underused portion, the context of the abstraction and what action is proportionate. If there is a justifiable reason for maintaining an underused portion the Environment Agency will not look to vary the licence, even if the underuse has exceeded the 12-year period.

Drainage and sewerage management

Reducing the incidence of untreated sewage entering rivers

When heavy rainfall events occur, forcing a large amount of additional water into the wastewater system, the capacity of sewer pipes can be exceeded. This can force sewerage companies to discharge diluted, but untreated wastewater out to sea or into a river to reduce the risk of it backing up causing sewer flooding of homes and land.

The government plan for England on storm overflows will set out how the frequency and harm of these storm overflows will be reduced. The cost of eliminating storm overflows would be considerable, and the government report on elimination will set out what actions would be needed to achieve elimination and the costs and benefits of doing so.

Statutory drainage and sewerage planning will also help to assess the risks that some sewerage undertaker assets may pose to the environment and deliver more actions needed to address such risks.

Government will also be taking non-legislative action, to review the case for implementation of Schedule 3 to the Flood and Water Management Act 2010. The Schedule would put in place statutory standards for the construction of Sustainable Drainage Systems (SuDS) on new developments and make the connection of surface water to foul sewer conditional on the approval of a developer’s SuDS system. The review will include consideration of how SuDS reduces pressure on combined sewers and storm overflows by separating out rainfall flows on new developments.

Internal Drainage Boards

There are currently 112 internal drainage boards in England. All play an important role in managing water levels, reducing flood risk, supporting local growth and protecting critical infrastructure in low-lying areas across parts of England. Between them, they operate and maintain some 22,000 kilometres of watercourse, including associated sluices and weirs, and over 500 pumping stations. This helps manage water levels to assist the local agriculture sector and reduce the flood risk to local communities.

Costs of updated valuation calculations

It is a local choice where a new internal drainage board is created or an existing one expanded. Internal drainage boards undertake important work that benefits the communities they serve. This measure may affect how some boards apportion their costs, but it does not determine the amount each needs to raise. New and expanding boards must use the updated valuation calculations and the remainder can choose to adopt the new valuation calculation. This is an enabling measure, and in the immediate term the government does not plan to require all internal drainage boards to adopt the changes.

Effect of these measures on consumer bills

The measures in the Bill will help improve long-term planning, which will feed into better water company business planning. Ofwat’s Price Review process for water company business planning is the key mechanism for delivering value for money for domestic customers. We expect the measures in the Bill to help continue the progress made in the current Price Review to deliver more service improvements for customers at a fair price.