Press Release: Response to Defra Strategic Policy Statement for Ofwat
Today Defra will lay out their new draft strategic policy statement for Ofwat, which will come into effect if it lays in Parliament for 40 days without objection.
The Rivers Trust welcomes the prioritisation of the environment for the first time in Defra’s latest Strategic Policy Statement for Ofwat.
For too long, the regulator has been too narrowly focused on keeping costs down in the short-term, with little regard for long-term impacts on the environment and the legacy for future generations.
This new emphasis on long-term thinking, innovation, and partnership working to drive improvements across water catchments gives hope that the water sector will play a stronger role in environmental improvement and nature recovery.
However, we have concerns that the SPS is not yet ambitious enough, and still lacks clarity on how Ofwat should regulate a fundamental shift in industry trade-offs.
Working across sectors to maximise co-funding and green finance opportunities will be vital to achieving this strategy. If the industry engages with environmental experts such as Rivers Trusts to deliver ecosystem services, we can create multiple benefits for people and wildlife including increased flood resilience, protection for priority habitats such as chalk streams, and cleaner, more plentiful water.
Mark Lloyd, CEO of The Rivers Trust, said: “We welcome that the protection and enhancement of the environment is now at the top of the list of OFWAT’s priorities. This will not be achieved by simply spending more money on traditional approaches by the water companies alone. We also therefore welcome the emphasis in the SPS on nature-based solutions and catchment-based partnerships with other sectors, which will deliver wider benefits to society and best value to customers.
“To make this a reality, we need better data to drive consensus about the pressures on the environment. We need a clear governance structure to set priorities and identify opportunities at a local level which can then bring together multiple streams of funding at a regional and national scale. This statement is encouraging, but the objectives will only become a reality if the government joins up the many plans into a more coherent and focussed collective sense of purpose.”
Rob Collins, Director of Science and Policy at the Rivers Trust, said: “The expectation of greater transparency and data sharing by water industry is to be welcomed but clarity is required as to the mechanisms for achieving that. Furthermore, successfully achieving these strategic priorities requires Ofwat to establish timelines and quantifiable targets against which progress can be measured.”
Christine Colvin, Director for Partnerships and Communications, said “This represents a very fundamental shift in how Ofwat will regulate the trade-offs made in the sector. It is clear that pollution, particularly from sewage, will no longer be tolerated. However, some of the language is a concern. There is too much focus on Ofwat ‘challenging’, ‘encouraging’, and ‘pushing’ the water sector for change. Ofwat is the regulator, not a cheerleader for water companies. We need more specifics on enforceable mechanisms.”
Amina Aboobakar, Commercial Director for The Rivers Trust, said: “Overall, this is an improvement on the previous version. We have a clearer ambition for progressive reductions in storm overflows, it asks for more accountability and more data sharing across stakeholders (with the mechanisms yet to be determined), more focus on long-term planning, better connection between environmental and regulatory processes, achieving zero serious pollution incidents by 2030, and more inclusion of nature-based solutions and greener approaches.”
“However, it needs to be more ambitious. It fails to specify the need for transformational change, provides no direct guidance around investment gaps in failing/ageing infrastructure and how this is to be addressed through the Price Review, and for the need for water companies to drive more environmental resilience.”
The key specific points that have fallen short of our response in the consultation period (which we jointly submitted under the Blueprint NGO coalition of Wildlife and Countryside Link) include:
- Climate change: although it’s great to see that protecting and enhancing the environment and delivering a resilient water sector are top priorities, we had asked in our response for climate change adaptation and mitigation to be included as a strategic priority in their own right. However, there is no explicit mention of climate change or the climate emergency as a top strategic priority.
- Net zero: we have asked for a much clearer indication of what the Government and Ofwat expect the sector to deliver to meet its short and longer-term priorities, including by specifying outcomes, as for example, challenging the sector to go beyond its “net zero by 2030” commitment, by taking action on scope 1,2 and 3 emissions, and to play a leading role in helping wider society reduce emissions (4-5% of UK emissions are from use of product the sector sells). This would require a more transformational way of working towards a less carbon intensive and more circular economy. The expectation on the current SPS is for the industry to just meet its 2030 ambition.
- Storm overflows: the language around storm overflow reduction is clearer in this version of the SPS, however, it does not go far enough in specifically prioritising the reduction of overflows that do most harm or impact the most sensitive and highest amenity sites, which we had asked for in our response.
- Per capita consumption: the SPS expects Ofwat to “hold companies to account for their contribution towards reducing personal water consumption to 110 litres of water per head per day (l/h/d) by 2050”. In our response Blueprint was calling for a more ambitious target, for companies to adopt a target of 100 l/p/d by 2050 – a level of consumption already achieved across many European countries.
- Biodiversity: we asked for target calling for 20% biodiversity net gain, but this hasn’t been included.
- Markets: we welcome the use of markets to drive ecosystem services and nature-based solutions, but in the consultation response we challenged the inclusion of “Use markets to deliver for customers” as a key strategic priority. Markets should be enablers of the other priorities and not a strategic priority in their own right.
- Partnership working: in order to maximise market opportunities, especially for ecosystem services and nature-based solutions, and to deliver value for customers, share data in a more transparent way, we need more ambition around partnership working, which is yet another key message missing in the current document e.g. competition through markets isn’t always the right way to drive more customer value and environmental gain, especially when considering co-funding and collaborative opportunities, so there must be a bigger ambition for partnership working (“encourage water cos to work in partnership” isn’t strong enough).
- Nature-based solutions: in our response we wanted more ambition around water companies adopting NBS as a matter of course, such as in protecting raw water quality and reducing flood risk to assets and customers, and to be able to provide good evidence where these solutions cannot be incorporated. And although the SPS now expects to see an increase in NBS, the expectation is still around “where appropriate”, which is still not ambitious or specific enough in providing the mechanisms by which this can be achieved.