Bid to allow water companies to tap planning gain cash

The chair of Parliament’s Environmental Audit Committee is launching a bid to allow water companies to receive planning gain cash from developers to help fund new infrastructure.

Giving evidence on Tuesday to the House of Lords Industry and Regulators Committee’s inquiry into Ofwat, Phillip Dunne MP revealed that he wants to amend the Levelling Up and Regeneration Bill to enable water companies to tap planning gain contributions.

Enabling the industry to use planning gain receipts, which are extracted from developers to compensate for the additional pressure new housing puts on existing services, would help fund the creation of segregated waste and surface water sewerage systems, Dunne said.

“At the moment, water companies are not able to be recipients of Communities Infrastructure Levy or section 106 funding, which developers are obliged to provide when consents are granted.

“Water companies are not even necessarily statutory consultees for development consents. They need to be put in a position where, if developers are making contributions, they should be able to make them contribute to that infrastructure.”

He said the levelling up bill, which the government tabled last month, also offers a potential opportunity to stop developers’ right to automatically connect to the nearest sewer, making it more likely that surface and waste water will be mixed.  Such a ban would bring England into line with Wales where the right to connect has already been stopped.

Dunne added that the proposed amendments to the bill are designed to persuade Michael Gove, secretary of state for levelling up, that developers must help pick up the cost of new water treatment facilities.

He said that while the former environment secretary’s Department of Levelling Up, Housing and Communities (DLUHC) has “significant ambitions” for building new housing, this must be delivered alongside investment in accompanying water treatment facilities.  DLUHC oversees planning issues.

Dunne said that around 38% of river pollution is caused by sewage outflows.

Annabelle Ong, director at Frontier Economics, told the same hearing that additional requirements proposed for the water industry will cost customers much more than the government has indicated so far.

A consultation paper on the government’s plan for reducing storm overflows, published in March this year, said efforts to tackle the problem would cost households up to £20 per annum between 2025 and 2030.

However, adding up all of the government’s mooted targets for the industry, such as those for net zero and cutting leakage, Ong said: “Very quickly, you could end up with situation where if you want to deliver all of these things, it is going to end up with much bigger impact on customers than £20.”