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Making Ofwat responsible for ensuring economic growth, could pose risks to the freshwater environment, a collective of NGOs has warned.
The implementation of the growth duty in its present iteration could make it more difficult for Ofwat to take enforcement action against companies that cause pollution, Wildlife and Countryside Link said.
Government said the reform will “facilitate even more pro-growth activity”, which caused concern for the environmental group. The coalition of 83 English environmental organisations, said the change could give regulated companies a new way to challenge Ofwat.
“It could have a chilling effect on Ofwat enforcement action, as it would allow water companies to challenge enforcement as the imposition of undue economic costs, or even point to the harm action would cause to public confidence in their business,” the group said.
It noted the record four appeals of business plan final determinations in 2020 as evidence that water companies “have not been shy about using every available route to challenge Ofwat in the past”.
It said the growth duty and its guidance “provides water companies with a new tool to push back against robust regulatory action”, which has repeatedly come under fire for lacking powers to take action.
Wildlife and Countryside Link said current guidance on the growth duty suggested enforcement action could be construed as hindering the economic growth of potentially offending companies.
It recommended that parliamentarians press for withdrawal of the forthcoming Statutory Instrument or for the draft guidance to be significantly amended.
The growth duty came into force in other regulated sectors in 2017. Government said its extension to Ofwat, Ofgem and Ofcom will bring these sectors in line with others that are regulated.
Regulators will have to ensure that all decisions made do not impede economic growth within the water and energy sectors.
The reforms will be implemented into both regulatory frameworks as well as that of Ofcom, taking effect from April.
It brings the three economic regulators in line with 40 other bodies as part of wider reforms by government to tighten up regulation.
The changes were first tabled in July last year before being committed to within the Autumn Statement.
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