Water sector has to fight back against pollution blame game

Although water companies risk bearing the brunt of public anger over sewage spills, the government has shown little appetite for allowing them the level of investment needed to tackle the issue effectively, Utility Week has been told. Ministers must now “take off the shackles” following the passage of the long-awaited Environment Act.

It seems everyone now has an opinion on the use of Combined Sewer Overflows (CSOs) – from politicians to former pop stars.

The emotive issue of pollution in our waterways has become the prism through which the slow passage of the Environment Bill has been filtered.

However, there are concerns that with the legislation now passed into law, there will be an expectation of a silver bullet for a fiendishly difficult, and expensive, problem to solve.

Luke Pollard, shadow environment minister, insists we are still at the heart of the campaign and now is the time to for the water industry to make its voice heard.

“Water companies need to be louder in making the case, otherwise they will be the recipients of public anger because of bad decisions by ministers. It’s time for the sector to step up and have its voice heard that it wants to do more but needs the government to act. But that’s not what I’m hearing at the moment.”

As it stands, Pollard believes the legislation will not deliver the changes that are needed at the speed they are needed: “The rest of government won’t allow the sector to fund the work that is needed. It’s a complete trap, which is why the clarity of a timetable and complete plan are needed.”

He says the industry must “put its head above the parapet” and assuage customer frustration that action is not being seen to be taken immediately.

The nature of price review cycles mean spending and infrastructure investments are locked in for the current asset management period (AMP7) with little room to spend on sewage systems until the following price review.

“When bills land on consumers’ doorsteps people will be angry to pay money when sewage is still in rivers,” Pollard says. “It’s a problem that must be fixed so let’s get companies to be part of the solution, not part of the problem.”

He suggests a framework of policy and legislation that “takes the handcuffs off the water industry” and allows it to “oppose sewage, invest in nature and biodiversity and keep water bills under control”.

Pollard, who formerly worked in the industry, believes the collective minds and willingness of the sector to improve will work towards a better solution: “There is a way through this that’s going to be a lot better than the stinking mess we are seeing with sewage where promises made by ministers cannot be delivered and we are only going to see public demand for bolder action increase.”

He says without that timetable and funding it will look to the public that government and water companies are burying their heads in the sand: “It’s time for ministers to take off the shackles and let water companies get on and close those raw sewage outlets with a timetable and at what cost it will happen.”

“Water companies want to do more to stop raw sewage outflows and deal with the wider sewage estate including plants that are beyond capacity or routinely discharge into rivers and seas outside of extreme weather events,” he adds.

“We all know that with greater investment there is more return to the companies via the regulated asset model. There is a real urgency and desire to do it from the public, water companies and parliament. The only people stopping them seem to be Defra and Ofwat who have locked themselves into this dirty trap where they can’t do anything for many years but have to give the impression that they are.”

Defra is due to publish its strategic policy statement (SPS) to Ofwat in the new year, following a consultation launched in July on the draft version. Pollard says this is an opportunity to clearly state the direction for the next five years and send a message to the sector about where its pipeline of investment should be.

“When they voted against ending raw sewage discharges, many in the public thought that meant a green light to continue discharging. The idea of ‘progressive reductions’ is welcome, but you need a timetable to make that a genuine commitment. In the next 10 years will that be 1%, 10%, 90%?”

He calls for transparency with the public about what is going to change and by when. An end to discharges can’t happen overnight, but a realistic timetable can be set for changes that can take place during AMP7. Companies could then build up an understanding of what is required through SPS guidance and changes in investment strategies to get an accelerated pace at the next price review period.

“My fear is that water companies will be under substantial scrutiny – because of underinvestment – to close outlets they aren’t authorised to do so for many years because of spending. In this situation government, the industry or the environment will not come out smelling of roses.”

Making it all add up

As well as the timeframe, Pollard and other MPs question the costs of ending the use of CSOs, with estimates ranging from millions to hundreds of billions of pounds.

“Government has gotten itself in a very curious trap by suggesting ending raw sewage discharges could cost up to £660 billion and – to quote the minister – lead to raw sewage backing up in people’s homes, but at the same time have argued that £144 million being spent on closing raw sewage outlets in this pricing period would be sufficient to sort the problem,” Pollard remarks. “Either tinkering around the edges is sufficient or it’s going to cost huge amounts but it can’t be both.”

Water UK previously estimated the cost to be close to £100 billion to eliminate combined sewer systems.

Pollard says: “I’m inclined to believe the water companies who say they can make substantial changes in the amount of raw sewage discharge for figures considerably lower than the amount quoted by ministers, but they have to be able to do that in their business plans.

“If the figures being used by a minister range from £100 million to hundreds of billions then it’s very clear they have not understood the question. What is the cost versus what is the task being asked?”

We’ve only just begun

Richard Smith, partner at Sandstone Law, a practice which specialises in environmental, commercial property and development law tells Utility Week it is impossible to know what the Environment Act means in practice until “a huge amount” of secondary legislation is also passed.

“I see the Act as a start because there are some broad policy issues which are now incorporated into law, which is good to get that far, but they are extremely wide and make provision for the secretary of state to make provisions for how X Y and Z will work in practice,” Smith says.

“The water section is very much about plans and reductions but granting powers to ministers to do things to gradually improve the situation. Like COP26, it’s all good broad stuff but it depends on what happens next.”

The Act, Smith says, is as seismic as the Environmental Protection Act was in 1990, which saw laws and regulations come from it in the next five to ten years. “We won’t know a lot about what it will achieve until we know about the laws and regulations that might come out of this framework and the time scales for those.”

The wording of such an important framework is crucial. The government resisted a more stringent legal obligation proposed by the Duke of Wellington for water companies to “take all reasonable steps to eliminate discharges”, watering it down to a requirement to achieve a “progressive reduction” of discharges.

“The word ‘reasonable’ is vague but in the legal sense means you have to do quite a lot – not spend every penny but expectations are high to achieve that end. Changing that to ‘progressive reduction’ of discharges is a very different type of wording. The fight was all about to what extend will water companies have a legal obligation to do this and how soon; how much money will they need to put into this.”

The devil will be in the detail of the regulations that are attached to this, for which there is no timetable. Government will have far more control over the regulations that are passed through parliament far quicker than a bill.

With such a wide-ranging piece of law there will be a huge number of smaller secondary laws coming through which will contain the actual legal requirements to adhere to. “There’s much less opportunity for the opposition to fight regulations. There is no time to debate the hundreds and thousands of regulations that must be passed,” Smith explains.

Keeping sewage on the political agenda

The framework, as it was passed, drew support from the MP who has become the political face of sewage this year, Philip Dunne, whose private members bill was incorporated into the Environment Bill to bring CSOs and river health up the political agenda.

Dunne tells Utility Week he was pleased with the scrutiny the bill received on an issue that will not vanish.

“There will be a lot more focus on this issue because the public demands it,” Dunne says. “It needs to get done and won’t happen overnight, but the starting point is to understand what water companies are contributing to water pollution. They’re not the only people who contribute but they are a big one.”

He says the monitoring and data requirements included in the Environment Act will be essential for the Environment Agency (EA) to effectively regulate wastewater companies.

“The Environment Agency must understand what we’ve been told by campaigners that water companies have been hiding behind poor provision of data since self-reporting began so a blind eye has been turned to poor behaviour.”

As chair of the Environmental Audit Committee (EAC), Dunne has recommended that the EA should receive more capacity to do its job properly as part of the spending review. He says this will depend on Defra “looking favourably on letting the EA do its job properly and in compliance with the law”.

The EAC is due to publish the results of its inquiry into water quality in rivers in the new year following evidence presented over a number of months that questioned how pollution in waterways had gotten so bad.

Dunne says the strategic policy statement to Ofwat is “the absolutely key next step”, which the secretary of state is due to publish in January for 2025-2030.

“In the past, statements have encouraged Ofwat to focus on the supply side of water such as reducing  leakage but this statement needs to say water companies must invest significantly in the treatment side of their business. It can take years to get a project underway, but this needs to increase the focus of water company investment.”

The timescale for investment could mean the public, and crucially the environment, do not see the effects of improvements for many years and underlines the need for government to set out its expectations.

Pollard sees the refusal to set out a timetable as self-defeating: “Defra seems to think sewage will drop from the headlines now the Environment Act has passed and it will no longer be yet another issue for the prime minister’s polling. But their failure to get to grips with this problem means the opposite will be true – public demand will only get stronger for bolder action and the pedestrian pace being offered by ministers is not only insufficient, it will be politically impossible to defend.”