Water sector to plunge £2.8 billion into the green recovery

The water sector is set to invest £2.8 billion in environmental projects to help the country build back greener.

Ofwat, in collaboration with Defra, the Environment Agency, the Drinking Water Inspectorate, and CCW, wrote to water companies last year and challenged them to identify ways to support the country’s green economic recovery from COVID-19. Companies were asked to bring forward new proposals and accelerating existing ones to deliver an innovative and more resilient future for customers, society and the environment.

Following that, Ofwat sets out plans to support £850 million of new, green investment projects. A further £1.9 billion of future planned environmental projects will be brought forward to contribute to a green recovery.

Severn Trent Water, South Staffs Water, South West Water, Thames Water, and United Utilities have received initial backing from Ofwat for ambitious new proposals collectively worth over £850 million which will benefit the environment and create jobs.

As part of this new package of investment, companies will commit over £157 million to help eliminate harm caused by storm overflows and trial the creation of two new bathing rivers.

The new projects will also see companies collaborating with local partners to reduce the risk of flooding, protect habitats, and cut pollution by investing £89 million in catchment management and nature-based solutions. There are also innovative improvements in drinking water treatment and supply which will reduce energy and chemical usage and there will be up to £172 million for measures to help customers save water, including in areas that currently abstract water from chalk streams. These proposals will help to restore and create a natural environment that current and future generations can be proud of.

These new schemes will be delivered alongside £1.9 billion of planned expenditure which has been brought forward by twelve water companies across England to further accelerate the green recovery and deliver hundreds of extra environmental schemes. These include measures to improve river quality and protect endangered species.

Several water companies are also accelerating parts of their existing 2020-25 plans, investing hundreds of millions earlier when it matters most for the economic recovery, at no additional cost to customers.

David Black, Interim Chief Executive at Ofwat said:

‘Today marks an important step in this country’s green economic recovery with the water sector stepping up to make a difference. As part of these measures, we will see a collective package worth £2.8 billion of new investment and accelerated expenditure to care for the environment, create jobs and support customers and communities to bounce back from the COVID-19 pandemic.

“From tackling the most pressing environmental issues, to providing economic stimulus with the backing of jobs and training, there has never been a more important time to act. These proposals can be of huge benefit for people and the planet when it is needed most.’

Environment Minister Rebecca Pow said:

‘£850m of new funding shows that water companies have risen to the challenge to help drive this country’s green recovery.

‘I am particularly pleased to see increased investment to eliminate the harm from storm overflows, following calls by the Storm Overflows Taskforce to accelerate progress in this area.

‘The investments announced today, in addition to a raft of measures being taken by the Government, will both benefit the environment and create more jobs as we build back better, and greener, from the pandemic.’

Environment Agency chair Emma Howard Boyd said:

‘The green recovery is an opportunity to go further on net zero, nature-based solutions and environmental protection. It is hugely encouraging to see water companies accelerate investment to deliver real and lasting improvements.

‘This demonstrates a renewed commitment to reduce pollution incidents and to prepare the country for escalating climate shocks like floods and demand for water during heatwaves. I look forward to seeing the results.’

Marcus Rink, Chief Inspector of Drinking Water in England, said:

‘We are delighted to participate in this important initiative, collaborating with Government and other regulators to ensure that protection and enhancement of drinking water quality is given the right priority. We look forward to working with the relevant companies as the proposals progress.’

Emma Clancy, Chief Executive of the Consumer Council for Water (CCW), said:

‘The broad support these proposed environmental improvements secured from customers reflects people’s eagerness for their water company to play a leading role in reducing pollution in rivers and bathing waters, tackling flooding risks and protecting our water resources.

‘We’re pleased that Ofwat will make sure money is returned to customers if companies fail to deliver on their promises. Each company must rise to the challenge of delivering these improvements and clearly show their customers that they are getting value for money.’

In assessing the new proposals, Ofwat collaborated with Defra, the Environment Agency, the DWI and CCW, and took their views into account. Ofwat will be consulting on these draft decisions before making final decisions in mid-July.

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