What’s next for the water sector? A briefing for MPs and citizens

MP Watch
Photo by Jimmy Chang on Unsplash

Editor’s note: We are reproducing this briefing sent to MPs so that you can see and share the information they have been given. One of MP Watch‘s aims is to counter disinformation and misinformation, which has a nasty habit of sticking in minds more than the facts. We face crises on numerous fronts as a result of austerity, underinvestment, privatisation’s profit focus, weak regulation and even weaker enforcement, Water is, perhaps, the most egregious example, alongside the NHS. It is vitally important that our politicians have a sound grasp of the issues and of the facts if they are to address the problems. This briefing paper has done the grunt work for them. You might like to urge your MP to take the trouble to read it.

NOTE TO MPs

The team at MP Watch have represented the facts after consultation with scientists. We ask you to consider whether there are any facts that we have presented that you disagree with, any key facts you think we have missed out, or any conclusions or interpretations that you disagree with.

If there are would you let us know which ones and why you disagree or what you think we have missed.

Our intention is to have a constructive two way conversation with you and other MPs so that we can develop a common understanding of the situation based on an acceptance of mutually agreed facts.

We hope that such an understanding might reduce the amount of disinformation and misinformation that is so often present in debates on the floor of the HoC – and also in the media and general public discourse.

The regulatory failure of Ofwat and ineffectiveness of the Environment Agency (EA) in adequately monitoring the water sector has given the Labour Government a legacy of highly-indebted monopoly companies, incapable of processing the nation’s sewage without routinely polluting the waterways that sustain life and food production in Britain: companies which have a combined debt of over £64 billion, with Thames Water debt at fourteen times its annual cash flow. Furthermore, this is an industry which has not invested in infrastructure, nor met its legal climate change or environmental targets.

The effect on the natural world is devastating: UK’s rivers, lakes, and seas are facing a mounting crisis, from widespread pollution to worsening floods and droughts driven by climate change. Agriculture, outdated infrastructure, and fragmented management are major contributors to this decline, and current targets fall far short of what’s needed. 

So what’s the next stage of the water story? Ofwat’s recent Price Review 2024 introduced some proposed valuable new targets such as  £104 billion investment over 5 years – 24 billion for investment in the environment and £12 billion going towards water and wastewater investment. It also proposes  3000 new storm overflows and 9 new reservoirs. But Ofwat’s history makes some sceptical that they can make this happen. 

The new Water (Special Measures) Bill has welcome but limited new measures: blocked bonuses, personal fines and even two years in prison for underperforming law-breaking chief executives. Other changes include ringfencing investment funds from consumers and monitoring every sewage outlet and ensuring leakages reported within an hour. Yet even before the bill is passed Thames Water have threatened to raise their Exec’s base salary as a workaround. 

In June the Independent Water Inquiry, headed by former Bank of England deputy Sir Jon Cunliffe, will report on strategic planning, regulation, supporting consumers and even non profit-model. There is a parallel inquiry by the  Environment, Food and Rural Affairs Committee (EFRA committee). Private members bills by Clive Lewis & Adrian Ramsay are also interesting.

This briefing is a short summary of the major flaws in policies for managing our water bodies, signposting to high quality external sources as supporting evidence.

Headlines

  1. Bias on regulating the status quo rather than new structures

Many consider Water Privatisation an irredeemably failed system and polling suggest British people favour renationalisation. In the Water (Special Measures) Bill – the Government is trying a tighter regulatory approach to change the culture of the industry. The fact that Cunliffe a former Deputy of the Bank of England is at the helm of the Government Inquiry into seems to indicate a commercial approach though he is able to consider ‘non-profit’ options.

  1. Nature-based solutions are not prioritised

Many consider Ofwat’s recent announcement in its five-yearly Price Review of a proposed £3bn investment in nature-based solutions too little. Natural approaches like wetlands, restoring uplands, and improving soil management, offer cost-effective, climate-friendly solutions for flooding/drought, water quality, and biodiversity loss. The new Water (Special Measures) Bill merely requires that companies report on the use of nature-based solutions, rather than mandating prioritising their use. Adrian Ramsay’s Nature-based Solutions (Water and Flooding) Bill offers an alternative. 

  1. Agriculture is a major source of pollution, but is largely ignored

Driven by our unsustainable food system, farming is the largest contributor to water pollution—with runoff from animal waste, fertilisers, and pesticides contaminating rivers and lakes. But the elephant in the room is the Climate Change Committee recommendation that we eat less meat, to free up land for NBS, with a 20% reduction by 2030. 

  1. More Robust Sewage Targets

The new Water Bill’s requirement for water companies to write and then action public pollution reduction plans is backed by greater ‘incentives’ and ‘transparency’ rather than legal obligation. The greater roll out and obligation for water companies to give the public access to data from sewage flow monitors for emergency and storm flows is welcome, but we need new robust legal targets for reducing sewage pollution. Ofwat’s proposal for water companies to invest an additional £6bn towards dealing with nutrient pollution is a good first step. Continuing to pollute water bodies with raw sewage undermines the Environment Act’s commitment to halt species decline by 2030.

  1. Failure to adapt to climate change

Flooding and droughts are worsening due to climate change, overwhelming old defences like concrete walls and drainage systems and threatening the ability to get insurance as well as the well-being of coastal communities

  1. Lack of joined-up thinking

Water management is disjointed, with responsibilities split between multiple agencies and government departments. A catchment-wide approach is essential to address pollution, flooding, drought, and climate adaptation effectively.

  1. Microplastics and ‘forever chemicals’ ignored

Microplastics and persistent organic pollutants (POPs) such as PFAS and PCBs known as forever chemicals are a serious public health risk but as yet the UK has no solution for eradicating them from water. The Royal Society of Chemists has analysed the public health risks and is calling for an overhaul of weak standards in drinking water. Some of these chemicals have long been made illegal but there is very little monitoring on the levels of toxicity in our water network.

B.  Further essential detail

  1. The Present Privatised Model has not delivered
    • Privatisation of water utilities has failed to deliver infrastructure improvements or environmental protection, with not one  river in England and Northern Ireland classed as ‘good overall”. Since privatisation in 1989:
    • No new reservoir has been built despite 21% population growth.
    • England’s rivers are amongst the least healthy in Europe
    • Water company debt has soared from zero in 1989 to over £60 billion, with profits directed toward shareholders instead of critical investments in infrastructure.  
    • One approach to opening a wider debate is provided by  Clive Lewis’s private members bill which  proposes a national conversation about the water industry looking both at the status quo, alternative models in other countries, and at the challenges of climate change.
  2. Nature Based Solutions 
    • The Water (Special Measures) Bill misses an opportunity to ensure nature is prioritised over engineered solutions as a means to slow water flows e.g. by planting trees, carefully reintroducing beavers, or mandating sustainable drainage systems. But the current bill  merely requires that drainage and sewerage management plans should mention what use will be made of them—and this is limited to sewage pollution rather than considering upstream measures to slow water..
    • Over-reliance on expensive concrete defences which cause high CO₂ emissions—despite nature’s potential to address flooding, drought, and water quality sustainably and cheaply. 
    • Evidence shows nature is not only a proven solution, but it will deliver wider economic benefits. For example, every £1 invested in peat restoration, will deliver an estimated £4.62 in terms of economic and social benefits including reduced flood risk and nature recovery.
    • Flooding highlights land use failures, as demonstrated by recent major flooding in the North West. Engineered flood defences were inadequate, with a pumping station itself failing after being flooded. Water must be held back from built-up areas through changes in land use—particularly in uplands and on farmland. Engineered solutions should be a last resort.
  3. Agriculture: a major source of pollution, largely ignored
    • Agricultural pollution is the biggest cause of water bodies failing to achieve good status, but the Environment Act does little to address it.
    • An unsustainable food system is driving farmers towards environmentally damaging practices, which harm our water bodies, and there is no serious action to address root causes. 
  • No legal targets to reduce pesticides and veterinary medicines: despite the UK’s biodiversity COP15 commitment to halve pesticide impacts by 2030. A ‘cocktail of chemicals’ in UK rivers is devastating wildlife and endangering public health. Highly toxic Neonicotinoids, still used widely in pet treatments, are found in 98% of river water sampled. 
  • Dietary shift ignored: Government is not acting on Climate Change Committee recommendations to reduce meat and dairy consumption by 20% by 2030 and meat by 35% by 2050. These changes are necessary to meet climate targets, but also to free up land to adapt to a warming world, and bring agricultural pollution under control.
  • Unsustainable water consumption: Livestock production competes for public water supplies, intensifying shortages in dry periods and damaging ecosystems, yet government targets focus only on household use, with no targets to reduce agricultural use.
  • Inadequate funding—nature-friendly farming grants (ELMs) could make an enormous contribution to protecting the public and our food security from flooding and drought, but rates are too low for widespread take-up. Capital grants typically used for flood mitigation have been suspended and ‘high-ambition’ ELMs schemes are watered down and delayed.
  1. Weak targets on sewage pollution

This will allow nature’s “lifeblood” to continue being poisoned until 2050, and even beyond. Though clause 2 of the Water (Special Measures) Bill requires water companies to produce annual “pollution incident reduction plans”, there is no legal obligation to actually implement the plan, or to ensure that it drives changes quickly enough to prevent ecosystem collapse. We need new robust legislation to replace legal targets set out in the 2022 Storm Overflows Discharge Reduction Plan.

  1. Failure to adapt to climate change
  • Our system of agricultural monoculture exacerbates flooding and drought. Rainfall, made heavier by global warming, runs too quickly off farmland depleted of natural ecosystems, particularly in the uplands, and along artificially modified and straightened rivers. This results in flooding downstream, and loss of precious topsoil which disrupts river ecosystems. 
  • Food Sector Adaptation: there is no serious engagement with the food industry to transition away from the demand for monoculture to allow land use diversification and more sustainable production. This leaves farmers and consumers trapped in a dysfunctional market driven by industry demands. The health consequences alone are costing the country £268 billion (around the entire healthcare budget) on top of the costs of flooding.
  1. Lack of joined-up thinking
  2. Microplastics and forever chemicals ignored
  1. Raw sewage dumping in England’s rivers and seas doubled in 2023 to 3.6 million hours—due partly to record rainfall, but that is expected with climate change and must be planned for.
  2. The food system is an even bigger problem than sewage. The Government reported that agriculture is responsible for 45% of rivers failing “Good” status vs 44% for sewage. Parliamentarians and environmental lawyers at Leigh Day have joined forces to launch a claim to hold big food businesses responsible for environmental breakdown.
  3. Land management is key: Our predominant system of monoculture exacerbates flooding and drought. Defra’s 2021 report on food security models the risk this creates for food supply. The situation has since worsened and the 2024 report highlights that reversing the “long term decline in the UK’s natural capital” is essential for our water and food supply.
  4. The Rivers Trust State of Our Rivers Report:
    • No single stretch of river in England or Northern Ireland is in good overall health.
    • Toxic chemicals that remain in ecosystems for decades pollute every stretch of English rivers.
  5. The 2021 Environment Act contains targets for water bodies. Targets for water are listed  here.
  6. The Environmental Improvement Plan (EIP) sets out strategy and legally required actions to restore nature and reduce pollution. The Government has promised an EIP review.
  7. The 2022 Storm Overflows Discharge Reduction Plan is a key component of the EIP, setting out legal sewage targets.
  8. Estimated costs of flooding from the Office for Budget Responsibility 
  9. Government guide to forever chemicals – persistent organic pollutants (POPs)