A decade of deregulation

| 12th October 2022 |
A decade of 'diminishing' regulation funding puts pressure on water pollution enforcement.

The only money we have to enforce and prosecute comes in the form of grants. 

Reductions in government funding has put pressure on Environment Agency efforts to take action against water companies for pollution, the regulator has said.

The agency’s chief executive Sir James Bevan said prosecution of companies for breaking environmental rules was one of the “key weapons in our armoury” but they were doing less of it, partly due to resource constraints.


He told the Lords Industry and Regulatory Committee the overall government grant for the agency’s environmental work – including enforcement – had “diminished” over the past 10 years, putting pressure on staff numbers and resources for prosecutions.

But it had increased this year in a very “welcome reversal” of previous declines, he said.

Sir James was appearing in front of the committee alongside Environment Agency chairman Alan Lovell to answer questions on water companies’ environmental performance and regulation.


The water industry has seen its reputation battered by rising public concern over sewage spills into rivers and seas, pollution from water treatment works, assessments of poor environmental performance by some companies and this summer’s imposition of hosepipe bans amid high levels of water leaks.

The Environment Agency is also warning of the impact of an increasing population and climate change on water supplies and says industry, regulators, government and the public will all need to take action to increase supplies and reduce demand.

Mr Lovell suggested water bills should increase – with social tariffs to protect those who cannot afford rises – to increase the awareness of the value of water and backed earlier application of hosepipe bans in some instances.


He also welcomed an intention by the new environment secretary Ranil Jayawardena to increase the level of “variable monetary penalties” the EA could impose from a maximum of £250,000 to £250 million as part of efforts to address breaches by water companies.

Mr Lovell said that a criminal standard of evidence had to be achieved to impose such fines but that it would “certainly give us a much bigger stick with which to go after bad behaviour amongst water companies”.

He said he hoped Mr Jayawardena would be able to deliver on the pledge soon.


Sir James also told the committee there had been significant public and media focus on combined sewage overflows which spill sewage into rivers or coastal waters after heavy rain to prevent sewers, and also handle rainwater backing up.

But he said combined sewage overflows were not the biggest part of what was causing pollution in English waters with the main issues being failures at water treatment works and run-off from farming.

The “cleanest solution” for the sewer outlets – replacing the Victorian sewerage system with a modern one which separates sewage from rainwater – would cost around £100-£200 billion to install across the country.


And he said: “Bathing waters have got cleaner and cleaner over the last 20 years because of investments by the water companies to reduce spillage, regulation by the Environment Agency and collaboration with local authorities and that’s a really good news story.

“This summer I think because of the heightened public immediate interest in sewage in rivers which we understand, almost any spill onto a beach was reported as outrageous.

“Now one spill is too many, but I think we have to recognise that the system is the system that the Victorians designed.

“What we want in the short term is the companies to be operating their facilities so they minimise spillage and in the longer term, we need them to be finding alternative solutions.”


When it came to enforcement action against water companies, Sir James said: “We’re not allowed to put the £200 million that we get on average every year from the water companies to fund the cost of regulating them, to prosecute them.

“That means that the only money we have to enforce and prosecute comes in the form of grants and over the last 10 years the overall grant that the Environment Agency’s had from successive governments for our environment work has diminished.

“That has put pressure on numbers of our people and our resources for prosecution but there’s been a very welcome reversal of that decline in the budget that we’ve been given this year from the government.”

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Emily Beament is an environment correspondent for PA media. 

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