Environmentalists champion a green growth duty for Ofwat

The Wildlife and Countryside Link (WCL) environmental coalition has challenged Government plans to extend the Deregulation Act 2015’s Growth Duty to Ofwat, Ofgem and Ofcom.

In a consultation response supported by 11 of its member organisations including The Rivers Trust, The Wildlife Trusts, Waterwise and Surfers Against Sewage, WCL said the shift would “weigh the balance too heavily towards economic costs at the expense of environmental costs, benefits and needs”. This in a situation where economic considerations already have “considerable focus” from the regulators while the watchdogs “struggle to adequately capture and consider environmental costs and benefits”.

The group argued that the new Growth Duty would also risk “contradicting and confusing existing Government guidance – for example, the most recent Strategic Policy Statement to Ofwat, which names ‘protect and enhance the environment’ as the top strategic priority for Ofwat and the water industry – and the recommendations of the Government-commissioned Dasgupta Review.” Meanwhile it would also jeopardise the contributions of the energy and water industries to Environment Act and Climate Change Act targets and the delivery of the Environmental Improvement Plan.

WCL argued: “Government should instead consider a green growth duty for regulatory bodies, to contribute to growth through conserving, enhancing and restoring natural capital. This would benefit not only environmental and economic resilience, but also the customers whom Ofwat, Ofgem and Ofwat seek to protect.”

Regarding Ofwat specifically, the group observed:

• the price review process fails to fully consider natural capital – this is not mentioned once in the PR24 final methodology; and

• keeping bills low has come at the expense of keeping infrastructure fit for purpose – for instance, £1bn of investment was cut from company business plans at PR14, £100m of which was environmental.

Meanwhile in July, Defra asked water companies to trim green spending from AMP8 plans to keep costs to customers down. WCL called this a false economy, undermining resilience and ultimately increasing costs.

It said a green growth duty would help address these issues, whereas the proposed Growth Duty will not.