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Water for Life
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lronl cover pholograph Thinkslock
Water for Life
Presented to Parliament
by the Secretary of State for Environment, Food and Rural Affairs by Command of Her Majesty
December 2011
CM 8230 20.50
Crown copyright 2011
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!
Conlenls
Foreword by the Secretary of State for Environment, Food and Rural Affairs .......................... 3
Executive Summary ........................................................................................................................ 4
Waler and lhe nalural environmenl ................................................................................................... 5
Waler and lhe green economy ........................................................................................................... 7
Waler and you ................................................................................................................................... 8
1. Introduction .......................................................................................................................... 10
The case lor change ................................................................................................................ !2
2. Secure, sustainable and resilient water resources ............................................................. 19
Pelorm ol lhe abslraclion regime ............................................................................................ 2!
lncreasing inlerconneclion and lhe lrading ol bulk supplies ol lrealed waler ........................... 25
3. Protecting our rivers ............................................................................................................. 27
lmproving waler qualily ........................................................................................................... 28
Currenl unsuslainable abslraclion ........................................................................................... 40
4. Planning and building for the future .................................................................................. 45
Aligning plans ......................................................................................................................... 47
lnlraslruclure ........................................................................................................................... 53
Waslewaler and drainage ........................................................................................................ 56
5. Developing a customer focused water industry ................................................................ 60
Allordabilily ............................................................................................................................ 6!
Peducing high household bills in lhe soulh wesl ...................................................................... 67
Pelorming lhe markel lor business cuslomers ......................................................................... 68
Prolecling cuslomers ............................................................................................................... 75
6. Taking action ......................................................................................................................... 78
Using waler wisely .................................................................................................................. 80
Delivering lhe While Paper ...................................................................................................... 92
7. Conclusion ............................................................................................................................. 98
Water for Life
2 Water for Life
3
The privalisalion ol lhe waler induslry has been a success slory. Since lhe public
regional waler aulhorilies became privale companies in !989, lhe induslry has
invesled over 90 billion lo reduce ils impacl on nalure and lo conlinue lo deliver
high qualily, allordable drinking waler.
So why do we need a while paper aboul waler?
8ecause lhe lrulh is lhal in some areas ol Lngland our waler supplies are already
under slress.
8ecause, despile a dramalic improvemenl in lhe heallh ol many ol our rivers, only a quarler ol our
waler bodies are lully lunclioning ecosyslems.
And because, in lhe coming years, lhe combined ellecls ol climale change and a growing populalion
are likely lo pul increasing pressure on waler qualily, and on our waler supplies.
We lhink ol waler as lree, lalling lrom lhe sky in abundance. ll is only when rivers slarl lo run dry,
reservoirs lall low, cracks emerge in lhe ground lhal lhe old cerlainlies are shaken. These are warning
signs ol whal we mighl expecl lo see in a changing climale.
We cannol do wilhoul waler. ll is in many ways our mosl precious resource. So we musl acl now lo
make lhe changes needed lo keep our rivers lowing and our waler supplies reliable and allordable.
This While Paper describes a vision lor lulure waler managemenl in which lhe waler seclor is
resilienl, in which waler companies are more ellcienl and cuslomer locused, and in which waler is
valued as lhe precious resource il is. And il explains lhal we all have a parl lo play in lhe realisalion
ol lhis vision.
The Rt Hon. Caroline Spelman MP
loreword by lhe Secrelary ol Slale lor
Lnvironmenl, lood and Pural Allairs
Water for Life
1 We all enjoy clean waler al lhe lurn ol a lap, and walch il drain away wilhoul a lhoughl. We
lhink ol Lngland as a rainy counlry, and lnd il hard lo believe some areas have less rainlall per person
lhan many Medilerranean counlries. We lake waler lor granled.
2 ll has been 22 years since lhe waler induslry was privalised. Since lhen il has invesled over
90 billion lo reduce ils impacl on nalure and lo conlinue lo deliver high qualily drinking waler, while
keeping waler bills allordable. ln recenl decades we have seen a dramalic improvemenl in lhe heallh
ol many ol our rivers.
3 8ul lhe lrulh is lhal waler supplies are already under slress in some parls ol lhe counlry.
8ecause ol pollulion and over-abslraclion only a quarler ol our rivers and lakes are lully lunclioning
ecosyslems. ln lhe coming years, lhe combined ellecls ol climale change and a growing populalion
are likely lo pul increasing pressure on our rivers, lakes and aquilers. ll we do nol acl, lhe securily ol
our waler supplies could be compromised.
4 Droughls may become more commonplace. Changing rainlall pallerns could allecl our river
lows and make il harder lor our groundwaler reserves lo be recharged. More inlense rainlall may
increase lhe likelihood ol surlace waler looding, leading lo pollulion ol our waler bodies. Meanwhile,
populalion growlh means more demand lor waler.
5 A reporl by lhe Lnvironmenl Agency, issued alongside lhis While Paper, draws lhe lollowing
conclusions.
Waler resources are already under pressure. Currenl levels ol waler abslraclion are already
harming nalure.
ln lhe lulure lhere is likely lo be less waler available lor people, businesses and lhe environmenl.
lulure pressures will nol be limiled lo lhe soulh and easl ol Lngland.
ln lhe longer lerm climale change could have a bigger impacl on available waler resources lhan
populalion growlh.
The waler environmenl will change. Some species will be beller suiled lo lulure condilions
lhan olhers.
Demand lor waler will need lo be managed and we may need signilcanl new waler resources.
6 We cannol do wilhoul waler. Clean, lhriving waler bodies are an inlegral parl ol lhe nalural
environmenl, giving lile lo planls, animals and people alike. Waler is also inlegral lo lhe economy. We
need il lo grow lood, lor induslrial processes and lor energy produclion.
7 This is why prolecling lhe heallh ol our rivers and lakes, mainlaining our waler inlraslruclure and
managing our waler resources elleclively, while keeping waler allordable lor all is among lhe mosl
crilical ol lhe challenges we lace.
8 ll is also a very complex challenge, posing some dillcull queslions. How do we prolecl
lhe environmenl and lake less waler lrom our rivers, while meeling lhe demands ol a growing
populalion? How do we encourage innovalion and dynamism in lhe waler seclor while ensuring
il remains a low-risk choice lor inveslors? How do we incenlivise less waslelul use ol waler while
keeping waler allordable lor everyone?
Lxeculive Summary
4 Water for Life
9 We musl acl now lo lnd lhe answers lo lhese queslions, and slarl lo make lhe changes needed
lo keep our rivers lowing and our waler supplies reliable and allordable.
10 This While Paper is a call lo aclion. ll describes a vision lor lulure waler managemenl in which
lhe waler seclor is resilienl, in which waler companies are more ellcienl and cuslomer locused, and
in which waler is valued as lhe precious resource il is. And il explains lhal we all have a parl lo play in
lhe realisalion ol lhis vision.
Waler and lhe nalural environmenl
11 Published in June 20!!, lhe Nalural Lnvironmenl While Paper, The Natural Choice made clear lhe
imporlance ol valuing nalure and lhe benells il provides. Heallhy rivers, lakes, groundwaler, esluaries
and wellands deliver a wide range ol benells, lrom relalively pure waler needing less lrealmenl lo be
drinkable, lo lood proleclion, recrealional opporlunilies and lhriving wildlile.
12 We have many exquisile slrelches ol waler, lo lsh in, lo swim in, lo walk along. 8ul only 27 per
cenl ol our rivers and lakes are lully lunclioning ecosyslems. Under LU law we have a legal imperalive
lo make a subslanlial improvemenl lo lhis lgure by 2027. We also have a clear moral imperalive, and
an economic one.
13 This While Paper makes clear lhal we musl hall and reverse lhe damage we have done lo waler
ecosyslems, and ensure lhal lhey can conlinue lo provide essenlial services lo us and lhe nalural
environmenl more generally. ll lakes lorward a key message lrom lhe Nalural Lnvironmenl While
Paper. lhal we all have an inleresl, and lherelore a role, in prolecling our waler bodies.
14 We have been damaging rivers and olher waler bodies in lwo ways. We have been polluling
lhem, and we have been laking loo much waler oul ol lhem (over-abslraclion). Over-abslraclion
compounds pollulion, because lhe less waler lhere is, lhe more concenlraled lhe pollulion will be.
Tackling water pollution
15 There has been good progress in lackling pollulion over recenl years, largely as a resull ol
lackling poinl sources ol pollulion such as discharges lrom sewage lrealmenl works and induslrial
processes.
16 Dilluse pollulion, lrom a range ol sources such as run-oll lrom roads and larmland, and
delergenls and olher loxic malerials people pul down drains, is slill a problem. Taken individually,
lhe impacl ol each source would be relalively low. 8ul laken logelher, lheir impacl can be dramalic,
poisoning waler and damaging wildlile and planls.
17 Civen lhe diversily ol lhe sources ol pollulion, neilher Covernmenl regulalion nor public money
alone can solve lhe problem. lnslead we need a new approach lhal mobilises local groups and draws
on new sources ol lunding. Therelore lhis While Paper lakes lorward lhe new "calchmenl-based
approach" lo waler qualily and dilluse pollulion launched earlier lhis year.
18 A river's calchmenl area is all lhe land and olher waler bodies lrom which il receives waler.
The characlerislics ol any river are delermined by lhe aclivilies, bolh human and nalural, lhal
lake place wilhin ils calchmenl. So working on pollulion across a calchmenl area makes good
environmenlal sense.
5 Water for Life
19 ll also makes sense socially. Calchmenl-sized projecls are local projecls, making use ol local
nelworks, lapping inlo local enlhusiasm, addressing local concerns. Working al a calchmenl level
enables all lhose wilh an inleresl lo see how lhey can lackle waler issues logelher, in a way lhal nol
only improves waler qualily bul also delivers benells lo lhe whole area.
20 There could also be lnancial benells. Slopping pollulion al source, somelimes lhrough simple
measures avoids lhe need lor expensive and carbon inlensive waler lrealmenl paid lor lhrough our
waler bills.
21 The While Paper explains how we will learn lessons lrom around 70 calchmenl scale pilol
projecls, and provide inlensive supporl lo 25 ol lhem, as a precursor lo rolling oul lhis approach across
lhe counlry. We will also work lowards Common Agricullural Policy relorms lhal will promole lhe
larming induslry's role as cuslodian ol lhe nalural environmenl. We will provide clearer guidance lor
larmers on lhe basic measures required lo saleguard local waler qualily. As well as agricullural sources
we will conlinue lo lackle pollulion lrom olher sources such as privale waslewaler lacililies and
abandoned melal mines.
22 We will consull on a nalional slralegy on urban dilluse pollulion in 20!2. Parl ol our approach
will be encouraging lhe inlroduclion ol drainage syslems lhal reduce lood risk and lhe amounl
ol pollulion running oll our roads and induslrial eslales and inlo our slreams and rivers, as well as
relieving pressure on our sewers. We will consull shorlly on nalional slandards and a new approval
syslem lor suslainable drainage.
Tackling over-abstraction
23 Many rivers and waler bodies in lhe UK are being damaged when loo much waler is laken lrom
lhem. The currenl syslem lor managing abslraclion was sel up in lhe !960s, and was designed lo
manage compeling human demands lor waler ralher lhan lo prolecl lhe environmenl.
24 The syslem's inadequacies will become more apparenl as a changing climale and increasing
demand place grealer pressure on our waler resources. We need lo lake remedial aclion belore lhe
heallh ol our rivers is damaged beyond repair.
25 We announced in our Nalural Lnvironmenl While Paper our inlenlion lo relorm lhe abslraclion
regime. This will be a complex lask, and we will work closely wilh abslraclors and olher slakeholders
lo deliver il. We plan lo consull on proposals in 20!3, and aim lo inlroduce legislalion lo relorm lhe
regime early in lhe nexl Parliamenl, implemenling lhe new regime lully by lhe mid lo lale 2020s. Our
rivers cannol wail unlil lhen. We will ramp up our ellorls lo reduce damaging abslraclion now, using
our exisling lools beller.
26 The Lnvironmenl Agency will reporl ils progress on implemenling ils Pesloring Suslainable
Abslraclion programme early in 20!2. We will develop an aclion programme lor addressing
unsuslainable abslraclion up lo 2027 and beyond in lhe second cycle ol Piver 8asin Managemenl Plans.
27 We will work wilh Olwal and lhe Lnvironmenl Agency lo give waler companies beller incenlives
and lools lo manage lheir abslraclion suslainably.
6 Water for Life
Waler and lhe green economy
28 The Covernmenl's lop priorily is economic growlh. green economic growlh. This means
businesses growing suslainably, saving money, slrenglhening lheir brands and ensuring lheir longevily
by using resources more ellcienlly, culling lheir carbon emissions and reducing lheir impacl on lhe
environmenl. ll also means lhe business seclor laking advanlage ol lhe new markels lor environmenlal
goods and services, crealing green jobs al home and becoming global leaders in lhese new markels.
29 Waler is essenlial lor economic growlh, and lhe waler induslry has a vilal role in lhe lransilion lo
lhe green economy. The green economy needs a suslainable, resilienl, allordable waler supply. ll also
needs an energised, innovalive, compelilive waler induslry.
30 The challenge is nol jusl lo keep olher induslries and households supplied wilh waler, while
keeping our rivers, lakes and aquilers heallhy. ll is also lo innovale and develop experlise, lor example,
in leakage deleclion, waler ellcienl lechnologies and lrealmenl ol waler and waslewaler, and lo lake
advanlage ol lhe US$300 billion worldwide markel in waler producls and services. To lhis end a
3.5 million innovalion compelilion in waler securily will be launched by lhe Technology Slralegy
8oard in March nexl year.
A water sector that focuses on its customers
31 Olwal's regulalion ol lhe waler seclor has ensured allordable bills, secure supplies and good
environmenlal perlormance. The slable regulalory lramework enabled lhe seclor lo allracl subslanlial,
low cosl inveslmenl lo upgrade inlraslruclure and improve environmenlal slandards.
32 ll is crucial lhal lhe seclor remains allraclive lo inveslors, so lhal il can mainlain and develop lhe
inlraslruclure we need lor lhe lulure. 8ul we also need change in lhe seclor lo slimulale innovalion
and growlh, encourage ellciency and improve lhe range and qualily ol services waler companies oller
lo lheir cuslomers.
33 We are inlroducing a package ol relorms lo exlend compelilion in lhe waler seclor by increasing
choice lor business cuslomers and making lhe markel more allraclive lo new enlranls. This is an
evolulionary approach lo relorm, delivering changes lhal will benell cuslomers while mainlaining
inveslor conldence in lhe seclor.
34 We are also supporling changes lo help developers receive much higher slandards ol service lrom
waler companies, and we will increase lhe lransparency ol lhe inlraslruclure and requisilion charges
lhey pay.
Supporting growth and innovation
35 We know lhal il can be dillcull lor a business wanling lo slarl or increase waler abslraclion
lo oblain a year-round reliable licence. This could become a signilcanl barrier lo economic aclivily in
parls ol lhe counlry as waler availabilily decreases. A beller markel in abslraclion licences would make
il easier lor businesses lo access waler in lhe volume and lhe localion lhey wanl. So we will reduce lhe
barriers lo lrade in abslraclion licences.
36 The planning regime lor lhe waler seclor is elleclive, bul we need lo ensure we are planning lor
lhe long lerm and doing as much as we should lo conserve waler in lhe supply syslem, in business
7 Water for Life
and al home. Waler companies' planning role is limiled lo lhe public waler supply and many waler
users draw lheir supplies lrom olher sources. We need a broader underslanding ol lulure demand so
we can assess lhe resilience ol our waler supplies. lndividual seclors and businesses, especially waler
inlensive ones, need lo idenlily lhe risks lo lheir own operalions. The Lnvironmenl Agency will work
wilh seclors, such as lhe energy generalion induslry, lo develop a shared underslanding ol lulure
waler demand and risks lo bolh lhe abslraclors and lhe environmenl.
Waler and you
37 Waler is a necessily and musl remain allordable lo all. Al lhe same lime everyone has a role lo
play in using waler more ellcienlly. This While Paper puls cuslomers al lhe hearl ol decision-making
in lhe waler seclor. ll also explains how we can all use waler more ellcienlly and prolecl ourselves
lrom higher waler bills.
Affordability and bad debt
38 lor many household cuslomers, lhe mosl crilical issue is lhe allordabilily ol lheir bills. Allhough
waler and sewerage services are relalively cheap on average ! per day, some households slruggle lo
pay lheir waler bill.
39 This While Paper sels oul how we are lackling waler allordabilily in lwo ways. ll explains how
we will enable waler companies lo lake aclion lo help households who are having problems paying
lheir bills. Over lhe longer lerm, our markel relorms lo increase compelilion and innovalion will limil
lulure rises in cuslomers' bills.
40 ln Oclober we published drall guidance lor bolh waler companies and Olwal on waler
company social larills. This will enable waler companies lo oller more supporl lo cuslomers al risk by
inlroducing lheir own social larills. We will publish lhe lnal guidance lo companies early in 20!2. This
will give companies lime lo design schemes and consull wilh lheir cuslomers lo inlroduce larills lrom
April 20!3 where lhey choose lo do so.
41 Low income melered cuslomers who need lo use lols ol waler already receive supporl lhrough
lhe Covernmenl's nalional WalerSure larill. We will also ensure lhal waler companies have lhe
lreedom lo oller enhanced lerms lo WalerSure cuslomers lhrough lheir social larills.
42 8ad debl is a big problem lor waler companies because households cannol be disconnecled il
lhey do nol pay lheir bills. 8ad debl lorces companies lo raise everyone's bills, and currenlly adds an
average ol !5 lo lhe bills ol paying cuslomers.
43 Peducing levels ol bad debl would lower bills and help households who are slruggling lo allord
lheir charges. We are lherelore consulling on measures lo help companies recover debls.
Reducing high household bills in the south west
44 Households in lhe soulh wesl ol Lngland lace lhe highesl waler bills in lhe counlry because al
privalisalion lhe nelwork ol waler and sewerage pipes and olher capilal assels was less well developed
in lhe soulh wesl lhan in olher regions. Since lhen Soulh Wesl Waler has had lo invesl around 2
billion lo raise sewerage slandards lo lhe same slandards as lhe resl ol counlry. This has led lo high
bills.
8 Water for Life
45 The Covernmenl believes lhal in order lo deal wilh lhis hisloric anomaly il should conlribule lo
lhe cosl ol reducing bills. We have lherelore decided lo lund Soulh Wesl Waler lo enable il lo cul bills
by 50 per year lor all household cuslomers unlil al leasl lhe end ol lhe nexl spending review period.
Changing the way we use and value water
46 Keeping waler allordable is vilal. 8ul il is also vilal lhal we use waler more ellcienlly. The While
Paper advocales sleps such as inslalling waler bulls in gardens lo collecl rainwaler, converling loilels
lo dual lush, and addressing domeslic leaks. We can also avoid waler pollulion by being carelul aboul
whal we pul down our drains, and by inslalling modern drainage syslems lhal reduce lhe risk ol
surlace looding.
47 The While Paper also explains how Covernmenl will encourage and incenlivise waler ellciency
measures, some ol which are being supporled under lhe Creen Deal. ll sels oul how we will
encourage volunlary waler ellciency labelling lo enable cuslomers lo choose more ellcienl producls.
48 We will use previous successlul inilialives lo improve our underslanding ol whal molivales
individuals lo make besl use ol waler, and ol whal gels in lheir way. We will apply lhe lessons we
learn lo encourage waler ellcienl behaviour.
49 We will also collaborale on a campaign lo save waler and prolecl lhe environmenl, working wilh
waler companies, regulalors and cuslomers lo raise awareness ol lhe conneclion belween how we
use waler and lhe qualily ol our rivers.
Delivering the White Paper
50 The Covernmenl's immediale sleps include.
Publishing a drall Waler 8ill lor pre-legislalive scruliny in early 20!2 and inlroducing a Waler 8ill as
soon as Parliamenlary lime allows,
Producing a new slralegic policy slalemenl and social and environmenlal guidance lor Olwal
during 20!2,
Wilh lhe Lnvironmenl Agency, supporling calchmenl pilols across lhe counlry, wilh parlicular locus
on lhe 25 lo be evalualed in early 20!3,
New arrangemenls lo work wilh slakeholders on design ol a new abslraclion regime in early 20!2,
Slepping up our work on unsuslainable abslraclion, publishing inlormalion on progress on lhe
Pesloring Suslainable Abslraclion programme in 20!2,
Publishing lnal social larill guidance in early 20!2, and
Producing a drall guideline lor lhe nexl waler resources managemenl planning round during 20!2.
51 This While Paper includes several proposals lor deregulaling and simplilying legislalion, lo reduce
burdens on business and slimulale growlh. Olwal's proposals lor reducing ils regulalory burdens
complemenl lhese. The Covernmenl's Ped Tape Challenge will oller anolher opporlunily lo idenlily
areas where regulalion can be simpliled or removed.
52 The lulure is never easy lo predicl, bul we have solid evidence lhal lhe way we use waler and
manage our waler resources needs lo change. We musl prolecl lhe environmenl, supporl economic
growlh and secure supplies lor households. We musl saleguard our waler, so lhal generalions lo
come can enjoy waler lor lile.
9 Water for Life
1.1 We lhink ol Lngland as a wel counlry, and rain helps drive our nalional obsession wilh lhe
wealher. 8ul lhe lrulh is ralher dillerenl. Parls ol Lngland have less rainlall per person lhan many
Medilerranean counlries. The dry spring lhis year showed how quickly changes in rainlall can
allecl our rivers and reduce whal we can lake lrom lhem lo waler crops and supply homes and
businesses. When heavy rain comes il creales ils own problems. While il llls reservoirs and lops up our
groundwaler supplies, il can overwhelm our drainage syslem, so drains block up and sewers overlow.
1.2 We lake waler lor granled. We assume lhere is plenly ol il, and lor mosl ol us il is cheap
and allordable. We do nol make lhe conneclion belween lhe waler we use every day lor cooking,
washing, walering our gardens, and lushing lhe loilel and lhe heallh ol our local rivers. Nor do we
always lake lhe care we should wilh whal we lhrow down lhe drain, blocking sewers and polluling
our rivers and beaches. 8ul lhe aclions we lake every day can help prolecl and conserve our mosl
precious resource.
1.3 Our rivers, slreams and lakes are lhe lileblood ol our nalural world, enriching us all. This
Covernmenl wanls lo leave lhe nalural environmenl ol Lngland in a beller slale lhan il inheriled.
The Nalural Lnvironmenl While Paper The Natural Choice
!
sels oul lhe challenge. A heallhy nalural
environmenl is lhe essenlial loundalion il we are lo enjoy suslained economic growlh, prospering
communilies and personal wellbeing.
1.4 The qualily ol our waler is lundamenlal lo lhis. The heallh ol our rivers and coaslal walers
has improved greally over lhe lasl lwo decades, wilh mosl balhing walers now meeling lhe highesl
slandards. We have seen symbolic changes, wilh ollers now lound in rivers in every Lnglish counly.
! hllp.//www.delra.gov.uk/environmenl/nalural/whilepaper/
!0 Water for Life
!. lnlroduclion


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8ul lhis is nol an issue where progress can be judged lhrough nalional slalislics. The condilion ol
local rivers, slreams and lakes remains a deep concern lo communilies across lhe counlry who see lhe
impacls on lhe places lhey know and love.
1.5 ll is nol jusl pollulion lhal lhrealens our rivers. We need waler lo supply our homes and
businesses, bul we are laking loo much waler lrom many ol our rivers and lrom lhe groundwaler lhal
leeds lhem, damaging nalural syslems. As lhe waler low in rivers reduces, lhe heallh ol lhe waler
environmenl deleriorales because lhere is less waler lo dilule pollulion and lo supporl lsh and olher
wildlile. As we look lo lhe lulure, we can expecl climale change lo reduce lhe amounl ol waler in our
rivers, al lhe same lime as a growing populalion drives up demand. ll we lail lo lake lhis challenge
seriously, we nol only risk irreparable damage lo our environmenl, we lhrealen our economy.
1.6 Waler is nol only essenlial lor lile, il is crilical lo lhis Covernmenl's commilmenl lo drive
economic growlh. We musl manage our waler resources in a way lhal supporls growlh and lhe wider
needs ol sociely. Pressure on waler resources would lhrealen growlh by disrupling induslrial processes,
by allecling agricullural produclivily and lood securily, by reslricling lhe polenlial lor new business
slarl up and developmenl, and by increasing lhe price we pay lor waler as we lund new sources ol
supply. ll lhe power seclor cannol rely on secure supplies ol waler, il could allecl energy securily and
energy bills. Wilhoul waler supplies and sewers we cannol build lhe new homes we need.
1.7 We musl consider growing demand alongside a realislic piclure ol lhe waler we have available,
and mainlain our lrm commilmenl lo prolecling our nalural environmenl. This will involve some
dillcull choices. lor example, choices aboul whal inlraslruclure we need, how we balance supply
and demand lor new housing developmenl in areas where waler supplies are slressed, and where
businesses wilh high waler demand decide lo locale. And in making lhese choices we musl always
lake accounl ol lhe cosl lo cuslomers. Waler musl slay allordable lor everyone.
1.8 Since privalisalion in !989, our waler induslry has been a success. ll has invesled over 90 billion
lo deliver improved inlraslruclure and higher environmenlal slandards. The cosl lo cuslomers ol lhis
inveslmenl has been kepl down by lhe pressure lor ellcienl delivery driven by Olwal's regulalory
syslem. When all goes lo plan, clean wholesome waler comes al lhe lurn ol a lap, and our sewage
is lushed away wilhoul a lhoughl. ll is only on lhe rare occasions when lhere are problems lhal
we become aculely aware whal a high value we allach lo lhe smoolh operalion ol our waler and
sewerage syslems.
1.9 The waler seclor is unlike olher ulililies as currenlly only a lew large business cuslomers have any
choice over who supplies lheir waler. Cuslomers are almosl always supplied by lheir local monopoly
company. While lhis arrangemenl works well lor many household cuslomers,many business cuslomers,
especially lhose lorced lo deal wilh dillerenl suppliers in dillerenl areas, are looking lor relorm lo enable
lhem lo negoliale higher slandards ol perlormance, a beller range ol services and lower cosls lrom lheir
suppliers.
1.10 There are lundamenlal assels we musl preserve high qualily drinking waler, secure supplies lo
households and businesses, elleclive removal ol waslewaler, and a lourishing waler environmenl. 8ul we
need lo lhink dillerenlly aboul how we deliver lhese oulcomes. ll we are lo manage our waler resources
responsibly, we musl make sure supplies and inlraslruclure are resilienl lo condilions we lace now and
lo a changing climale. We only need lo look al evenls over lhe lasl lew years lo undersland lhe impacl
!! Water for Life
wealher can have on services we lake lor granled. The cold winler a year ago led lo lrozen and bursl pipes
across lhe counlry. We had a hosepipe ban in lhe norlh wesl ol Lngland in 20!0 and lhis year a droughl
in Lasl Anglia, wilh dry wealher conlinuing lhrough lhe aulumn in lhe soulh, easl and lhe midlands. We
have seen river lows across lhe counlry lall lo very low levels, damaging valuable ecosyslems and reducing
lhe opporlunily lor lhose walerways lo be used lor leisure, wilh boaling reslriclions and lsheries sullering.
There were no hosepipe bans lhis year, bul we musl nol be complacenl. While lhe summer was cool, il
was relalively dry and lhe silualion may be more dillcull nexl year il we have anolher dry winler.
1.11 The lollowing seclion sels oul evidence ol how our waler resources may change. The
Lnvironmenl Agency has developed new scenarios lor waler availabilily in lhe 2050s. These sel oul
slarkly lhe challenges we lace, bul also lhe uncerlainly lhal makes planning so dillcull. While we
cannol provide lrm lorecasls ol lhe impacl climale change will have on our waler supplies, we can
be conldenl lhal lhe way we manage and use our waler resources will have lo change. Demand may
well increase, driven by a growing populalion and a warming climale. Al lhe same lime we are likely
lo have less waler available as rainlall pallerns change and lemperalures rise. The piclure we are used
lo, where waler resources are more slrelched in lhe soulh and easl ol Lngland, and supplies more
abundanl in lhe norlh and wesl may also change.
1.12 Our response cannol simply be more ol lhe same predicling lulure demand and building
capacily lo meel il lhe lnancial, environmenlal and carbon cosls would be loo high. We musl
caplure more waler when il is plenlilul and use waler more ellcienlly. Our waler use is higher lhan in
many olher developed counlries, so we know we can cul demand by being more carelul in how we use
waler, choosing waler ellcienl producls, and collecling rainwaler lo use in our gardens. 8ul even wilh
concerled ellorls lo manage demand we cannol expecl waler lo remain as cheap and lreely available.
The case lor change
The impacts of climate change
1.13 Our besl underslanding ol lhe polenlial impacl ol climale change on our waler resources is
based on lhe lalesl UK Climale Projeclions (UKCP09)
2
. However, lhere is considerable uncerlainly in
projecling climale change. We are conldenl lhal over lime average lemperalures will increase, bul
lhe ellecls on rainlall are less easy lo predicl. UKCP09 suggesls lhal on average lhe UK will experience
warming lemperalures and changes in seasonal precipilalion pallerns, while exlreme wealher evenls
will be more common and more inlense.
1.14 This would all impacl on our waler resources. Holler wealher would be likely lo lead lo more
evaporalion lrom our reservoirs and rivers, while aquilers will nol be recharged as ellcienlly by lhe
more inlense rainlall expecled. lnlense rainlall also leads lo surlace waler looding and more pollulanls
running oll inlo our rivers and slreams and ullimalely allecling our coaslal walers. While lhere is
slill a signilcanl degree ol uncerlainly around lulure precipilalion, lhe currenl projeclions suggesl
less rainlall in summer on average
3
.

As a resull, we are likely lo have lower river lows in summer
loo, lhough lhe ellecls in olher seasons are much more dillcull lo predicl, wilh dillerenl scenarios
showing very dillerenl resulls.
2 hllp.//ukclimaleprojeclions.delra.gov.uk/
3 lor example, lor 2040-2069 under a medium emissions scenario, UKCP09 projecls an average change in summer rainlall ol minus !9 per cenl, bul
wilh a large range (lrom minus 4! per cenl lo plus 7 per cenl).
!2 Water for Life
!3 Water for Life
1.15 The currenl projeclions suggesl droughl condilions are likely lo be more common. The worsl
case scenario in a Mel Ollce sludy
4
suggesled lhal we mighl have len limes as many signilcanl
droughls by 2!00 wilh droughls like lhal ol !975-76 occurring on average every len years. Waler
companies are beller prepared now lor such droughls, bul we cannol be conldenl lhal our
inlraslruclure would sland up lo lhe more unusual condilions we mighl see under a changing climale,
such as a run ol very dry years.
4 An exlreme value analysis ol UK droughl and projeclions ol change in lhe lulure, Mel Ollce, 20!0. Journal ol Hydrology.


L
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v
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o
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e
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A
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e
n
c
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8
e
w
l

W
a
l
e
r

P
e
s
e
r
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o
i
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1.16 Climale change is also likely lo pul more slress on our waler environmenl. Lower waler levels in
our rivers and lakes would reduce lheir capacily lo dilule pollulanls, and worsen waler qualily, as well
as reducing lheir abilily lo suslain wildlile and economically imporlanl species like salmon and lroul.
Poor qualily waler also needs inlensive lrealmenl lo make il ll lor public consumplion, raising cosls lo
cuslomers and increasing energy use and carbon emissions.
Demographic change
1.17 Demographic change is likely lo increase pressure on our waler supplies and inlraslruclure. The
populalion ol Lngland is lorecasl lo grow by jusl under !0 million by 2035
5
, wilh much ol lhis increase
likely lo be concenlraled in areas which are already some ol lhe mosl waler slressed parls ol lhe
counlry. Combined wilh olher lrends, such as lhe increasing number ol smaller households, lhis will
push up demand lor waler, wilh some scenarios suggesling growlh ol around 5 per cenl by 2020 and
as much as 35 cenl by 2050.
Changing demand
1.18 Household waler demand has been increasing since lhe !950s while waler use by induslry has
been declining wilh lhe move away lrom heavy induslry. As a resull, households now use around hall
ol waler pul inlo lhe public supply. Waler companies lorecasl lhal average personal consumplion will
drop lrom !54 lilres per day in 20!0-!! lo !44 lilres in 2030-3!. The growing populalion will ollsel
lhis reduclion, wilh lolal household demand expecled lo rise by lhe equivalenl ol 3 per cenl ol currenl
public waler supply. 8ul overall demand across lhe economy is lorecasl lo drop as leakage and non-
household demand reduce.
Figure i: Water delivered to households 1990-2011
5 See lable A!-4 al hllp.//www.ons.gov.uk/ons/publicalions/re-relerence-lables.hlml?edilion=lcm3A77-229866 Peleased 26 Oclober 20!!.
!4 Water for Life
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
1
9
9
0
-
9
1
1
9
9
1
-
9
2
1
9
9
2
-
9
3
1
9
9
3
-
9
4
1
9
9
4
-
9
5
1
9
9
5
-
9
6
1
9
9
6
-
9
7
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
2
0
0
5
-
0
6
2
0
0
6
-
0
7
2
0
0
7
-
0
8
2
0
0
8
-
0
9
2
0
0
9
-
1
0
2
0
1
0
-
1
1

Water delivered to households megalitres per day


Water delivered to households megalitres per day
!5 Water for Life
1.19 Climale change is likely lo allecl lulure demand as well as supply. We lend lo use more waler in
holler wealher, lor example lor washing and drinking, or lo waler gardens. Olher ellecls are harder
lo predicl, lor inslance whelher larmers choose lo irrigale more or change lhe crops lhey grow. The
level ol waler demand may also change al some power slalions because ol lhe drive lo reduce carbon
emissions. lor example, inslalling carbon caplure and slorage lechnology on a power slalion may
increase ils waler use.
Planning for change
1.20 Planning lor such uncerlain change is complex. The range ol rainlall projeclions and lhe dillcully
ol predicling regional and local ellecls creale challenges lor lhose planning waler resources and laking
inveslmenl decisions.
1.21 The Lnvironmenl Agency has used lhe Mel Ollce's Pegional Climale Model lo assess lhe possible
ellecls on lulure river lows and our waler supplies in 2050. Using a range ol assumplions on lulure
demand and how much waler will be needed lo prolecl waler ecosyslems, il has calculaled lhe impacl
in dillerenl calchmenls, and whal lhis mighl mean lor new inlraslruclure build and aclion lo reduce
demand il we are lo mainlain secure supplies. This work is illuslraled in lhe maps below and explained
in more delail in lhe Lnvironmenl Agency's reporl, Case for Change current and future water
availability
6
, which is published alongside lhis While Paper.
Explanation of water demand maps: Blue catchments have water surpluses while red catchments
have decits. The 8 left hand maps are based on lower population growth and substantial increase in
water conservation, while the 8 right hand maps are based on higher population growth and increased
water use. The top 8 maps are based on current levels of water ow protection, while the bottom 8
maps are based on ow requirements that alter as ows are affected by climate change. Lastly, each
square has 4 maps based on 4 different scenarios of how climate change might affect future river
ows (A, C, G & J). See Figure ii.
6 hllp.//www.environmenl-agency.gov.uk/research/planning/33088.aspx
16
Figure ii: Unmet demand in the 2050s
Water for Life
1.22 Despite the range of results, the Environment Agency was able to draw several conclusions:
Water resources are already under pressure. Current levels of water abstraction are already
harming some nature conservation sites or the ecological health of catchments.
All of the scenarios predicted a future with less water available for people, businesses and
the environment.
Future pressures will not be limited to the south and east of England. Under many of the
scenarios the south west and northern England will see signifcant unmet demand.
Over the longer term climate change could have a bigger impact on available water
resources than population growth.
The water environment will change. Some species will be better suited to future conditions
than others. We will need to reconsider the requirements for future water ecosystems and the
implications for the amount of water available for abstraction.
Demand management will have an important role to play, but we may need signifcant new
water resources to be developed.
Solutions will have to be found at both a local and strategic level as even where a river basin
may have enough water, local catchments within it might not.
1.23 Over the last few years three major reviews have considered these and other challenges faced
by the water sector. The issues raised by Martin Caves Review of Competition and Innovation in
Water Markets in England and Wales
7
, Anna Walkers Independent review of Charging for Household
Water and Sewerage Services
8
and more recently by David Grays Review of Ofwat and consumer
representation in the water sector
9
, are central to this White Paper.
1.24 This White Paper is Governments response, and it sets out how we will work with others to drive
change, support growth and protect the environment. Our objectives are to:
paint a clear vision of the future and create the conditions which enable the water sector and water
users to prepare for it;
deliver benefts across society through an ambitious agenda for improving water quality, working
with local communities to make early improvements in the health of our rivers by reducing pollution
and tackling unsustainable abstraction;
keep short and longer term affordability for customers at the centre of decision making in the water
sector;
protect the interests of taxpayers in the policy decisions that we take;
ensure a stable framework for the water sector which remains attractive to investors;
stimulate cultural change in the water sector by removing barriers to competition, fostering
innovation and effciency, and encouraging new entrants to the market to help improve the range
and quality of services offered to customers, and cut business costs;
7 http://www.defra.gov.uk/environment/quality/water/legislation/whitepaper/
8 http://www.defra.gov.uk/environment/quality/water/legislation/whitepaper/
9 http://www.defra.gov.uk/publications/2011/07/06/pb13587-ofwat-review-2011/
Suffcient water for
environment & abstraction
0-25%
25-50%
50-75%
75-100%
Insuffcient water for
environment & abstraction
100-125%
125-150%
150-200%
>200%
Insuffcient water for
environment, regardless
of abstraction
<0%
Demand scenario: Sustainable behaviour
Environment protection fow thresholds: Fixed at
current levels
Demand scenario: Sustainable behaviour
Environment protection fow thresholds: Reduces in
proportion to climate change impacts
Demand scenario: Uncontrolled demands
Environment protection fow thresholds: Fixed at
current levels
Demand scenario: Uncontrolled demands
Environment protection fow thresholds: Reduces in
proportion to climate change impacts
A
A
A
A
C
C
C
C
G
G
G
G
J
J
J
J
Current position
DEF-CM8230-WFL-Rep.indd 16 06/12/2011 13:48
!7 Water for Life
1.22 Despile lhe range ol resulls, lhe Lnvironmenl Agency was able lo draw several conclusions.
Water resources are already under pressure. Currenl levels ol waler abslraclion are already
harming some nalure conservalion siles or lhe ecological heallh ol calchmenls.
All ol lhe scenarios predicled a future with less water available for people, businesses and
the environment.
Future pressures will not be limited to the south and east of England. Under many ol lhe
scenarios lhe soulh wesl and norlhern Lngland will see signilcanl unmel demand.
Over lhe longer lerm climate change could have a bigger impact on available water
resources than population growth.
The water environment will change. Some species will be beller suiled lo lulure condilions
lhan olhers. We will need lo reconsider lhe requiremenls lor lulure waler ecosyslems and lhe
implicalions lor lhe amounl ol waler available lor abslraclion.
Demand managemenl will have an imporlanl role lo play, but we may need signicant new
water resources to be developed.
Solutions will have to be found at both a local and slralegic level as even where a river basin
may have enough waler, local calchmenls wilhin il mighl nol.
1.23 Over lhe lasl lew years lhree major reviews have considered lhese and olher challenges laced
by lhe waler seclor. The issues raised by Marlin Cave's Review of Competition and Innovation in
Water Markets in England and Wales
7
, Anna Walker's Independent review of Charging for Household
Water and Sewerage Services
8
and more recenlly by David Cray's Review of Ofwat and consumer
representation in the water sector
9
, are cenlral lo lhis While Paper.
1.24 This While Paper is Covernmenl's response, and il sels oul how we will work wilh olhers lo drive
change, supporl growlh and prolecl lhe environmenl. Our objeclives are lo.
painl a clear vision ol lhe lulure and creale lhe condilions which enable lhe waler seclor and waler
users lo prepare lor il,
deliver benells across sociely lhrough an ambilious agenda lor improving waler qualily, working
wilh local communilies lo make early improvemenls in lhe heallh ol our rivers by reducing pollulion
and lackling unsuslainable abslraclion,
keep shorl and longer lerm allordabilily lor cuslomers al lhe cenlre ol decision making in lhe waler
seclor,
prolecl lhe inleresls ol laxpayers in lhe policy decisions lhal we lake,
ensure a slable lramework lor lhe waler seclor which remains allraclive lo inveslors,
slimulale cullural change in lhe waler seclor by removing barriers lo compelilion, loslering
innovalion and ellciency, and encouraging new enlranls lo lhe markel lo help improve lhe range
and qualily ol services ollered lo cuslomers, and cul business cosls,
7 hllp.//www.delra.gov.uk/environmenl/qualily/waler/legislalion/whilepaper/
8 hllp.//www.delra.gov.uk/environmenl/qualily/waler/legislalion/whilepaper/
9 hllp.//www.delra.gov.uk/publicalions/20!!/07/06/pb!3587-olwal-review-20!!/
work wilh waler companies, regulalors and olher slakeholders lo build underslanding ol lhe impacl
personal choices have on lhe waler environmenl, waler resources and cosls, and
sel oul roles and responsibililies including where Covernmenl will lake a slronger role in slralegic
direclion selling and assessing resilience lo lulure challenges, as well as clear expeclalions on lhe
regulalors.
1.25 Chapter 2 sels oul how we will lake lorward our commilmenl in lhe Nalural Lnvironmenl While
Paper lo long-lerm relorm ol lhe waler abslraclion regime. Pelorm is vilal lo ensure lhe syslem is
lexible enough lo deal wilh a more waler slressed lulure in a way lhal delivers waler lor households
and lhe economy, and prolecls lhe nalural environmenl. We also discuss how we can build more
resilience inlo our waler supply nelwork and reduce lhe cosl ol meeling lulure demand lhrough
grealer inlerconneclion belween supply areas.
1.26 We musl also acl now lo deal wilh currenl lhreals lo our rivers lrom pollulion and over
abslraclion. We can succeed only by drawing on lhe enlhusiasm and knowledge ol lhose wilh a clear
slake in lheir local environmenl. Chapter 3 sels oul how Covernmenl and regulalors are already
slarling lo make lhis happen lhrough new calchmenl pilols as parl ol our concerled ellorl lo align
advice, incenlives and regulalory lools lo address dilluse pollulion and improve lhe environmenl. This
chapler also sels oul our plans lor lackling lhe over-abslraclion which is already damaging our rivers
and wellands.
1.27 However elleclively we manage demand, we will need new inveslmenl in inlraslruclure lo
caplure more waler, use lhe supplies we have more ellcienlly and deal wilh our waslewaler. This
will mean inveslmenl in large inlraslruclure projecls as well as smaller scale projecls, such as on-larm
reservoirs lo slore waler over lhe winler and suslainable drainage syslems which reduce pressure on
lhe sewer nelwork. We need lo connecl up our waler syslem more elleclively so lhal we can move
supplies lo areas where lhey are scarcer. We also need lo properly mainlain our inlraslruclure as il ages
and as pressure on capacily grows as lhe populalion increases. Chapter 4 sels oul how we expecl
lhe waler induslry and olher seclors lo plan lor and meel lhese challenges, and how lhey will be
supporled by Covernmenl, lhe regulalors and lhe planning lrameworks we are responsible lor.
1.28 We know lhal lhe allordabilily ol waler bills is a growing problem lor householders. Chapter 5
sels oul how we will enable waler companies lo largel more help on lhose household cuslomers
who need il mosl by inlroducing social larills. We are also supporling households in lhe soulh wesl
ol Lngland who lace lhe highesl bills in lhe counlry because ol lunding decisions lhal were laken al
lhe lime lhe waler induslry was privalised. To creale an innovalive, ellcienl, cuslomer locused waler
seclor lhal keeps cosls down over lhe long lerm and provides beller service, lhe regulalory lramework
governing lhe induslry musl change. We sel oul a package ol relorms lo inlroduce more compelilion
inlo lhe waler induslry and help business cuslomers and public bodies reduce cosls as parl ol our drive
lor growlh and delcil reduclion.
1.29 Chapter 6 reminds us lhal we each have responsibilily lo acl. Saving waler and prolecling our
local environmenl begins al home. ll can save us money loo. We can also join wilh olhers and work lo
prolecl our local rivers. Waler ellciency will also become more imporlanl lor businesses and lhe public
seclor alike in keeping cosls down. We also sel oul our expeclalions lor lhe regulalors and lhe waler
induslry in delivering lhe objeclives sel oul in lhis While Paper.
!8 Water for Life
!9 Water for Life
2. Secure, suslainable and resilienl waler resources


U
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U
l
i
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i
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i
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s
20
Key commitments:
Pelorm ol lhe abslraclion regime
We will introduce a reformed water abstraction regime resilient to the challenges of
climate change and population growth and which will better protect the environment.
We will work closely with stakeholders in designing the new system and will establish a
national advisory group to guide the process. We plan to consult on proposals in 2013,
and aim to introduce legislation to reform the regime early in the next Parliament.
lncreasing inlerconneclion and lhe lrading ol bulk supplies ol lrealed waler
We want to increase interconnection in our water supply system so that we can use
our resources more exibly and efciently. The Environment Agency will look for
interconnection options across all licensed water supplies and will consider further whether
there are environmental barriers to large scale transfers through existing river and canal
systems. We are looking to Ofwat to support this drive for greater interconnection and
bulk water trading through its use of incentives for water companies.
2.1 Chapler ! oullined lhe scale ol lhe challenge we lace in delivering secure, suslainable and
resilienl waler in lhe coming decades. The Lnvironmenl Agency's modelling shows us lhal il we lail lo
respond lo lhis challenge we may lace dillcully in meeling projecled demand lor waler by lhe 2050s
and leaving sullcienl waler in lhe environmenl. We lherelore need lo lake a lresh look al lhe oplions
we have lor managing lulure supply and demand, and ensure lhal we build in lexibilily and resilience
lo uncerlain and changing condilions. To manage lulure supply and demand, we need lo be smarler
in using lhe supplies we have, develop new sources, and reduce lhe amounl ol waler we wasle.
Crealer conneclivily belween dillerenl parls ol lhe waler nelwork is a priorily.
2.2 We will need new lechnology and new ways ol working lo improve our resource ellciency
and use available supplies as ellcienlly as possible. We will need lo design more innovalive ways
ol capluring and using waler inlo our buildings lhal maximise lhe polenlial ol lhis resource while
minimising carbon and lnancial cosls. When all sleps lo minimise exisling waler use have been laken,
we should consider collecling and reusing rainwaler and recycling grey waler, parlicularly in new
buildings or lhose undergoing major renovalion. Peusing waler can reduce pressure on lhe supply
syslem and our drainage inlraslruclure.
2.3 These local lailored solulions can cul cosls lo households and businesses by reducing lhe need
lo invesl in new supply inlraslruclure and lo lreal waler lo drinking waler slandards when il is nol
needed. We will also need lo consider new supply solulions, such as considering how besl lo reuse
lrealed waler lrom sewage works.
2.4 Waler companies, abslraclors, induslry, larmers and each ol us as individuals will all need lo
make choices aboul how we use lhe oplions available. Whal Covernmenl and lhe regulalors musl
do is relorm lhe aspecls ol lhe currenl syslem which inslilulionalise shorl lerm lhinking and make
il dillcull lo adopl solulions which would deliver a more joined up resilienl waler resources syslem.
lncenlive slruclures which ignore lhe damage supply oplions can do lo lhe environmenl, and lail lo
reward lhose who choose lo lake a more suslainable roule, should be revised.
Water for Life
2! Water for Life
2.5 This chapler locuses on lwo areas Covernmenl sees as lundamenlal lo lhe change we need il we
are lo build resilience. relorm ol lhe abslraclion regime, and a grealer locus on inlerconneclion in lhe
waler supply nelwork.
Pelorm ol lhe abslraclion regime
Electricity supply industry
Public water supply
Fish farming, cress growing,
amenity ponds
Other industry
Non-tidal Abstraction
43%
40%
9%
8%
Figure iii
10
2.6 We abslracl waler lrom our rivers and lrom lhe groundwaler lhal leeds lhem lo supply our
homes, larms and businesses and lhe generalion ol eleclricily.
2.7 ll is imporlanl lhal we gel lhe balance righl belween lhe waler we abslracl and lhe waler
we leave behind lo supporl lhe nalural environmenl. Over-abslraclion reduces lhe qualily ol lhal
environmenl which we all enjoy and lhe value ol our rivers lor leisure and recrealion. Over recenl
decades we have begun lo undersland lhal in many calchmenls we may be damaging nalural
syslems. Waler lows allecl lhe qualily and lype ol habilal in lhe river, lhe ecosyslems il can supporl,
lhe amounl and lype ol sedimenl lhal is carried in lhe waler and where il is deposiled, and lhe exlenl
lo which lhe waler in lhe river can dilule pollulanls.
The case for reform
2.8 The currenl syslem lor managing abslraclion ol waler lrom rivers and aquilers was sel up in lhe
!960s, and was nol originally designed lo prolecl lhe environmenl or manage compeling demands
lor waler. Abslraclors were generally given licences lo lake a lxed volume ol waler lrom rivers or
aquilers. This means lhal in some calchmenls lhere is nol enough waler lell behind lo supporl lhe
nalural environmenl once abslraclors have removed lhe volumes ol waler lo which lhey are currenlly
enlilled. Allhough lhe regime has evolved lo some exlenl lo prolecl lhe environmenl, wilh more
modern licences requiring abslraclion lo be reduced when rivers are under pressure (so-called "hands
oll lows"), lor lhe majorily ol abslraclors lillle has changed.
!0 hllp.//www.delra.gov.uk/slalislics/environmenl/inland-waler/iwlg!2-abslrac/
22 Water for Life
2.9 This chapler sels oul our plans lor developing a new abslraclion regime which will be ll lor lhe
challenges ol lhe lulure, our plans lo deal wilh lhe unsuslainable abslraclion we already lace are sel
oul in chapler 3.
2.10 There are slrong economic and environmenlal argumenls lor relorm. These are sel oul in lhe
reporl lrom lhe Lnvironmenl Agency and Olwal, The case for change reforming water abstraction
management in England
!!
, published alongside lhis While Paper. ln summary.
Too much water is being abstracted from some catchments. More lhan one in len ol our rivers
are abslracled lo an exlenl lhal may be damaging waler ecosyslems. While ecosyslems can cope wilh
low lows lor a lime, regular and suslained lower lows can have signilcanl impacls.
Abstraction charges do not send the right price signals. The cosl ol an abslraclion licence does
nol relecl lhe relalive scarcily or abundance ol waler, and charges do nol vary lo relecl compeling
demands lor waler. This means lhal abslraclors and waler users have lillle incenlive lo change lheir
behaviour in response lo lhe availabilily ol lhe resource.
The current process to change licences that allow damage to the environment will become
increasingly untenable as the climate changes. Where abslraclion is damaging lhe environmenl
lhere is a mechanism lor lhe Lnvironmenl Agency lo invesligale lhe cause and lo vary licences, paying
compensalion lo abslraclors where necessary. ll would be impraclical lo use lhis syslem lo vary
licences as waler availabilily changes in lhe lulure. The syslem would become mired in bureaucracy al
a high cosl lo charge payers, as we eslimale belween 50 and 70 per cenl ol licences would need lo be
invesligaled by 2050.
The system fails to incentivise abstractors to manage risks from climate change at least cost.
Under lhe currenl syslem abslraclors pay inlo a lund used lo compensale licence holders il lhey suller
a loss when changes are made lo lheir licences lo lackle over abslraclion. This approach may be able lo
deal slowly wilh lhe legacy ol unsuslainable abslraclion, bul il incenlivises licence holders lo wail and
seek lhe maximum compensalion paymenl ralher lhan adapl quickly lo climale change risks al leasl
cosl.
The system creates barriers to efcient sharing of water. Where abslraclors no longer need
licences, or where lhey use waler in dillerenl pallerns (lor example, only al parlicular limes ol lhe
year) abslraclion licences could be lraded so lhal we gel more value lrom waler. lor inslance, larmers
could sell lheir abslraclion licences when lhey are nol growing a crop lhal needs irrigaling. The abilily
lo lrade waler righls will grow in imporlance as waler becomes scarcer. However, lhere have been very
lew lrades ol abslraclion licences and we have lound evidence
!2
ol barriers lo lrading in our regulalory
syslem.
A new abstraction regime
2.11 The problems wilh lhe currenl regime will become more apparenl as il slruggles lo cope wilh lhe
challenge ol a changing climale and increasing demand. We need lo replace il belore lhal happens. We
!! hllp.//www.environmenl-agency.gov.uk/research/planning/33088.aspx
!2 Assessmenl ol regulalory barriers and conslrainls lo elleclive inlerconneclivily ol waler supplies Delra (20!0)
hllp.//randd.delra.gov.uk/Delaull.aspx?Menu=Menu&Module=More&Localion=None&ProjecllD=!7265&lromSearch=Y&Publisher=!&SearchTexl=wl0
92!&SorlSlring=ProjeclCode&SorlOrder=Asc&Paging=!023Descriplion
23 Water for Life
will therefore introduce a reformed abstraction regime. Pelorm musl reinlorce lhe message on
lhe need lo adapl lo climale change, giving abslraclors clear signals on waler availabilily lo allow lhem
lo plan elleclively and invesl lor lhe lulure. All exisling licences will be changed in a phased way in lhe
lransilion lo lhe new regime, as will new licences issued lo abslraclors currenlly oulside lhe regime.
2.12 We are selling clear goals lor design ol a new regime now lo sel lhe lramework lor lhis design
process and reduce uncerlainly and risk lo abslraclors. We will design lhe new abslraclion syslem lo.
give clear signals and regulalory cerlainly on lhe availabilily ol waler, lo drive ellcienl inveslmenl lo
adapl lo climale change and meel waler needs,
beller relecl lhe value ol waler lo cuslomers, ils relalive scarcily, and lhe value ol ecosyslems
services lo ensure our rivers, lakes and aquilers are prolecled,
relecl lhe benell ol discharges lo river syslems,
drive ellciency in waler use, using markel lorces and smarl regulalion lo lower cosls and reduce
burdens,
be lair lo all abslraclors, laking inlo accounl currenl licences,
be lexible and responsive lo changes in supply and demand, including providing grealer access lo
waler when more is available, and
meel our waler needs lor people and lhe environmenl al leasl cosl lo waler bill payers, and lhe
consumers ol olher producls and services which depend on waler.
2.13 We will also need lo consider how we should prolecl waler ecosyslems under dillerenl climalic
condilions. As waler lows and lemperalures change, lhe species lound in our rivers and lakes may
aller loo. We will need lo know whal waler low requiremenls musl be in place lo prolecl polenlially
new and dillerenl waler ecosyslems.
2.14 Once lhese changes are in place, we would expecl.
Waler companies lo plan lo meel lheir lulure waler needs more ellcienlly,
8usinesses lhal rely on abslraclion lor lheir waler lo beller manage lhe risks ol reduced waler
availabilily and make lhe necessary inveslmenls lo adapl lo climale change,
All abslraclors lo be able lo make use ol a more dynamic markel in waler and waler righls lo meel
lheir needs, lhus reducing cosls and promoling economic growlh,
All abslraclors lo be able lo make use ol a more lexible syslem lhal lacililales access lo and sharing
ol available waler and which values high qualily discharges inlo rivers,
Waler ecosyslems lo be beller underslood and prolecled, and
Pegulalion lo be al a minimum, wilh communilies and abslraclors working logelher in calchmenls
lo manage waler resources and prolecl lhe waler environmenl.
24
The principles for transition
2.15 We will follow agreed principles for the transition to a new regime as we recognise
the importance to abstractors of both continued access to water supplies and transparent
understanding of their reliability.
lirsl, lhe volume, price and reliabilily ol waler allocaled lo abslraclors in a new regime will lake
accounl ol currenl licences and lhe aclual volumes used. However, we envisage lhal any new
licences will be designed lo vary lhe volume available lor abslraclion according lo overall waler
availabilily.
Secondly, we do nol inlend lo lund compensalion lor any losses individual abslraclors incur in lhe
change lo a new syslem. This would be adminislralively impraclical and nol legally jusliled as lhe
change will be designed lo beller prolecl lhe environmenl in lhe lulure.
Thirdly, we will nol use lhe lransilion lo change licensed volumes lo address currenl unsuslainable
abslraclion. We will slrenglhen our approach lo using mechanisms in lhe currenl regime lo lackle
lhis hisloric legacy in advance ol, and alongside, relorm. We do lhough inlend a new syslem lo
provide slronger proleclion lor lhe environmenl when waler is scarce.
Laslly, we wanl lo ensure lhal lhe move lo a new regime does nol creale barriers lo inveslmenl.
The Lnvironmenl Agency will assisl abslraclors by advising new inveslors on lhe risks lhal climale
change may pose lor projecls lhal are likely lo involve subslanlial waler use al low lows.
2.16 This will be a complex and imporlanl process ol relorm, nol leasl because ol lhe polenlial
need lo exchange around 30,000 licences lor new lypes ol licence once currenlly exempl abslraclors
are broughl inlo lhe currenl syslem. We recognise lhal relorm ol a well underslood regime lor lhe
managemenl ol a crilical resource creales risks and uncerlainly lor abslraclors, so we will approach
change carelully and work closely wilh slakeholders lhroughoul lhe process.
2.17 We will develop delailed oplions lor relorm, building lhe evidence base, considering how
approaches would work in dillerenl lypes ol calchmenl, and carelully assessing lhe cosls lo
abslraclors. We will also lake inlo accounl olher linked policy objeclives, such as lood securily, energy
securily, climale change miligalion, and inlernalional compeliliveness. We will establish a national
advisory group of key stakeholder representatives to guide this process.
The timetable for change
2.18 We will consult on detailed proposals for reform in 2013, and aim to introduce
legislation to implement the changes early in the next Parliament. This should properly inlorm
lhe consullalion on lhe nexl drall Piver 8asin Managemenl Plans which musl be lnalised in 20!5. We
will move lo lhe new regime in slages lo reduce disruplion and cosls. We will slarl wilh calchmenls
which are lacing parlicular risks ol increased waler slress. The new regime should be in place by lhe
mid lo lale 2020s.
Water for Life
25 Water for Life
lncreasing inlerconneclion and lhe lrading ol bulk supplies ol lrealed waler
2.19 The Lnvironmenl Agency's analysis ol lulure waler availabilily demonslrales lhe imporlance
ol increasing inlerconneclion in our waler supply syslem. Tackling supply delcils wilhin individual
calchmenls will be a high cosl approach, increasing lhe new inlraslruclure we need lo build, or
requiring more conslrainl on our waler use lhan is likely lo be acceplable.
2.20 The case lor using our waler resources more lexibly and ellcienlly is compelling. We already
have evidence lhal aclion lo improve inlerconneclion wilhin and belween waler companies on a
relalively local scale could ollsel lhe need lor new resources or inlraslruclure. Olwal eslimales lhal
savings lrom improved inlerconneclion across lhe counlry could be as high as 960 million over lhe
lilelime ol lhe assels, while lhe Waler Pesources in lhe Soulh Lasl Croup
!3
suggesled lhal grealer
sharing belween companies in lhe region could generale savings ol over 500 million by 2035.
2.21 The work ol lhe Waler Pesources in lhe Soulh Lasl Croup is expanding, and a similar group is
being eslablished in Lasl Anglia. The Covernmenl expecls lhe Lnvironmenl Agency lo work closely
wilh waler companies and Olwal lo ensure lhese groups make a robusl assessmenl ol lhe resource
oplions available.
2.22 However, waler is heavy and pumping il consumes energy, making lranslers expensive lo
deliver relalive lo lhe waler's value, and increasing carbon emissions. Modelling on lhe scope lor
bulk lranslers belween companies in lhe Anglian region suggesled lhal lhe opporlunilies lor new,
economically viable waler lranslers are limiled al lhe momenl. lncreasing waler scarcily would change
lhe economics and may make longer dislance lranslers a more allraclive oplion, bul il is slill likely lo
remain expensive lo pump waler long dislances.
2.23 The bulk lranslers we envisage al lhis slage are over a shorl dislance, wilh slralegic
inlerconneclion projecls joining up waler supply zones wilhin and belween company nelworks and
incremenlally building a more inlegraled supply nelwork. Oplions lor inlerconneclion will need lo be
objeclively assessed alongside allernalive approaches in Waler Pesources Managemenl Plans. Wilh lhe
righl incenlives in place, waler companies and new upslream waler enlranls will be able assess lhe
commercial opporlunilies lrom increasing inlerconneclion.
2.24 Waler companies have already slarled lo join up lheir own nelworks lo build resilience. lor
example, since lhe droughl ol !995-96, Yorkshire Waler has joined up dillerenl supply areas. More
recenlly, Uniled Ulililies buill a 55km long waler main belween Manchesler and Liverpool, allowing
bolh cilies lo be led by waler lrom Norlh Wales and lhe Lake Dislricl. lncreasing lexibilily and
resilience by joining nelworks in lhis way is lower risk lhan invesling in lhe inlraslruclure lor longer
dislance bulk lranslers al lhis slage, parlicularly in view ol lhe uncerlainly over which parls ol lhe
counlry are likely lo have surplus waler in lhe lulure.
!3 hllp.//www.environmenl-agency.gov.uk/slalic/documenls/8usiness/!0040!_WPSL_Joinl_reporl_linal.pdl
26
2.25 Wilh Olwal and lhe Lnvironmenl Agency we are addressing lhe lechnical barriers lo
inlerconneclion and lrading ol waler idenliled in a reporl we published lasl year
!4
. Chapler 4 sels oul
our plans lo ensure companies lreal lhis as a high priorily in lhe nexl waler resource planning cycle.
The Environment Agency will take an overview of interconnection options across all licensed
water supplies in order to provide a challenge to a companys assessment in its Water
Resources Management Plan of the potential for bulk transfers. It will also consider further
whether there are environmental barriers to large scale transfers through existing river and
canal systems.
2.26 We are looking lo Olwal lo supporl lhis drive lor grealer inlerconneclion and bulk lrading
lhrough ils use ol incenlives lor waler lrading in lhe nexl price review. We welcome lhe proposals
in Olwal's lulure Price Limils consullalion lo inlroduce regulalory incenlives lo make waler lrading
more allraclive lor bolh imporling and exporling companies. lls proposals lor lackling lhe aclual and
perceived bias againsl oplions which are scored as operaling expendilure, such as waler lrading, will
be crilical. Subjecl lo lhe oulcome ol lhe currenl consullalion, Olwal's delailed melhodology lor lhe
nexl price review is expecled lo include lrm plans lor incenlivising waler lrading and oplimising lhe
use ol lhe waler nelworks. We also welcome Olwal's ellorls lo help lacililale lrades by developing
an upslream markel code and a model conlracl lor bulk supplies lo clarily lhe regulalory rules around
waler lrading and make negolialions belween companies easier.
!4 Assessmenl ol regulalory barriers and conslrainls lo elleclive inlerconneclivily ol waler supplies Delra (20!0)
hllp.//randd.delra.gov.uk/Delaull.aspx?Menu=Menu&Module=More&Localion=None&ProjecllD=!7265&lromSearch=Y&Publisher=!&SearchTexl=wl0
92!&SorlSlring=ProjeclCode&SorlOrder=Asc&Paging=!0#Descriplion
Water for Life


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27 Water for Life
3. Prolecling our rivers


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28 Water for Life
Key commitments:
lmproving waler qualily
We will take forward our new catchment-based approach to water quality and diffuse
pollution. We will also work towards Common Agricultural Policy reforms that will promote
the farming industrys role as custodian of the natural environment. As well as agricultural
sources we will continue to tackle pollution from other sources such as private wastewater
facilities and abandoned metal mines. We will consult on a national strategy on urban
diffuse pollution in 2012.
Currenl unsuslainable abslraclion
We will tackle the legacy of unsustainable abstraction in parallel to developing and
implementing a reformed abstraction regime. We will develop an action programme for
addressing unsustainable abstraction in the River Basin Management Plans up to 2027, and
beyond. We are working with Ofwat and the Environment Agency on how best to include
water company solutions for restoring sustainable abstractions in the price review process,
having rst been included in the companies Water Resources Management Plans. We will
reduce the barriers to trade in abstraction licences.
3.1 Chapler 2 sel oul how we will meel lhe long-lerm challenge we lace in delivering a resilienl
waler resources regime. While major relorm ol waler abslraclion will lake lime, lhere are changes we
musl make much more quickly. 8y lackling pollulion and over-abslraclion we will improve lhe heallh
ol our rivers and wellands. We will also improve lhe economic value we gel lrom our waler resources
lo supporl growlh.
lmproving waler qualily
3.2 The benells ol a clean, heallhy aqualic environmenl are signilcanl and undervalued. relalively
clean waler lhal reduces lhe need lor waler companies lo carry oul coslly and carbon inlensive
lrealmenl processes lo make il ll lo drink, improved habilals lhal supporl grealer biodiversily,
improved lood proleclion, good qualily walers lor balhing, angling and olher leisure aclivilies,
high qualily supplies ol lsh and shelllsh, and many more. The UK National Ecosystem Assessment
!5

lold us lhal we need lo be beller al underslanding and lhen realising lhe benells lhal lhe nalural
environmenl can give lo sociely.
!5 hllp.//www.delra.gov.uk/environmenl/nalural/uknea/
29
3.3 lmproving waler qualily so lhal we make lhe mosl ol lhese benells is a challenge. There has
been good progress in improving waler qualily in recenl years. lor example, lrom !990-2008 under
previous slandards, lhe percenlage ol river lenglh ol good chemical qualily in Lngland rose lrom 55 lo
79 per cenl, while lhe percenlage ol river lenglh ol good biological qualily wenl up lrom 55 lo 72 per
cenl. This progress came largely lhrough lackling poinl sources ol pollulion, such as discharges lrom
sewage lrealmenl works or lrom induslrial processes. We musl mainlain our ellorls on such source
conlrols, especially in relalion lo emerging pollulanls, bul we now lace a lougher challenge.
3.4 We musl now locus on lhe pollulion lrom dilluse sources lrom our roads, larms and induslrial
eslales, lrom lhe delergenls we use lo wash our cars or lrom lhe many producls lhal wash down our
drains. We need lo be invenlive in lnding new ways lo slop lhis pollulion al source. This could be
cheaper lhan waler companies applying end ol pipe lrealmenls, and could dislribule lhe cosls beller
among pollulers and lhose who benell lrom a heallhier waler environmenl, ralher lhan lhe cosl
mainly lalling on waler cuslomers.
The Water Framework Directive
The Waler lramework Direclive, adopled in 2000, provides lhe means lor us lo pursue our desire
lo have heallhy, lully lunclioning ecosyslems. ll sels a new range ol paramelers lor delermining
lhe slalus ol waler bodies, which cover lhe ecology ol our waler bodies as well as lhe biology and
chemislry lhal we were measuring belore. Againsl lhese more demanding paramelers, jusl 26 per
cenl ol our waler bodies achieved "good slalus" in 2009.
The Direclive embodies our own ambilions lor improving lhe local nalural environmenl and like lhe
UK National Ecosystem Assessment
!6
, recognises lhe value in doing so. ll also recognises lhe need
lo work in local river calchmenls, lo assess all lhe pressures lrom rural and urban land use and lo
involve local slakeholders in designing and implemenling improvemenls.
The primary requiremenls are lhal we musl adopl Piver 8asin Managemenl Plans (P8MPs) lhal
prevenl class-lo-class delerioralion in any waler body and aim lo bring all waler bodies lo good
slalus by 20!5. This is excepl where cosls would be disproporlionale, solulions lechnically inleasible,
or lhe nalural condilions do nol allow, in such cases we can use lwo subsequenl planning cycles
(20!5-2! and 202!-27) and in cerlain circumslances sel lesser objeclives.
The P8MPs adopled lor lhe lrsl cycle lhrough lo 20!5 are projecled lo prevenl delerioralion and
lo increase lhe percenlage ol bodies meeling good slalus lo 30 per cenl, on lop ol which lhe
Lnvironmenl Agency commilled lo delivering an exlra 2 per cenl.
The Lnvironmenl Agency is carrying oul a programme ol invesligalions, lo be compleled by lhe end
ol 20!2, lo resolve uncerlainlies aboul why parlicular waler bodies are lailing and whal measures
are needed lo address lhal. This will enable us lo increase lhe rale al which our rivers and lakes
achieve good slalus as we prepare and deliver lhe second planning cycle.
!6 hllp.//www.delra.gov.uk/environmenl/nalural/uknea/
Water for Life
30 Water for Life
PRESSURE
SECTOR RESPONSIBLE
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20 17 1 21 267 21 31 78
Priority
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15 4 18 8 30 67 8 106
BOD and
Ammonia
376 1 6 1 88 1 3 340 873 457
Nutrients 1552 3 4 101 4 1 433 1635 653
Hydrology 38 1 1 1 3 12 1 5 1 8 98 718
Morphology 288 5 13 5 3 107 3 38 3 392 170 2725
pH 15 39 5 13 50 3 68
Sediment 396 4 7 8 17 2 9 66 9 50
Groundwater
pressures
53 19 6 9 10 12 271
Still under
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82 10 16 11 29 2 155 106 656
Figure iv Reasons for failure to achieve good status
17
The catchment-based approach
3.5 The new calchmenl-based approach we announced in March lhis year is al lhe hearl ol our drive
lo improve environmenlal waler qualily. Waler syslems are complex and inlerconnecled wilh lhe land
lhal surrounds lhem. Aclivily on land allecls lhe qualily ol lhe waler environmenl and lhe lile il can
supporl, as well as lhe quanlily ol waler available lor abslraclion and lhe risk lhal heavy rainlall leads
lo looding.
3.6 Mobilising local players lo develop and deliver our goals lor lhe waler environmenl is a new
approach lor Covernmenl. However, lhere are examples we can learn lrom, where Pivers Trusls,
Wildlile Trusls, waler companies, lhe Lnvironmenl Agency and olhers have achieved resulls by building
a local consensus on whal aclions are needed and by lorging parlnerships lo lund and carry lhem oul.
3.7 The key elemenls ol our approach will be.
lhe Lnvironmenl Agency sharing lhe evidence lo slarl discussion al local level among pollulers,
polenlial benelciaries and all inleresled parlies lo build consensus on lhe oulcomes needed,
driving immediale aclion lo address pollulion lound by walking calchmenls, and securing
compliance wilh exisling regulalions,
largeling advice and incenlives where lhey can have lhe mosl impacl in reducing pollulion and
saleguarding lhose waler bodies lhal provide lhe grealesl range ol public benells, lor example
where agricullure is concerned, Calchmenl Sensilive larming and agri-environmenl paymenls,
!7 ligure iv is based on lhe 20!! Lnvironmenl Agency nalional Peasons lor lailure dalasel. The numbers reler lo lhe number ol limes lhe pressure
or seclor appear in lhe dala sel. The conldence wilh which seclors responsible have been idenliled may vary lrom 'suspecled' lo 'probable' lo
'conlrmed', which is relevanl lo lhe level ol cerlainly in lhe assessmenls.
3! Water for Life
maximising wider sources ol lunding lhrough paymenls lor ecosyslem services lrom lhe
benelciaries ol a clean waler environmenl given lhe scale ol lhe aclions needed, il is imporlanl lo
mobilise all available lools and polenlial lunding sources,
laking opporlunilies, where possible, lo deliver waler qualily solulions lhal bring olher
environmenlal benells,
lracking our progress in achieving "good slalus" lor waler bodies, and
being ready lo inlroduce new mandalory measures where a consensus lor aclion cannol be
eslablished.
3.8 We will join up lhe calchmenl approach wilh olher landscape scale inilialives including Nalure
lmprovemenl Areas lo inlegrale messages where lhere is geographical overlap and generally lo
secure besl value lor money by adopling measures which deliver mulliple environmenlal benells
as well as lhe desired improvemenls in waler qualily. We will also work closely wilh Local Nalure
Parlnerships as lhese slarl up lo ensure we have represenlalion across all inleresls lhal wanl lo gel
involved in improving lheir environmenl.
3.9 We wanl lo move away lrom lhe idea lhal lhe Covernmenl and ils delivery bodies need lo drive
all lhe solulions. Maximising wider sources ol lunding will be imporlanl lo lhe delivery ol waler qualily
improvemenls and lo wider environmenlal benells. The Nalural Lnvironmenl While Paper highlighled
lhe opporlunilies lor expanding paymenls lor ecosyslem services and made a number ol commilmenls
lo enable and encourage lhese approaches lo be laken lorward including lhe publicalion ol an
aclion plan in 20!2.
3.10 Waler companies can play an inluenlial role in lackling pollulion al lhe calchmenl level,
parlicularly in lhe drinking waler prolecled areas lrom which lhey source lheir supplies. We welcome
lhe commilmenl made by Waler UK lhal calchmenl managemenl will be lhe lrsl approach companies
consider when evalualing oplions lo deliver waler qualily improvemenls. We wanl companies lo work
closely wilh lhe regulalors lo galher evidence on lhe ellecliveness ol lhe aclion lhey lake, and remove
any disincenlives lo waler company calchmenl aclivily when il is clearly in lhe inleresl ol cuslomers.
8uilding lhe evidence base will help companies in engaging wilh cuslomers when seeking lheir supporl
lor calchmenl managemenl schemes.
3.11 The Lnvironmenl Agency is already hosling !0 pilol calchmenls and is building lhe approach in
close discussion wilh local inleresls. We have also called lor olhers lo come lorward lo hosl calchmenl
schemes. We have received 70 expressions ol inleresl al lhe lime ol publicalion (see Figure v). The
Lnvironmenl Agency will supporl all calchmenl approaches lhal proceed.
3.12 We inlend lhe pilols lo evolve inlo permanenl approaches, bul also lo serve as lhe lesl bed lor
developing a model lor delivering across all calchmenls lor lhe second river basin planning cycle. We
will draw out the lessons from all the catchment pilots and intensively support 25 of them,
including through an evaluation of the initial phases in early 2013.
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Upstream Thinking
Upslream Thinking is Soulh Wesl Waler's lagship programme ol environmenlal improvemenls
aimed al improving waler qualily in river calchmenls in order lo reduce chemical lrealmenl cosls.
Alongside lhe Weslcounlry Pivers Trusl, Devon Wildlile Trusl, Cornwall Wildlile Trusl and lhe
larming and Wildlile Advisory Croup, Soulh Wesl Waler is looking al all lhe issues which can
inluence waler qualily and quanlily across calchmenls.
The aim is lo improve land managemenl so lhal waler qualily and quanlily is improved al source,
long belore il reaches lhe lrealmenl works.
The programme helps larmers and land managers lo keep peal, soils and nalural lerlilisers on lheir
land and lunds aclions lo improve waler and slurry managemenl.
The capilal expendilure in lhe programme has slrong projecled benell lo cosl ralios (in lhe region
ol 65 lo ! or beller over 30 years) and will cosl jusl 60 pence per cuslomer by 20!5.
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South Pennines Ecosystem Services Pilot
An innovalive projecl in lhe Soulh Pennines has shown how calchmenl managemenl lo improve
waler qualily can deliver mulliple benells.
Yorkshire Waler is pursuing a land managemenl based solulion lo lhe growing raw waler colour
problem on Keighley Moor. Tackling lhe problem al source ralher lhan locusing on expensive and
carbon inlensive lrealmenl solulions is more suslainable, avoids cosls lo cuslomers and supporls lhe
olher ecosyslems services lhal lhe moor provides such as biodiversily and carbon slorage.
A parlnership approach balances lhe needs and inleresls ol lenanls, who earn lheir livelihoods lrom
lhe moor, wilh waler qualily and habilal improvemenls. The ecosyslem services pilol led by Nalural
Lngland valued lhe benells lo sociely ol changing land use and resloring habilal as 3 limes grealer
lhan lhe cosls ol delivery.
Mandatory measures
3.13 The calchmenl approach musl nol be a licence lor inaclion. We wanl calchmenl plans lhal
clearly sel oul aclions on which progress can be checked. Should il become clear lhal new mandalory
measures are necessary and would be more elleclive in delivering environmenlal oulcomes, we will
consider lheir inlroduclion. However, as lhe circumslances ol each calchmenl are dillerenl and lhe
lime il lakes lo build a collaboralive calchmenl approach and measure lhe benells il brings will vary,
we do nol lhink selling a slandard limelable lor decisions on lurlher regulalory sleps is leasible.


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Water Framework Directive Catchments
Figure v
34 Water for Life
Figure vi
Figure vi shows the impact of changing farming practices on the health of a catchment. Improved
practices illustrated on the right have been shown to have a signifcant impact on water quality,
be affordable and in many cases even save farmers money. Examples of good practices include soil
management (cultivating across the slope, establishing buffer strips and avoiding high risk crops
next to water courses), livestock management (reducing feld stocking rates when felds are wet and
regularly moving feeders and water troughs), fertiliser management (ensuring soil analysis for nutrient
content and using clover in place of grass), farm infrastructure (fencing off rivers, bridges for livestock
crossing and farm track management) and manure management (keeping heaps away from water
courses and installing covers on slurry stores).
Agricultural pollution
3.14 Work by the Environment Agency illustrates the relative importance of different sectors impact
on the water environment and the reasons for water bodies failing to achieve good status (see
Figure v). While many farmers have worked to prevent pollution, by not over applying fertilisers,
manures and pesticides, and by preventing soils eroding into watercourses, pollution from agriculture
is signifcant
18
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18 See Figure iv (p.30)
Pilot catchments (Environment Agency and
third party hosted, evaluated by Defra)
Catchments where external organisations
have expressed an interest to host
Remaining Water Framework Directive
catchments
Map produced 29/11/2011
Crown Copyright and database right 2011.
Ordnance Survey licence number 100024198
0 25 50 100
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35 Water for Life
Figure vi
Figure vi shows the impact of changing farming practices on the health of a catchment. Improved
practices illustrated on the right have been shown to have a signicant impact on water quality,
be affordable and in many cases even save farmers money. Examples of good practices include soil
management (cultivating across the slope, establishing buffer strips and avoiding high risk crops
next to water courses), livestock management (reducing eld stocking rates when elds are wet and
regularly moving feeders and water troughs), fertiliser management (ensuring soil analysis for nutrient
content and using clover in place of grass), farm infrastructure (fencing off rivers, bridges for livestock
crossing and farm track management) and manure management (keeping heaps away from water
courses and installing covers on slurry stores).
Agricultural pollution
3.14 Work by lhe Lnvironmenl Agency illuslrales lhe relalive imporlance ol dillerenl seclors' impacl
on lhe waler environmenl and lhe reasons lor waler bodies lailing lo achieve "good slalus" (see
Figure v). While many larmers have worked lo prevenl pollulion, by nol over applying lerlilisers,
manures and peslicides, and by prevenling soils eroding inlo walercourses, pollulion lrom agricullure
is signilcanl
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!8 See ligure iv (p.30)


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3.15 This year we are invesling approximalely !! million in improving our underslanding ol land and
waler managemenl. This will help us idenlily lhe impacls ol dilluse pollulion and lhe besl measures
lo lackle il. We are also developing novel mapping lools lo allow lor incenlives lo be largeled lo areas
ol high ecosyslem polenlial, building on work done lor lhe UK National Ecosystem Assessment and by
lhird parlies like Pivers Trusls and waler companies.
3.16 We expecl invesligalions by lhe Lnvironmenl Agency, calchmenl walkovers and local knowledge
lo idenlily inslances where improvemenls slill need lo be made. This evidence will be shared wilh local
inleresls in calchmenls, including larmers and land managers, lo demonslrale how lheir aclivilies are
impacling on lhe local environmenl and how lhey can come inlo compliance wilh exisling regulalory
requiremenls, lhrough on-larm aclion. Some aclions will be cosl neulral and cenlral lo good larming
praclice, olhers will be incenlivised lhrough largeling ol Covernmenl advice, granls, agri-environmenl
paymenls and any olher local sources ol lunding.
3.17 Coing lorward, lhe availabilily ol some ol lhe lunding and incenlives lor larmers will depend
on lhe oulcome ol negolialions on lhe lulure ol lhe Common Agricullural Policy (CAP) and on waler
companies laking lorward calchmenl managemenl plans. We will work towards a reformed
CAP which promotes effective delivery of environmental public goods, particularly by
implementing land management uses and practices that mitigate climate change and
protect vital natural resources such as water. We will provide clearer guidance for farmers
on the basic measures required to safeguard water courses. We will plan how to spread
the funds across economic and environmental priorities, and gain better value for money
by identifying measures that deliver multiple benets for water, soils, air quality, climate
change and biodiversity.
3.18 When this approach is delivering, we will consider whether we can merge the
requirements that ow from the Nitrates Directive into the integrated set of asks of farmers
so that we do not need a separate set of requirements for Nitrate Vulnerable Zones.
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Other sources of rural diffuse pollution
3.19 We will continue to tackle sources beyond those from agriculture, for example from
private wastewater facilities, such as septic tanks, or abandoned metal mines. Using
evidence gathered through local investigations and national data sources, the Environment
Agency will target those catchments where these sources are a problem. Through a joinl
endeavour belween lhe Lnvironmenl Agency and lhe Coal Aulhorily we now have a priorilised
programme lo deal wilh waslewaler lrom mines and are slarling an inilial !0 million programme ol
remedialion works.
Saltburn Gill
Overnighl lhe river Sallburn Cill, in Cleveland, lurned brighl orange, when lhe nearby abandoned
ironslone mine workings slarled discharging iron ochre. Over 330kg is now deposiled inlo lhe
slream bed every day, slripping lhe river ol oxygen. Over !00 lonnes ol iron is subsequenlly
discharged inlo lhe Norlh Sea each year and over lhe balhing beach ol Sallburn-by-Sea, impacling
severely on lhe lown's lourisl lrade.
The Lnvironmenl Agency and Coal Aulhorily eslablished lhal a lrealmenl planl could remove 99 per
cenl ol lhe iron. The cosl ol remedialion work would be belween 3 8 million over 25 years, bul
lhe nel benell lo lhe local economy would be around !0.5 million. Once lhe lrealmenl planl is up
and running in 20!5, lhe ecology ol Sallburn Cill is expecled lo recover wilhin six monlhs lo a year.
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Urban diffuse pollution
3.20 Dilluse pollulion arising lrom lhe buill environmenl has a signilcanl impacl on waler qualily.
However, lhe pressures are complex and diverse wilh many dillerenl organisalions needing lo play a
parl in lhe solulions. Some ol lhe measures also require a more general shill in behaviour, lor example
addressing lhe misuse ol drainage syslems.
3.21 We will consult on a national strategy on urban diffuse pollution in 2012. This slralegy
will lorm parl ol our relreshed approach lo Waler lramework Direclive delivery. We will locus on
several key sources, including runoll lrom roads and induslrial eslales, conlaminaled sedimenl, and
loul-waler misconnecled lo surlace waler sewers.
3.22 We will work wilh lhe Highways Agency lo model lhe risks lrom road runoll and lo priorilise
remedialion work, wilh local aulhorilies lo amend slreel cleaning regimes which could reduce
pollulanls enlering lhe surlace waler syslem or lhe use ol permeable asphall, wilh induslry, lo remove
harmlul chemicals in producls, and wilh lhe general public on such mallers as misconneclions lo lhe
sewerage syslem and disposal ol lals, lo raise awareness and encourage aclion.
3.23 ln lhis way, we will employ bolh nalional level inlervenlions and more locally driven measures
wilhin calchmenls. As parl ol lhis, we are encouraging uplake ol lhe calchmenl-based approach
wilhin urban areas loo, building on currenl cross-organisalional working lo manage local lood risks.
Bathing and shellsh waters
3.24 From 2015, we will introduce more stringent bathing water standards, based on a better
understanding of how pollution can affect bathers health. ll lhese slandards were in place now,
over hall ol our walers would achieve lhe highesl slandard, bul around !0 per cenl would lail lhe new
minimum.
3.25 We will also maintain delivery of microbial standards at designated shellsh waters
and, as the legislation changes in 2013, ensure that they are afforded the same level of
protection as protected areas under the Water Framework Directive.
A summary of our ongoing commitments
3.26 The Covernmenl looks lo many aclors lo play lheir parl in securing a heallhy aqualic
environmenl, bul, wilh ils delivery bodies, will lead lhe way by supporling and lacililaling aclion. ln
parlicular.
as announced in April, we have made 92 million available over lhe 4 years slarling 20!!-!2 lo lund
projecls lo deliver lhe Waler lramework Direclive in ways lhal lever conlribulions lrom lhird parlies,
conlinuing Calchmenl Sensilive larming, wilh programme lunding anlicipaled lo be 72 million
over lhe lhree years slarling 20!!-!2,
mainlaining our programme ol research and developmenl projecls worlh !! million lhis year
(including lor example Demonslralion Tesl Calchmenls, worlh 8.5 million), looking lo beller
undersland and encourage joinl land and waler managemenl,
crealing, lhrough lhe Lnvironmenl Agency, a high qualily evidence base lo inlorm lhe calchmenl-
based approach and lrack whelher il is achieving whal we need or whal more is needed,
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39
Urban diffuse pollution
3.20 Diffuse pollution arising from the built environment has a signifcant impact on water quality.
However, the pressures are complex and diverse with many different organisations needing to play a
part in the solutions. Some of the measures also require a more general shift in behaviour, for example
addressing the misuse of drainage systems.
3.21 We will consult on a national strategy on urban diffuse pollution in 2012. This strategy
will form part of our refreshed approach to Water Framework Directive delivery. We will focus on
several key sources, including runoff from roads and industrial estates; contaminated sediment; and
foul-water misconnected to surface water sewers.
3.22 We will work with the Highways Agency to model the risks from road runoff and to prioritise
remediation work; with local authorities to amend street cleaning regimes which could reduce
pollutants entering the surface water system or the use of permeable asphalt; with industry, to remove
harmful chemicals in products; and with the general public on such matters as misconnections to the
sewerage system and disposal of fats, to raise awareness and encourage action.
3.23 In this way, we will employ both national level interventions and more locally driven measures
within catchments. As part of this, we are encouraging uptake of the catchment-based approach
within urban areas too, building on current cross-organisational working to manage local food risks.
Bathing and shellfsh waters
3.24 From 2015, we will introduce more stringent bathing water standards, based on a better
understanding of how pollution can affect bathers health. If these standards were in place now,
over half of our waters would achieve the highest standard, but around 10 per cent would fail the new
minimum.
3.25 We will also maintain delivery of microbial standards at designated shellfsh waters
and, as the legislation changes in 2013, ensure that they are afforded the same level of
protection as protected areas under the Water Framework Directive.
A summary of our ongoing commitments
3.26 The Government looks to many actors to play their part in securing a healthy aquatic
environment, but, with its delivery bodies, will lead the way by supporting and facilitating action. In
particular:
as announced in April, we have made 92 million available over the 4 years starting 2011-12 to fund
projects to deliver the Water Framework Directive in ways that lever contributions from third parties;
continuing Catchment Sensitive Farming, with programme funding anticipated to be 72 million
over the three years starting 2011-12;
maintaining our programme of research and development projects worth 11 million this year
(including for example Demonstration Test Catchments, worth 8.5 million), looking to better
understand and encourage joint land and water management;
creating, through the Environment Agency, a high quality evidence base to inform the catchment-
based approach and track whether it is achieving what we need or what more is needed;
contributing to the delivery of outcomes that are sought at catchment level by acting to promote
and secure compliance with existing requirements;
making sure that Defras delivery bodies join up and work well together to generate a common
message to farmers on what is needed to deliver environmental objectives in an integrated way;
allocating funds under the Common Agricultural Policy in a way that delivers the range of desired
environmental outcomes in an integrated way; and
publishing a strategic approach to addressing urban diffuse pollution during 2012 as part of our
wider refresh of Water Framework Directive delivery, and as part of this encouraging greater uptake
of the catchment-based approach within urban areas.
Figure vii Risk to ecology from current abstraction in England and Wales
Water for Life
Should support Good Ecological Status
Low risk to Good Ecological Status
Medium risk to Good Ecological Status
High risk to Good Ecological Status
Regulated rivers, reservoirs and lakes
DEF-CM8230-WFL-Rep.indd 39 06/12/2011 13:48
40
Currenl unsuslainable abslraclion
Establishing the extent of the problem
3.27 Under lhe Waler lramework Direclive, lhe Lnvironmenl Agency has begun invesligaling !,500
waler bodies where lhe pressure lrom currenl abslraclion means lhal lhe remaining waler low may
nol be supporling good ecology, including aboul 300 waler bodies al high risk (see Figure vii).
3.28 These invesligalions will build on lhe experience lhe Lnvironmenl Agency has gained under ils
Pesloring Suslainable Abslraclion (PSA) programme. Under lhis programme lhe Lnvironmenl Agency
is already invesligaling around 250 siles, which include lhe counlry's mosl environmenlally imporlanl
siles, lo see whelher abslraclions are causing damage and whal can be done lo lackle lhe problem.
Tackling over-abstraction
3.29 We will lackle lhis legacy ol unsuslainable abslraclion in parallel lo developing and implemenling
a relormed abslraclion regime. The Lnvironmenl Agency will be publishing exlensive inlormalion on
progress wilh implemenling lhe PSA programme early in 20!2, which will show how il is addressing
locally damaging abslraclions. This work, logelher wilh calchmenl scale invesligalions, will give
us early inlormalion on lhe issues we need lo lackle in lhe nexl round ol Piver 8asin Managemenl
Plans, slarling in 20!5. We will develop an action programme for addressing unsustainable
abstraction in the River Basin Management Plans up to 2027, and beyond. ln doing so, we will
lake proper accounl ol lhe lessons learnl lrom our calchmenl managemenl pilol schemes along wilh
all available dala, carelully assess lechnical leasibilily, disproporlionale cosls and nalural condilions,
and engage lully wilh slakeholders.
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Restoring Sustainable Abstraction Heltondale Beck
This beck is a lribulary slream ol lhe Piver Lowlher, which is parl ol lhe Lden Special Area ol
Conservalion. Al lhis sile, lhere would nalurally be a heallhy populalion ol salmon and lroul, and in
lhe lower reaches possibly bullhead eel, slone loach and minnow.
ln lhe !950s, a weir was buill across lhe river so waler could be laken lor public waler supply,
lranslerring il lrom lhe beck inlo Haweswaler Peservoir. An inadequale low release 200 melres
downslream ol lhe weir lell a dry seclion, and below lhal, low lows. As a consequence lhe poor
low blocked lhe passage ol migralory lsh bolh upslream and downslream.
The solulion designed under lhe PSA scheme involved inslallalion ol a lsh pass, a lsh screen lo
prevenl lsh being laken along wilh lhe abslracled waler inlo lhe inlake inlo Haweswaler, and
changes lo lhe licences and condilions lo ensure appropriale river lows al all limes. When lhe lows
are increased, lsh will have a heallhier, more nalural, waler habilal lhal allows lhem lo lollow lheir
nalural migralory pallerns.
3.30 8ul lackling over-abslraclion is nol slraighllorward waler lrom lhese rivers is used lo supply our
homes and businesses, and il waler companies or olher abslraclors were lo slop laking lhis waler lhey
would have lo lnd olher sources ol supply, or work wilh us all lo reduce our consumplion. As explained
in chapler 2, lhe abslraclion regime responds only slowly and expensively lo unsuslainable abslraclion.
Under lhe currenl regime, il can lake several years lo invesligale all licences in lhrealened waler bodies,
reach decisions on licence changes, and raise lunds lrom abslraclion charges lo compensale abslraclors.
3.31 Al lhe momenl lhe damage over-abslraclion causes lo lhe environmenl is nol lully relecled in
lhe price we pay lor our waler. Nor is il properly relecled in lhe oplions appraisal carried oul by waler
companies when lhey consider how besl lo balance supply and demand.
3.32 The comprehensive relorm ol lhe abslraclion licensing syslem we propose will reduce lhe risk
lhal lhe impacls ol climale change lead lo an increase in unsuslainable abslraclion. However, lhere
are immediale aclions we can lake which will improve our abilily lo lackle lhe legacy ol unsuslainable
abslraclion and prepare lhe ground lor relorm. These measures will speed up our abilily lo invesligale
and deliver change lo problemalic licences and make sure we gel beller value lrom expendilure used
lo cul unsuslainable abslraclion.
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3.33 The exisling approach ol lunding changes lo waler company licences lhrough lhe PSA
Programme does nol encourage waler companies lo plan elleclively lor managing changes lo lhe
volume ol waler lhey are licensed lo abslracl. The arrangemenls drive a sile-by-sile approach, do nol
incenlivise companies lo examine inler-relaled siles (where combining aclion across a number ol siles
mighl deliver mulliple benells), and will be slow lo deliver suslainable abslraclion levels.
3.34 We wanl waler companies lo have beller incenlives and lools lo innovale and manage lheir
abslraclion suslainably. We wanl lhem lo locus on delivering long lerm cosl benelcial solulions.
And we wanl waler cuslomers lo be able lo play a role in deciding how lhis should be done in lheir
region. Al lhe same lime we wanl lo ensure lhal waler cuslomers are lrealed lairly, lhal lhe cosl lo
lhem delivers real benells, and lhal lhey pay only lheir lair share ol lhe cosls ol resloring suslainable
abslraclions.
3.35 We think that a framework where company solutions for restoring sustainable
abstractions are included in the price review process, having rst been included in the
companies Water Resources Management Plans has the potential to deliver better outcomes
for consumers and the right incentives on water companies. We are working with Ofwat
and the Environment Agency to identify how best this could be achieved. Olwal's proposals lo
change how il regulales and locus on delivery ol long lerm oulcomes would ll well wilh our objeclive
lor lackling unsuslainable abslraclion. And lhe new cuslomer challenge groups Olwal is requiring lor
lhe nexl price review would be a good lorum lor cuslomers lo be involved in company proposals. A
change ol approach would also mean lhal lunds lhal waler cuslomers have, lhrough lheir waler bills,
conlribuled lo lhe compensalion lund so lar would have lo be relurned lairly lo lhem so lhal lhey do
nol pay lwice.
3.36 Olwal is also consulling on lhe Abslraclion lncenlive Mechanism (AlM) as parl ol ils lulure Price
Limils proposals. This will incenlivise waler companies lo lake inlo accounl lhe environmenlal impacls
ol abslraclion when considering lhe use ol lheir waler supplies and will avoid lhe risk lhal lrading ol
waler could increase over-abslraclion. Olwal has developed lhese proposals wilh WWl and members
ol ils "llchen inilialive" and is working wilh lhe Lnvironmenl Agency and slakeholders lo lesl how
lhe AlM should work in praclice. Lxperience wilh developing and using lhe AlM will also help in
underslanding lhe role ol price signals in a relormed abslraclion regime.
3.37 The Environment Agency will consult in 2012 on changes to its charging scheme to use
the Environmental Improvement Unit Charge (the part of abstraction charges that funds the
costs of compensation payments) to fund hydromorphological measures, where it is cost
effective to do so and where the primary objective is to address unsustainable abstraction.
Such measures could prolecl waler ecosyslems and reslore suslainable abslraclion al a lower cosl
lhan changing licences, while slill enabling abslraclors lo lake lhe waler lhey need. The Lnvironmenl
Agency will work wilh landowners and abslraclors lo assess where hydromorphological oplions mighl
be used. Hydromorphological measures will only be used in praclice in localions where invesligalion
ol lheir cosls and impacls demonslrales value lor money and prolecls waler ecosyslems. The cosl
ol implemenling lhe measure will be lunded by lhe Lnvironmenlal lmprovemenl Unil Charge and il
is inlended lhal lhere should be no cosls lo lhe owners ol lhe land allecled by hydromorphological
measures.
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43
Hydromorphological measures
Hydromorphological measures look lo aller lhe physical characler ol channels wilh lhe aim ol
helping lo concenlrale low lows wilhin lhe channel, so increasing waler deplhs and low velocilies.
There are several melhods available lo do lhis including.
excavaling a small "channel wilhin a channel" lo concenlrale low lows, crealing whal is known
as a lwo slage channel,
placing a low berm (perhaps lrom nearby dredgings) across a signilcanl porlion ol lhe channel
bed lo creale a lwo-slage channel,
placing deleclors (perhaps log beams or olher soll malerials) in lhe channel bollom lo locus and
concenlrale lows, and
changing channel mainlenance regimes by slopping or reducing dredging and/or slopping or
changing lhe way weed culling is underlaken.
3.38 The Environment Agency will also pilot using reverse auctions as a tool for restoring
catchments to a sustainable balance at least cost. This was recommended in lhe Cave review
and can be elleclive when lhere are several licences in a calchmenl lhal could be varied lo prolecl
lhe environmenl. Licensees whose abslraclion is damaging lhe environmenl or which may cause
delerioralion in Waler lramework Direclive slalus, il used, will be able lo bid lo sell back parl or all ol
lheir licensed volume lo lhe Lnvironmenl Agency. The Lnvironmenl Agency will lake lhe ollers lhal
deliver lhe besl value in resloring suslainable abslraclion in lhe parlicular area.
3.39 A power in the Water Act 2003 enables licences causing serious damage to our rivers,
lakes and groundwater to be removed or varied without compensation. We will start using
this power from 2012 and will consult shortly on how we do so.
Driving economic growth through better use of our water resources
3.40 We know al lhe momenl lhal il can be dillcull lor a business wanling lo slarl or increase
abslraclion lo oblain a year-round reliable licence. On average, in a quarler ol waler bodies in
Lngland, il is only possible now lo oblain new licences lhal provide waler lor 30 per cenl ol lhe lime
(see Figure viii). This could become a signilcanl barrier lo economic aclivily in parls ol lhe counlry
as waler availabilily decreases. An elleclive markel in abslraclion licences would make il easier lor
businesses lo access waler in lhe volume and lhe localion lhey require and lor abslraclors lo make
judgemenls on lhe relalive value ol lheir licences.
3.41 However, lhe inlexibilily ol lhe exisling abslraclion regime, lack ol markel inlormalion, complex
rules around lrading
!9
, and uncerlainly over whelher licence holders will be required lo reduce lhe
amounl ol waler lhey abslracl, are impeding lhe developmenl ol such a markel. Only 53 licence
lrades have so lar been idenliled in Lngland up lo November 20!0
20
.
3.42 We will reduce the barriers to trade in abstraction licences.
!9 Synovale UK (2008) Lxploring views on lhe polenlial lor more aclive waler righls lrading
20 Some lrades may have gone unrecorded. lor example, lhere may have been signilcanl sales ol land including waler righls.
Water for Life
44
3.43 The Environment Agency published in October 2011 new and clearer rules, introducing a
presumption that a trade should be permitted where there is no risk of increasing environmental
damage. The Environment Agency will improve market information (including by publishing
information electronically on average trade prices, volumes and locations) to make it easier
for willing buyers and sellers to understand the potential value of their abstraction licences.
It will publish on the internet data on water licences so that those interested in buying
licences can approach potential sellers, encouraging the emergence of market makers and
brokers.
3.44 To encourage trading by increasing the volume of water that may be available to trade,
the Environment Agency will examine large unused licences to consider whether it should
use its current powers to revoke these licences where the holder does not have a reasonable
need for them (which might include holding a reasonable contingency). The Environment
Agency will also identify a number of catchments with potential for increased trading where
it will actively promote and test these reforms. We will use this experience to help design a new
abstraction regime more encouraging to trades.
Figure viii Availability of water in England and Wales percentage of time water would be
available for abstraction under new licences
Water for Life
less than 30%
at least 30%
at least 50%
at least 70%
at least 95%
4. Planning and building for the future


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4. Planning and building lor lhe lulure


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46 Water for Life
Key commitments:
Aligning plans
Government and the regulators are working to minimise burdens on companies from the
separate planning processes in the water sector. We will build on the priorities set out
in this White Paper in the guideline for the next water resource management planning
cycle and the forthcoming strategic policy statement and social and environmental
guidance to Ofwat. The Environment Agency will work with other sectors of the economy
with signicant dependence on water to advise Government of the future risks to both
abstractors and the environment.
lnlraslruclure
We will take a strategic overview of the quality and capacity of water and wastewater
infrastructure, and the robustness of the sectors plans for future service delivery.
Government, the Environment Agency and the water industry will consider further
whether there are strategic national infrastructure projects necessary to ensure water
supplies remain resilient and, if so, whether there are barriers to their delivery that should
be removed.
Waslewaler and drainage
We will work with Ofwat and Environment Agency to ensure a more strategic approach
to drainage planning. We will consult shortly on national standards and a new approval
system for sustainable drainage. We will also consult on proposals that new sewers must
meet default build standards.
4.1 The previous chaplers sel oul evidence on lhe challenge lhal climale change and populalion
growlh presenls lor our waler resources, and lhe need lor aclion lo build resilience and enable a
good qualily waler environmenl. While lhe scenarios in chapler ! presenl dillerenl piclures ol whal
lhe lulure mighl look like, lheir consislenl message is lhal beyond, and perhaps belore, 2050 we can
expecl reduced waler availabilily and increased pressure on lhe capacily ol our drainage syslems.
4.2 We musl plan and prepare now il we are lo reduce lhese risks. While we should nol
undereslimale lhe scale ol lhe challenge, we can meel il. We have lime lo make lhe signilcanl
inveslmenls lhal will be needed and lo begin lo inluence alliludes lo lhe way as a sociely we use and
value waler. 8ul we cannol allord lo delay. Planning and conslruclion limelines lor new inlraslruclure
are lenglhy, and real and lasling behaviour change lakes lime lo eslablish. The longer we leave
decisions on how we adapl lo lhe lulure, lhe higher lhe cosl is likely lo be and lhe more uncerlain lhe
oulcomes.
4.3 Our exisling waler supply and waslewaler inlraslruclure is ol varied age and condilion, and some
ol il is well over a cenlury old. 8ul whalever ils age, our exisling inlraslruclure also needs a suslained
and signilcanl programme ol inveslmenl in mainlenance, renovalion and replacemenl as necessary lo
ensure a high level ol service.
4.4 We are well placed lo plan lor lhe lulure. The waler seclor has a good lrack record in long-lerm
planning and has been allraclive lo inveslors because ol ils slabilily. The slalulory lramework lor lhe
47
seclor locuses on lhe long lerm lhrough broad ranging Piver 8asin Managemenl Plans and a waler
resources planning regime which looks al supply and demand over a lwenly lve year period. Waler
companies also develop slralegic direclion slalemenls covering lhe same period and have conducled
climale change risk assessmenls and produced adaplalion plans.
4.5 These are slrong loundalions on which we can build, bul responsibilily lor planning lor lhe
lulure goes beyond lhe waler seclor. 8usinesses need a beller underslanding ol how pallerns ol
waler availabilily may aller in lhe lulure and lhe impacl lhis mighl have on lheir operalions and lulure
cosls. Covernmenl also needs lo undersland lhe likely scale and geographical dislribulion ol lulure
demand, and lhe impacl lhis could have on our nalural environmenl. We will look lor assurance lhal
waler companies' waler resource plans will colleclively deliver a waler supply syslem which is resilienl
lo lhe impacls ol climale change. Our approach will need lo be supporled by slreamlined and largeled
aclion by lhe seclor's regulalors.
The current water planning framework
The Waler lramework Direclive eslablishes a slralegic lramework lor managing lhe waler
environmenl. ll requires a managemenl plan lor each ol Lngland's !0 river basin dislricls (lwo
ol which are shared wilh Wales and one wilh Scolland) lo be developed every six years. The
measures idenliled lor delivery by waler companies, lor example where reduclions in abslraclion
are needed lo reslore a calchmenl, leed inlo lhe waler resources managemenl planning process.
Waler companies consider sources ol supply and lorecasl demand over a lwenly lve year period
and assess oplions lor closing any gap belween supply and demand. The prelerred programme
mighl balance inveslmenls, lor example, in new supply inlraslruclure, such as reservoirs, in pipe
replacemenl lo reduce leakage, or in melering ol waler supply lo manage demand. The oulpuls
lrom lhe river basin planning process and lhe waler resources managemenl planning process will
lorm parl ol lhe company's business plan lor lhe price review overseen by Olwal which decides how
much cuslomers can be charged lo lund lhis business plan.
Aligning Plans
4.6 lollowing lhe lrsl round ol Waler Pesources Managemenl Plans (WPMPs), Delra commissioned
an independenl review ol lhe process
2!
. This review and lhe Olwal review highlighled a lack ol co-
ordinalion belween lhe waler resources managemenl planning process and Olwal's 2009 price review.
While lhe plans have dillerenl drivers, lhey are linked.
4.7 Waler companies will be able lo produce more inlegraled plans and deliver beller oulcomes lor
cuslomers and lhe environmenl il lhe processes are beller aligned and regulalors co-ordinale lheir
requiremenls. 8olh processes require exlensive periods ol consullalion wilh cuslomers, and a beller
alignmenl would also help cuslomers undersland how lheir waler bills will change in lhe lulure.
4.8 Ofwat, the Environment Agency and the Drinking Water Inspectorate have agreed
to strengthen their working relationships to provide clear signals to the companies on
delivering outcomes, and the Government is working closely with them to minimise the
burdens on companies. This includes bringing forward some of the work for the second
2! hllp.//www.delra.gov.uk/publicalions/20!!/09/30/pb!3653-waler-resources/
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48 Water for Life
cycle of River Basin Management Plans to enable delivery through the 2014 price review.
Government will also change the statutory timeframe for drought plans to a ve yearly cycle
as for WRMPs.
Water Planning up to 2025
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2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
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Price
Determination
Figure ix Water planning up to 2025
Clearer priorities for water companies
4.9 The Covernmenl agrees wilh lhe lndings ol lhe WPMP review lhal lhe waler resources
planning process has delivered a slrong sel ol plans, bul we believe lhal more can be done lo
reduce cosls lo cuslomers and improve environmenlal oulcomes. ln parlicular, we wanl companies
lo relecl lhe broader conlexl ol supply challenges lhrough lo 2050, lo more accuralely relecl
lhe cosl ol abslraclion lo lhe environmenl, lo recognise lhe broad slewardship role lhey can play
wilhin calchmenls lo prolecl lhe qualily ol lheir sources ol drinking waler, lo consider lhe scope lor
improved inlerconneclion and grealer use ol waler lrading and bulk lranslers, and lo sel ambilious
goals lor reducing average waler consumplion and supporl lhem wilh robusl plans lor delivery.
49
4.10 We will therefore use the guideline for the next water resources management
planning cycle to translate the policy priorities from this White Paper into a clear direction
for companies. These priorities will also be reected in our forthcoming strategic policy
statement and our social and environmental guidance to Ofwat
22
. These priorilies will include.
A long term perspective. We will update our planning guidance to reect the latest research
on how to account for climate change in water resources planning using the UK climate
change projections (UKCP09). We expecl companies lo assess lhe vulnerabilily ol lheir resources lo
climale change, and analyse, in a way proporlionale lo how susceplible parlicular areas are, how lheir
supplies mighl be allecled in lhose resource zones. While lhe planning horizon in WPMPs is 25 years,
our guidance will make clear lhal lhis should nol conslrain companies in looking al lhe resilience
ol lheir inlraslruclure lo climale change or lhe longer lerm pressures on lheir waler resources and
making business cases lor lunding lhrough lhe price review lhal look al longer limescales.
Better reecting water scarcity and environmental damage. 8y beller underslanding and
relecling lhe scarcily ol waler and lhe social and environmenlal cosls ol waler abslraclion, waler
companies will idenlily more suslainable plans lor balancing demand and supply. We are reviewing
lhe way in which environmenlal and social cosls are included wilhin lhe oplions appraisal in order
lo improve consislency and lransparency in lhe calculalions used and lo beller relecl lhe pressures
on calchmenls and lhe benells ol managing demand. This would be reinlorced by Olwal's proposal
lo inlroduce lhe Abslraclion lncenlive Mechanism (AlM) lhrough ils lulure Price Limils lramework,
making il more allraclive lor companies lo use less environmenlally damaging sources ol waler in lheir
day-lo-day operalions.
Consideration of catchment management approaches. Covernmenl is working wilh waler
companies and lhe regulalors lo build underslanding ol lhe benells ol calchmenl managemenl
approaches and lhe barriers which may reduce lhe likelihood lhal a waler company will pul lorward
such an approach, or lhal il will be lunded lhrough lhe price review. The strategic policy statement
for Ofwat and revised social and environmental guidance will give a strong steer on
Government support for approaches that offer good value for customers and the potential
to prevent and manage future risks to drinking water quality. Waler companies may also wanl
lo work wilh olher slakeholders on such projecls, and look lor parlnership lunding, where lhis will
maximise lhe scope lor delivering exlra benells.
The value of water trading. A number ol waler companies already make use ol waler lranslers lo
help balance supply and demand. Many ol lhese arrangemenls pre-dale privalisalion. Covernmenl
expecls waler companies lo consider all oplions lor meeling lheir supply and demand balance
when preparing waler resources plans, including inlerconneclivily across company boundaries,
opporlunilies lor lrading waler, or olher cross boundary solulions. The waler resources planning
guideline will provide advice on how lhis should be achieved. ln view ol lhe imporlance ol increased
inlerconneclivily lo lulure resilience, we will expecl lo see clear evidence lhal any company
proposing lo develop a new source ol supply has lully considered and cosled raw waler lrading
wilh neighbouring companies, and robuslly challenge companies on lheir approach lhroughoul lhe
planning process. ll lhis approach lails, Covernmenl will consider direcling a company lo lake lorward
22 Discussed lurlher in 6.46-6.47
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50
waler lrading. The Covernmenl welcomes Olwal's plans lo reinlorce lhis policy direclion lowards
grealer use ol bulk lrading lhrough lhe incenlives il is consulling on lor lhe nexl price review.
Conserving our water resources. The lasl round ol WPMPs saw an increasing use ol demand
measures, including melering in waler slressed areas and some large scale inlormalion campaigns
lo reduce household and business usage. Delivery ol lhese plans should lead lo average demand
lor waler levelling oul or decreasing over lhe planning period. However, we cannol be complacenl.
Delivering lhe reduclion in demand lhe plans envisage will be challenging, and il is nol clear lhal all
companies will succeed. lurlher aclion will be needed lo lackle demand pressures, especially in areas
ol currenl or likely lulure waler slress.
Ofwat and demand management targets
We recognise lhal some demand managemenl measures are less well lesled lhan olhers and deliver
less cerlain resulls lhan lradilional supply side measures. To help incenlivise companies in lhe currenl
Price Peview period, Olwal has sel an incenlive lor waler companies lo reduce demand by 5 lilres
per properly per day over lhe 5 year period, and made provision lor waler companies lo run pilols
wilhoul lear ol penally il lhey are less successlul lhan expecled. Olwal will review lhe success ol
lhis incenlive ahead ol lhe nexl Price Peview lo delermine whelher il should be conlinued and/or
increased, in lighl ol ils proposed move lo oulcome based regulalion and approach lo incenlives.
Leakage Targets
Since !994-95 leakage has lallen by 36 per cenl, saving enough waler lo supply lhe daily needs ol
over !2 million people. 8elween 2009-!0 and 20!5, largel leakage in Lngland and Wales is due lo
lall by a lurlher 3 per cenl, saving enough waler lo lll over 38 Olympic sized swimming pools every
day. Olwal largels move companies lo lhe Suslainable Lconomic Level ol Leakage (SLLL). This is lhe
level al which il would cosl more lo reduce leakage lurlher in a parlicular company's area lhan il
would lo save waler in dillerenl ways or lo develop addilional supplies.
The calculalion also lakes inlo accounl environmenlal laclors and lhe views ol consumers.
However, lhe exisling guidance lo companies on calculaling SLLL does nol lully relecl lhe long-
lerm suslainabilily ol lhe waler environmenl. We will work wilh waler companies, Olwal and
lhe Lnvironmenl Agency lo review SLLL, comparing approaches across lhe induslry lo valuing lhe
exlernalilies in lhe SLLL calculalion, wilh lhe aim ol revising guidance lo ensure ils more coherenl
applicalion. Olwal will lake lhe conclusions ol lhis review inlo accounl when considering how besl
lo incenlivise companies lo reduce leakage lhrough lhe nexl price review.
We will strengthen the WRMP guideline to make it clear that all demand management
measures must be thoroughly explored and tested as part of the options appraisal. The lasl
WPMP planning round sel lhe Covernmenl's aspiralion ol reducing average demand lo !30 lilres
per head per day by 2030. This incenlivised waler companies lo include measures in lheir WPMPs
lo reduce waler consumplion. There are wide varialions in average consumplion across lhe counlry,
wilh some resource zones already al or below lhe !30 lilre level. Waler companies also lace dillerenl
levels ol waler slress and risks and uncerlainlies around climale change. However, all companies
will be expecled lo show how lhey will reduce waler use per person. Where companies are in a
designaled waler slressed area, or where lhey have demand lhal is above lhe nalional average, we
Water for Life
5!
expecl companies lo produce a plan lhal will deliver overall demand reduclions in lhe lrsl lve years.
Looking lurlher ahead we will expecl all WPMPs lo demonslrale lhal lhe demand lrend is signilcanlly
downward. Covernmenl will reinlorce lhis message aboul lhe imporlance ol oplions lo reduce
demand over lhe lrsl lve years and beyond in ils slralegic policy slalemenl lo Olwal.
The cosls and benells ol increasing levels ol waler melering lo help reduce demand will vary lrom
region lo region, depending on lhe level ol waler slress. 8ecause ol lhese complexilies, we will not
impose a blanket approach to metering across the country. We believe water companies are
best placed to nd the appropriate local solution in discussion with their customers. As lhe
climale changes and lhe populalion grows, lhe case lor universal melering may change, bul will do so
al dillerenl limes lor dillerenl areas.
Water Meters
The majorily ol households in Lngland and Wales are charged lor waler and sewerage on lhe
basis ol lhe raleable value ol lheir home ralher lhan lhe amounl ol waler lhey use, 37 per cenl
ol households have a waler meler and pay lor whal lhey use. However, lhis balance is changing.
lor lhe lasl decade uplake ol melering has been increasing by jusl over 2 per cenl per year, mainly
as households opl lor a meler lo save money. ln lhe waler slressed areas ol Soulh Lasl Lngland
some companies are rolling oul universal melering programmes lo help lackle lheir supply demand
balance. Under currenl waler company plans, by 20!5 hall ol all homes in Lngland and Wales
would be melered.
Smart Meters
Smarl or inlelligenl waler melers may oller lurlher cuslomer benells. These include more accurale
billing and grealer conlrol over consumplion and beller underslanding ol pallerns ol demand and
levels ol leakage.
The Walker review recommended lhal Olwal eslablish a group lo advise on lhe cosls and benells
ol inlelligenl melering, and lo lake advanlage ol any synergies wilh lhe roll-oul ol smarl eleclricily
and gas melers. The Smarl Melering Advisory Croup brings logelher Covernmenl, induslry and
regulalors and is exploring lhe business case lor smarl melering and working lo undersland how il
could benell cuslomers. Covernmenl is inleresled in lhe polenlial ol smarl waler melers lo improve
waler company nelwork managemenl and encourage more suslainable waler use by consumers.
We look lo companies lo demonslrale lhe business case lor implemenlalion wilh lhe agreemenl ol
lheir cuslomers.
Certainty on sustainability reductions
4.11 The uncerlainly around lhe suslainabilily ol exisling abslraclion licences has been a signilcanl
obslacle lo elleclive long lerm planning. The Covernmenl will help waler companies by improving
lhe inlormalion which underpins lheir planning and lhe Lnvironmenl Agency will ensure likely
suslainabilily reduclions can be included wilhin WPMPs. As well as lhe decisions oullined in chapler 2
lo relorm lhe abslraclion regime, and lhe work lo enable company solulions lor resloring suslainable
abslraclions lo be included in lhe price review process, we will also reduce the uncertainty
around further sustainability reductions needed to deliver the Water Framework Directives
objectives. The Environment Agency has speeded up the current round of investigations,
Water for Life
52
with water companies asked to complete work by December 2012 to inform the next water
resources management planning round. It is also bringing forward work on the second cycle
of River Basin Management Plans so that schemes where the need to act is clear, for example
to avoid deterioration of protected areas, will be included in the Environment Programme for
the next price review and can be reected in water companies business plans. This will enable
companies lo plan slralegically lo meel public supply needs alongside measures lo meel river basin
plan objeclives lor lhe environmenl.
Planning for other sectors
4.12 Waler companies' planning role is limiled lo lhe public waler supply and many waler users draw
lheir supplies lrom olher sources. Covernmenl needs a broader underslanding ol lhe likely scale and
geographical dislribulion ol lulure demand lo enable us lo assess lhe resilience ol our waler resources.
lndividual seclors and businesses need lo idenlily lhe risks lo lheir own operalions, and lo consider
lhe level ol planning necessary relalive lo lhe risks involved. 8usinesses wilh waler inlensive operalions
need lo consider waler availabilily in planning lor lhe lulure and in deciding where lo locale. Llleclive
long-lerm planning lor waler will help avoid cosls lalling on cuslomers lrom shorl-lerm responses lo
supply problems.
4.13 The Lnvironmenl Agency has a key role in considering lulure waler needs and is working wilh
seclors, such as lhe energy generalion induslry, lo do lhis. The Environment Agency will develop
demand scenarios in partnership with different sectors, and use the outputs to develop a
common understanding of the future risks to both the abstractors and the environment and
provide advice to Government.
Energy Generation
Thermoeleclric power generalion needs signilcanl amounls ol waler, largely lor cooling. This
includes coal, gas, nuclear and biomass power slalions. Lleclricily producers are licensed lo abslracl
more waler lrom lhe environmenl lhan any olher seclor, including lhe public waler supply. Power
generalion is waler inlensive, however consumplion rales are low and a signilcanl proporlion ol lhe
waler lhal is abslracled lor cooling purposes is relurned
23
.
ln lhe coming decades, lhe UK's energy inlraslruclure will be subslanlially rebuill, and ils need
lor waler may increase as lhe seclor lackles growing demand and inlroduces new, lower carbon
lechnology. Legally-binding emissions reduclion largels are driving decarbonisalion ol eleclricily
generalion and a lransilion lo low carbon sources ol eleclricily. Wilh an expecled increase in
eleclricily demand and a conlinued reliance on lhermoeleclric power generalion lo meel lhis
demand, waler use al power slalions will conlinue.
Covernmenl, lhe Lnvironmenl Agency and lhe power seclor are working lo characlerise currenl
usage and assess lulure demand lor waler. This work will lake accounl ol lhe plausible range ol
lulure energy demand, lhe oplions lor meeling il (including choice ol cooling lechnology) and how
much waler lhis mighl consume. Separale sludies will examine lhe impacls including lhe cosl ol
policy oplions responding lo changed waler availabilily. Work is also underway lo undersland lhe
waler use associaled wilh carbon caplure and slorage lechnology.
23 Lnvironmenl Agency dala, 20!!.
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Agriculture
The droughl lhis year has highlighled how luclualions in waler availabilily al crilical limes in
produclion can allecl lhe agricullure seclor. larmers can increase lheir resilience lo droughl
condilions by developing lheir own supplies, lor example by building larm reservoirs or inslalling
rainwaler colleclion syslems. Demand lor waler can be reduced by using more ellcienl irrigalion
lechnology and precision larming lechniques, improving lhe managemenl ol waler resources, or
considering crops and varielies lhal need less waler or are more resilienl lo droughl.
Around one lhird ol larms in Lngland which are equipped lo irrigale already have winler slorage
reservoirs. The Covernmenl encourages larmers lo invesl in building sale reservoirs, and will develop
lechnical guidance lo help larmers lo do so. The Lnvironmenl Agency can also provide advice on
posilioning and conslruclion melhods lor reservoirs lo help larmers ensure lhal lhey are sale and
ll lor purpose. lunding lrom lhe Pural Developmenl Programme lor Lngland (PDPL) has supporled
lhe conslruclion ol 4! on-larm reservoirs as well as lraining on irrigalion and soil managemenl.
The package ol relorms in lhis While Paper may make il more allraclive lor waler companies and
olher licensees lo work wilh larmers on economically and environmenlally allraclive oplions lor
abslracling and sloring waler al peak winler lows.
Waler managemenl is one ol lhe measures supporled by lhe larming and loreslry lmprovemenl
Scheme, a small granls scheme launched in November 20!!, which lorms parl ol a suile ol new
nalionally consislenl schemes under lhe socio-economic elemenls ol lhe PDPL. The Pural Lconomy
Cranl, a scheme ol granls lor larger projecls is expecled lo be also announced al lhe end ol 20!!in
November, will give granls ol belween 25,000 and ! million lor micro businesses and SMLs lo
boosl larm compeliliveness and supporl signilcanl growlh in lhe rural economy. The scheme will be
launched early 20!2.
lrom ! January 20!2 lhe larming Advice Service, which will provide larmers wilh guidance on how
lo meel lhe environmenlal obligalions placed on claimanls ol Common Agricullural Policy subsidy
paymenls, will include advice on abslraclion licensing and on climale change adaplalion, including
waler managemenl. This will help raise larmers' awareness ol lhe challenges and supporl lhem in
lheir decisions.
We welcome lhe inclusion ol waler managemenl measures in lhe proposed LU Pural Developmenl
Pegulalions published by lhe Luropean Commission in Oclober 20!! as parl ol lhe discussions
on lhe Common Agricullure Policy 20!4-20, which will sel lhe lramework lor lhe nexl Pural
Developmenl Programme.
lnlraslruclure
4.14 The waler and waslewaler seclors provide imporlanl nalional inlraslruclure. The National
Infrastructure Plan
24
lrsl published in aulumn 20!0, and updaled in November, sel oul Covernmenl's
role in ensuring key nelworks are reliable, resilienl and inlegraled, and recognised lhal conlinued,
subslanlial inveslmenl in inlraslruclure is essenlial lo suslainable economic growlh.
24 hllp.//www.hm-lreasury.gov.uk/nalional_inlraslruclure_plan20!!.hlm
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A national strategic overview
4.15 While lhe primary responsibilily lor waler resource planning and providing an elleclive
waslewaler syslem musl conlinue lo resl wilh lhe waler companies, Government will take a
strategic overview of the quality and capacity of water and wastewater infrastructure, and
the robustness of the sectors plans for future service delivery. This will enable Covernmenl lo
assess whelher lhere are barriers lo delivery ol inlraslruclure projecls crilical lo lhe resilience ol lhe
nelworks. Government, the Environment Agency and the water industry will also consider
further whether there are strategic national infrastructure projects necessary to ensure water
supplies remain resilient. However, responsibilily lor delivering any projecls idenliled will conlinue
lo resl wilh induslry, working proaclively wilh projecl promolers, developers, lhe local aulhorily and
olher relevanl public bodies.
Planning for future infrastructure
4.16 More houses and commercial properlies are needed lo meel lhe needs ol a growing populalion,
changing lileslyles, and lo enable economic growlh. However, houses and ollces should nol be
buill unlil lhe waler and sewerage inlraslruclure serving lhe developmenl is sullcienl lo ensure
lhe environmenl is nol placed al risk. This requires close dialogue and collaboralion belween local
aulhorilies, lhe Lnvironmenl Agency, developers and waler companies so lhal lhe parlies can balance
lhe needs ol lhe economy and sociely lor new developmenl, lhe environmenl, and lhe bills lo
cuslomers.
4.17 This need lor dialogue is relecled in our amendmenls lo lhe land use planning regime.
The proposed new Nalional Planning Policy lramework sels oul lor local aulhorilies lhe slralegic
priorilies lhey need lo address posilively in lheir Local Plan. Those priorilies include lhe provision ol
inlraslruclure needed lo supporl developmenl, such as inlraslruclure lor waler supply and waler
qualily. Local planning aulhorilies and olher public bodies, lhal play a slralegic role in local plan
making have a new Duly lo Co-operale which requires lhem lo engage conslruclively, aclively and
on an ongoing basis as local plans are prepared. Once Local Plans are drawn up, local aulhorilies
are required lo nolily lhe relevanl waler and sewerage providers and invile represenlalions on lhe
conlenls ol lhe Plan. We are ensuring lhrough workshops and discussions lhal all parlies are lully
aware ol lhe changing planning lramework and how il and lhe waler and sewerage planning
lramework can be mulually supporling.
4.18 The companies providing waler and waslewaler services lor lheir parl will delermine lheir
need lor inveslmenl in inlraslruclure lhrough lheir WPMPs and lhe lnal price review business plans
submilled lo Olwal. 8olh lhese should be based on robusl dala lhal draws on bolh Local Plans and
lhe lalesl available housing and demographic projeclions.
4.19 The waler ellciency ol new housing has improved wilh lhe inlroduclion ol 8uilding Pegulalions
which have sel a calculaled whole building perlormance slandard ol !25 lilres per head per day. The
Code lor Suslainable Homes has also eslablished a series ol perlormance levels and slandards lor new
homes, including waler ellciency slandards. Publicly lunded housing has lo meel !05 lilres per head
per day.
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Nationally signicant infrastructure
4.20 The Planning Acl 2008 allows lor lhe Secrelary ol Slale lo designale Nalional Policy Slalemenls
covering lhe need lor new or expanded inlraslruclure ol nalional signilcance. Nalional Policy
Slalemenls remove lhe need lor lenglhy planning inquiries on lundamenlal policy queslions al lhe
applicalion slage and help inlorm decisions on Nalionally Signilcanl lnlraslruclure Projecls (NSlPS)
covered by lhal Acl including dams or reservoirs holding over !0 million cubic melres ol waler.
4.21 Whilsl a number ol drall WPMPs conlained reservoir proposals, none ol lhe published lnal
plans include a proposal lhal would meel lhe lhreshold lor nalionally signilcanl inlraslruclure. We
do nol lherelore have plans al lhe momenl lo produce a Nalional Policy Slalemenl lor waler bul we
will keep lhis under review during lhe nexl WPMP round. We have consulted on a National Policy
Statement for Waste Water
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and anticipate laying it before Parliament for approval shortly.
Thames Tunnel
The nalional policy slalemenl on waslewaler provides lhe lramework lor developmenl consenl lor
major waslewaler projecls, such as lhe Thames Tunnel. The Thames Tunnel, in combinalion wilh
olher improvemenls lo London's sewerage syslem, would reduce lhe currenl unacceplable level
ol sewage overlowing inlo lhe lidal Thames, bring lhe waler qualily up lo a slandard lhal meels
inlernalional benchmarks, and help ensure lhal lhe syslem has lhe capacily lo meel lhe lulure
needs ol a growing populalion and changing rainlall pallerns caused by climale change.
Infrastructure resilience
4.22 We musl also make sure our exisling inlraslruclure can conlinue lunclioning ellcienlly. A
changing climale is nol jusl a lhreal lo lhe amounl ol waler available. ll also lhrealens our supply
syslems, lor example lhrough increased lood risk. During lhe 2007 loods Mylhe Trealmenl Works in
Clouceslershire was looded wilh lhe loss ol piped waler supply lo 350,000 people, while Yorkshire
Waler's pumping slalions in Hull were overwhelmed leading lo surlace waler looding.
25 hllp.//archive.delra.gov.uk/corporale/consull/wasle-waler/!0!!!6-waslewalerpolicy-condoc-annex!.pdl
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4.23 Over lhe currenl lve year price round, waler companies are planning lo spend 400 million
on making lheir lrealmenl works and olher assels more resilienl lo looding and olher hazards, lhus
prolecling cuslomer supply.
Climate Change Act 2008
The Climale Change Acl 2008 requires lhe Covernmenl lo carry oul an assessmenl every lve years
ol lhe risks and opporlunilies lor lhe UK lrom climale change. The lrsl reporl is due lo be laid
belore Parliamenl by January 20!2. The Climale Change Pisk Assessmenl (CCPA) will draw logelher
evidence lo make a cross-culling comparison ol lhe risks and opporlunilies lhal climale change
presenls lo our economy, wider sociely and lhe environmenl over lhe nexl cenlury.
The Climale Change Acl also requires Covernmenl lo prepare a Nalional Adaplalion Programme
selling oul lhe objeclives, proposals and policies Covernmenl will pursue in response lo lhe risks
raised by lhe climale change risk assessmenl. Civen lhe prominence ol waler relaled risks in lhe
risk assessmenl, lhe While Paper and lollow-up aclion will lorm an inlegral parl ol lhe Nalional
Adaplalion Programme.
Through lhe Adaplalion Peporling Power, lhe Climale Change Acl enabled Covernmenl lo require
public service organisalions, including all waler companies, Olwal and lhe Lnvironmenl Agency, lo
reporl on how lhey are addressing risks lrom climale change.
Waler company reporls were published in May 20!! and can be read al
hllp.//www.delra.gov.uk/environmenl/climale/seclors/reporling-aulhorilies/reporling-aulhorilies-reporls/
Waslewaler and drainage
4.24 Lach day, waler and sewerage companies in Lngland and Wales collecl and dispose ol over !0
million lonnes ol waslewaler. Our exlensive sewerage nelwork would cosl over 200 billion in lolal
lo replace relecling lhe large scale and hidden value ol lhese assels. Approximalely !84,000km
ol lormer privale sewers and 36,000km ol laleral drains connecl lo lhe resl ol lhe public syslem.
The Covernmenl decided lo lransler lhe ownership ol lhese privale sewers lo waler and sewerage
companies lrom Oclober lhis year lo enable inlegraled managemenl ol lhe sewerage syslem and
address a range ol problems associaled wilh lhe previous ownership arrangemenls. These sewers are
lhoughl lo be in a worse condilion wilh a higher blockage rale lhan exisling public sewers.
4.25 Our sewerage inlraslruclure is ageing. lor example, lhe average age ol a London sewer is 63
years old. 8elween 2000 and 2008 jusl over 3,000km, or ! per cenl ol public sewers in Lngland
and Wales were replaced or rehabililaled. Thal relecls lhe condilion assessmenls made by sewerage
underlakers as relecled in lhe Price Peview selllemenls lor each company. However, al lhal rale il
will be aboul 800 years belore lhe whole syslem is covered which suggesls lhal al some poinl we or
lulure generalions will need lo increase lhal rale ol inveslmenl il lhose nelworks are lo conlinue lo
lunclion al lhe same slandard. lnvesling al a rale which mainlains lhe long-lerm serviceabilily ol lhe
nelwork musl remain a priorily.
4.26 lailures ol lhe sewerage nelwork can resull in signilcanl environmenlal impacls and sewer
looding ol properlies. ln 20!0, over 60 per cenl ol serious pollulion incidenls were caused by lhe
lailure ol lhe sewerage nelwork (such as sewer collapses and combined sewer overlows).
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4.27 We recognise lhal planning, and in parlicular longer lerm planning, lor sewerage inlraslruclure
has had less locus lhan lhal lor waler supply. A recenl review by Olwal, lo be published shorlly,
lound considerable varialion in companies' lhoroughnessin lhis area. We will work with Ofwat
and Environment Agency to ensure a more strategic approach to drainage planning and
that planning standards are brought up to a consistent level of best practice so that both
customers and investors have a better understanding of future plans.
Olympic Innovation
The Olympic Delivery Aulhorily (ODA) had an Olympic Park-wide largel lo reduce drinking waler
consumplion by 40 per cenl compared lo equivalenl developmenls. The Aquatics Centre houses
lwo 50m pools, and a 25m diving pool. The building is waler inlensive, nol only as lhe pools require
regular lop ups, bul swimmers are ollen showering belore and aller swimming.
Waler ellciency lechniques produce greal savings lhrough lhe incorporalion ol low-low showers,
hand wash basin laps and low lush WCs, a waler-saving ol around 29 per cenl could be achieved
over lhe lilespan ol lhe building. Covering lhe pools is assumed lo save around 30 per cenl ol
evaporalion losses and small quanlilies ol rainwaler will be slored lor localised irrigalion.
The design leam also inlroduced a 53,000 syslem lo recycle lhe swimming pool backwash waler lo
lush WCs and urinals. This should save 2.7 megalilres each year, bringing lhe lilelime savings up lo 32
per cenl.
lor more inlormalion go lo www.learninglegacy.London20!2.com
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The largesl 'black-waler' recycling cenlre in lhe UK Thames Waler's Old Ford Water Recycling
Plant produces non-polable waler lor lhe Olympic Park.
Palher lhan laking lresh waler lrom lhe environmenl and lrealing il lo lhe high slandards required
lor lap waler, lhe Old lord Planl lreals waslewaler lor non-polable use.
The Planl lakes Londoners' waslewaler lrom lhe norlhern oullall sewer, designed in lhe !860s by
Sir Joseph 8azalgelle, and lurns il inlo waler suilable lor irrigalion, lushing loilels and as coolanl
in lhe Lnergy Cenlre. Waler lrom lhe Planl is pumped inlo lhe Park's nelwork ol pipes, which are
separale lrom lhose supplying drinking waler lo laps.
As a large scale lrial lo lesl lhe lechnical and commercial viabilily ol eslablishing communily-
scale waler lrealmenl and recycling lacililies lhis projecl represenled bolh an imporlanl research
opporlunily lor Thames Waler and an innovalive solulion lo help lhe ODA wilh ils 40 per cenl
reduclion largel. The 574 cubic melres ol waler lhe Planl will produce per day will save lhe
equivalenl ol 83 Olympic swimming pools' worlh ol waler in a lypical year.
The sile is also a designaled nalure reserve and lhe operalional building blends in wilh ils nalural
surroundings, using suslainable melhods, wherever possible. The use ol a 'green rool' and
permeable surlaces, lor example, ensure a variely ol environmenlal benells while reducing lhe
impacl ol surlace waler run-oll on lhe sile.
4.28 Nol all ol our drainage nelworks are currenlly able lo cope wilh exlreme rainlall. Surlace waler
looding is complex and ollen includes looding lrom waler courses, sewers and drainage nelworks al
lhe same lime. Civen lhe pressures on our inlraslruclure capacily and lhe risks lrom climale change,
we wanl lo encourage lhe use ol Suslainable Drainage Syslems (SuDS) wherever lhey will be elleclive.
SuDS are a range ol measures designed lo mimic as closely as possible nalural drainage, and ils
advanlages in providing habilal, lllering pollulanls, recharging groundwaler parlicularly imporlanl
in waler slressed areas, and in slowing waler down lhus reducing lood risk.
4.29 To achieve lhis we are looking al removing lhe aulomalic righl lor developers lo connecl lo
exisling sewers syslems lo ensure lhey consider more elleclively where and how lo drain surlace
waler. We will consult shortly on national standards for SuDS and a new approval system
for sustainable drainage. To encourage the use of SuDS by water and sewerage companies
we will work with Ofwat to improve dissemination of cost and benet data and look at
removing regulatory incentives for water companies to implement traditional piped drainage
solutions. This may involve amending the Water Industry Act to ensure water companies
are able to build SuDS to meet their statutory duty to effectually drain an area. We will also
consult on proposals that new sewers must meet default build standards.
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Sustainable drainage at Matchborough First School, Redditch
The Malchborough School is a relroll lhal shows how SuDS can be used in communily areas. The
school's surlace runoll now lows inlo a range ol SuDS including swales, delenlion basins and a
conslrucled welland.
The welland provides wildlile habilal and a valuable resource lo leach lhe pupils aboul
environmenlal suslainabilily and slewardship, waler conservalion and lhe hydrological cycle.
More inlormalion on lhis case sludy can be lound al.
hllp.//www.ciria.com/suds/cs_malchborough_school.hlm
Anaerobic digestion
4.30 Anaerobic digeslion has been used in lhe waler induslry lor many years lo deal wilh sewage
sludge, bul growlh has been slower in olher areas. The Covernmenl's Anaerobic Digeslion Slralegy and
Aclion Plan published in June and lhe more recenl Ollce ol lair Trading (OlT) markel sludy looked al
lhe barriers lo co-digeslion using anaerobic digeslion lo lreal sewage sludge alongside olher lypes ol
wasle. The OlT lnal reporl made a number ol recommendalions and observalions, including changes
lo lhe economic and environmenlal regulalion ol waler and sewage companies lo losler ellciency
and encourage grealer harmonisalion ol lhe lrealmenl ol sewage sludge and olher organic wasle. The
Luropean Commission is currenlly assessing whelher lhe Sewage Sludge Direclive should be reviewed.
We will lake lhis work lorward on publicalion ol lhe Commission's reporl.
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Key commitments:
Allordabilily
We want everybody to have access to an affordable water supply. We will publish nal
guidance to companies on the introduction of social tariffs which would enable water
companies to offer more support to customers at risk of affordability problems. We will
ensure that water companies have the freedom to offer enhanced terms to WaterSure
customers through their social tariffs from April 2013.
Peducing high household bills in lhe soulh wesl
Households in the south west of England face the highest water bills in the country. We
have therefore decided to fund South West Water to enable it to cut bills by 50 per year
for all household customers until at least the end of the next spending review period.
Pelorming lhe markel lor business cuslomers
We are introducing a package of reforms to extend competition in the water sector by
increasing choice for business customers and public sector bodies and by making the
market more attractive to new entrants.
5.1 The previous chaplers ol lhis While Paper have explained how lhe Covernmenl plans lo approach
lhe long-lerm waler supply and drainage challenges we lace lrom lhe lwin pressures ol climale change
and populalion growlh. ln order lo deliver lhe suslainable and resilienl waler supplies which are essenlial
lor sociely, lhe economy and lhe environmenl we need lo relorm our waler resource managemenl
syslem, ensure long planning horizons, drive innovalion, and mainlain a slable regulalory lramework lo
encourage cosl-elleclive solulions and mainlain inveslor conldence in lhe seclor. We also need lo lislen
more lo cuslomers and deliver allordable and innovalive services lhal relecl lheir changing expeclalions.
5.2 We wanl lo drive change in lhe waler induslry so lhal companies become much more sharply
locused on lhe needs ol lheir cuslomers. We are looking lo companies lo largel new supporl al
households slruggling lo pay lheir bills and oller domeslic cuslomers praclical advice and help lo
reduce lheir waler consumplion. And we will relorm lhe markel lor business cuslomers by removing
barriers lo compelilion in lhe seclor lo drive ellciency and innovalion.
Allordabilily
5.3 lor many household cuslomers, lhe mosl crilical issue is lhe allordabilily ol lheir bills. While
waler and sewerage services are relalively cheap and good value, cosling on average ! per day, some
households slruggle lo pay lheir waler bill, eilher because lhey are on a low income or because lhey
live in an area where bills are higher lhan average.
5.4 We are laking a dual approach lo lackling allordabilily pressures. This While Paper sels
oul measures which enable waler companies lo lake aclion lo reduce lhe allordabilily problems
households are lacing now. Over lhe longer lerm, lhe package ol relorms we are inlroducing lo
increase compelilion and innovalion and drive cosl-elleclive responses lo lulure challenges will
limil lhe lulure impacl on cuslomers' bills. Cuslomers will have lo meel lhe cosl ol lnancing new
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inlraslruclure so il is essenlial lhal lhe regulalory regime incenlivises companies lo selecl low cosl
oplions and only invesl in measures lhal are needed lo deliver lhe secure and suslainable supplies lhal
cuslomers wanl.
5.5 Lverybody should have access lo an allordable waler supply, bul we know lhal an increasing
number ol cuslomers are slruggling lo pay lheir bills. Olwal's lalesl analysis shows lhal 23 per cenl ol
households spend more lhan 3 per cenl ol lheir income (aller housing cosls) on waler and sewerage
bills and !! per cenl ol households spend more lhan 5 per cenl ol lheir income some 2.4 million
households across Lngland.
5.6 ln April, Covernmenl published a consullalion paper selling oul proposals designed lo address
allordabilily problems. ln Oclober we published drall guidance lor bolh waler companies and Olwal
on waler company social larills.
Water Company Support Schemes
Waler companies already run a number ol schemes lo help cuslomers slruggling lo pay lheir bills.
lor example.
Yorkshire Water cuslomers who have a low income and are experiencing lnancial dillcullies
can clear lheir debl lhrough lhe Pesolve scheme. Cuslomers who have arrears ol al leasl 500 are
eligible lo join Pesolve. Cuslomers musl mainlain a paymenl arrangemenl and Yorkshire Waler
wriles-oll lhe remaining arrears. During 20!0-!!, 5,000 cuslomers paid 650,000 and lhe company
wrole oll ! million ol waler debl. 75 per cenl ol cuslomers mainlain regular paymenls aller lheir
debls are cleared. This is complemenled by lhe Yorkshire Water Community Trust which helps
individuals and lamilies in real need who are unable lo pay lheir waler charges. During 20!0-!!,
!,400 cuslomers received 660,000 ol awards lo clear waler debls lhrough lhe Communily Trusl.
Wessex Water launched lheir Assist Tariff in 2007 and 8,000 cuslomers currenlly benell. The
company works wilh independenl debl advisers, such as local Cilizens Advice 8ureaux, who provide
cuslomers wilh independenl debl advice, lull benell checks, and assess lheir abilily lo pay. They can
lhen recommend lo Wessex Waler lhal a cuslomer should receive a lower bill. Wessex Waler has
lound lhal cuslomers on lhe larill gel inlo a regular paymenl rouline, benellling lhe company and
olher cuslomers.
Wessex Waler make lhe parlnership work by lunding lhe provision ol debl advice and giving
advice agencies access lo a dedicaled leam in lheir billing cenlre, a direcl lree phone inlo lhe leam,
educalion and lraining and annual workshops lo share learning. ln 2009 Wessex Waler won lhe
Cilizens Advice award lor besl cuslomer service in lhe UK and recenlly won lhe 8esl Parlner award
lrom Willshire Cilizens Advice 8ureau.
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5.7 Once lnalised lhis guidance will enable waler companies lo oller more supporl lo cuslomers al
risk ol allordabilily problems by inlroducing lheir own social larills. Waler companies are besl placed
lo design supporl schemes largeled al local needs lhal will be more elleclive lhan any nalional one-
size-lls-all approach. Company social larills will enable waler companies lo design larills lhal help
lhose cuslomers mosl in need ol supporl and lund lhese lhrough cross subsidy belween cuslomers.
This new approach relecls lhe lacl lhal lhe previous syslem ol cross subsidy is unwinding as more
cuslomers opl lor melers and lhe conclusion in lhe Walker review lhal properly values are a poor
proxy lor idenlilying lhose mosl likely lo lace dillcullies allording lheir bills. Companies will need lo
work closely wilh lheir cuslomers in designing social larills so lhal lhey relecl local circumslances
and local views, considering who should be eligible lor help and how much cross subsidy would be
acceplable.
5.8 We will publish nal guidance to companies on social tariffs early in 2012. This will give
companies lime lo design schemes and consull wilh lheir cuslomers lo inlroduce larills lrom April
20!3 where lhey choose lo do so. The Covernmenl welcomes lhe commilmenl lrom Waler UK lhal
companies will develop social larills, and looks lorward lo lhe early inlroduclion ol such schemes.
5.9 Some waler companies have expressed a wish lo be able lo access Covernmenl dala on
cuslomers in receipl ol benells lo help lhem largel lheir social larills. However, 60 per cenl ol
households wilh allordabilily problems do nol receive means-lesled benells. Cuslomers on benells
are al high risk ol nol being able lo allord lheir bills, wilh over hall ol lhose cuslomers spending
more lhan 3 per cenl ol lheir income on waler and sewerage bills and one lllh spending more lhan
5 per cenl ol lheir income. We will conlinue lo work wilh lhe waler induslry in lheir developmenl ol
social larills, including by making inlormalion available, wherever lhis is legal and leasible. However,
Covernmenl lakes lhe securily ol sensilive dala (such as lhal held on benells recipienls) exlremely
seriously and lhe circumslances in which any personal dala may be shared are very limiled and lighlly
conlrolled by law.
WaterSure
Low income melered cuslomers wilh a high essenlial use ol waler already receive supporl lhrough
lhe Covernmenl's nalional WalerSure larill. This caps lhe bills ol melered households in receipl
ol a qualilying means-lesled benell al lhe average bill lor lheir company il lhe household eilher
has lhree or more children living al home under !9 or somebody in lhe house who has a medical
condilion which necessilales a high use ol waler. The cosl is mel by olher waler cuslomers al
company level who provide a cross subsidy lo qualilying households.
ln 20!0-!!, 45,336 households in Lngland benellled lrom lhe WalerSure scheme. Around 40 per
cenl ol lhose qualiled lor medical reasons and 60 per cenl by having 3 or more children. These
cuslomers benell lrom an average discounl ol !20 lor waler and !25 lor sewerage, paid lor
lhrough an average cross subsidy ol 35 pence per non-eligible household.
5.10 The consullalion on oplions lor addressing allordabilily challenges also explored lhe polenlial
lor providing addilional supporl lor vulnerable cuslomers lhrough enhancemenls lo lhe WalerSure
larill. ln lheir responses lo lhe consullalion several key slakeholders emphasised lhal WalerSure
only helps some ol lhose households wilh allordabilily problems, and lhal a number ol polenlially
vulnerable groups, such as pensioners or lone parenls, are nol eligible. Some waler companies also
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64 Water for Life
raised concerns lhal changes lo WalerSure would impose addilional levels ol cross subsidy on non-
eligible cuslomers and would consequenlly limil lhe abilily ol companies lo design lhe mosl locally
appropriale social larills in consullalion wilh lheir cuslomers.
5.11 We have lherelore decided lo locus on enabling waler companies lo oller supporl lo lhe
lull range ol cuslomers al risk ol allordabilily problems lhrough lheir social larills. We wanl lo see
waler companies bringing lorward lhe mosl generous package possible, based on consullalion wilh
lheir cuslomers and an underslanding ol lhe parlicular allordabilily issues in lheir area. To supporl
lhis, Covernmenl will ensure lhal waler companies have lhe lreedom lo use lheir social larills lo
oller a more generous discounl lo WalerSure cuslomers lhan lhe cap mandaled by lhe exisling
scheme. Where companies design a social larill lhal ollers equal or beller lerms lo lheir WalerSure
cuslomers, lhey will be allowed lo incorporale WalerSure wilhin lhe social larill. This will simplily lhe
adminislralion ol lhe scheme and improve lransparency aboul levels ol cross subsidy belween groups.
We will amend lhe Vulnerable Croups Pegulalions so lhal lhese changes can be inlroduced lrom
April 20!3.
Keeping bills affordable
The Covernmenl recognises lhal rising household bills are a concern lo many people and, logelher
wilh Olwal, keeps lhe cosl ol waler bills under review. The currenl average combined waler and
sewerage bill is 356. This will rise in lulure. The level ol increase will depend on a range ol laclors
including ellciency and innovalion, how companies meel regulalory requiremenls, lhe need lo
improve waler qualily and lhe challenges ol meeling changing supply and demand. Modelling
based on a range ol dillerenl scenarios shows lhal by 2030 bills may increase by an average ol
approximalely !4 per cenl, which is below lhe expecled increase in lhe rale ol inlalion. The relorms
slemming lrom lhis While Paper will increase compelilion and innovalion in lhe markel, and drive
cosl-elleclive responses lo lulure waler resource challenges lo limil lhe impacl on cuslomers' bills.
We will work wilh Olwal, lhe Lnvironmenl Agency and lhe Drinking Waler lnspeclorale over lhe
nexl lwo years lo develop lools lor eslimaling lhe likely impacl ol policies on waler bills.
Affordability and metering
5.12 Tradilionally waler charges have been linked lo properly values, enabling cross subsidy, which has
helped lo prolecl some lower income households. However, lhe Walker review demonslraled lhal lhe
raleable value charging regime did nol largel cross subsidy elleclively al lhose on lhe lowesl incomes,
and lhal lhe cross subsidy was unwinding as lhe number ol households opling lo swilch lo a waler
meler increased. Over a lhird ol households are on a meler already, which will rise lo over hall by 20!5
as households conlinue lo swilch volunlarily lo melers and several waler companies in waler slressed
areas roll oul melering programmes.
5.13 Melering can have advanlages lor cuslomers and help lackle allordabilily. ll is a lair way ol
charging lor waler because melered cuslomers pay only lor lhe waler lhal lhey use. Melering also
provides a direcl incenlive lo reduce waler usage, which can help lo reduce a household's bills and
conlrol prices lor all cuslomers by reducing lhe need lor inveslmenl in new waler supply inlraslruclure.
Melers can also help idenlily leakage in cuslomers' and waler companies' pipes.
65
5.14 Many householders who would benell lrom swilching lo a meler are unaware ol lhe savings
lhey could make or do nol acl on lhal inlormalion. Lvidence lrom Olwal
26
suggesls single adulls
and pensioners are al high risk ol waler allordabilily problems, and lhese are groups who mighl be
mosl likely lo benell lrom opling lor a meler, bul may choose nol lo because ol concerns aboul
lhe uncerlainly ol lulure bills. Waler companies can overcome lhis by explaining likely benells,
making sure lhal cuslomers al risk ol allordabilily problems are on a suilable paymenl plan and by
demonslraling a sample bill.
5.15 Whilsl many households would receive lower bills il lhey opled lor a meler, olhers, parlicularly
large households in properlies wilh low raleable values, would be likely lo see lheir bills increase lo
relecl lheir aclual waler consumplion. As levels ol melering increase over lime, waler companies will
need lo supporl households lhal have lradilionally been prolecled by lhe cross subsidy in charges
based on raleable value. The new lexibilily lo inlroduce social larills will be a valuable lool lor
addressing lhese problems.
5.16 Covernmenl wanls waler companies lo do more lo aclively promole melering lo lhose who
would benell, and lo make swilching as simple as possible lor lhose who choose lo do so. This should
lorm parl ol wider programmes designed lo help lhose wilh allordabilily problems and link lo advice
on waler ellciency. Trusled lhird parlies, such as environmenlal groups and lhose working wilh older
people, and agencies like Cilizens Advice can also advise on lhe benells ol melering as parl ol lheir
own work.
5.17 Covernmenl expecls waler companies who choose lo roll oul melering programmes lo handle
lhe lransilion exlremely carelully, working closely wilh cuslomers lo explain lhe purpose ol lhe
melering programme, and ensuring lransilional larills are in place lo cushion lhe lransler lo lhe new
syslem. lrom 20!3, companies will also have lhe oplion lo supporl lhis wilh a well-largeled social
larill, coupled wilh packages ol advice and olher help lor vulnerable and low income cuslomers who
may slruggle lo pay lheir bills.
26 Affordable for all: How can we help those who struggle to pay their water bills? Olwal (20!!)
hllp.//www.olwal.gov.uk/lulure/cuslomers/melering/allordabilily/prs_inl_allord.pdl
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66
Southern Waters universal metering roll out
Soulhern Waler is inslalling waler melers lor hall a million households by 20!5. 8elore lhe
inslallalion began, Soulhern Waler launched a wide-scale newspaper, radio and online adverlising
campaign lo raise awareness ol lhe melering programme, explaining how lhe soulh easl was under
waler slress and ollering lop lips lor cuslomers lo "Save Waler, Save Lnergy, Save Money".
Soulhern Waler held brielng meelings wilh local councils and communily organisalions including
Age UK, Cilizens Advice 8ureaux and Neighbourhood Walch.
Cuslomers are alerled via signs on lamp posls, and inlormalion packs aboul lheir new waler meler
and bills and lhe supporl available lo lhem are hand delivered belore lhe meler is inslalled giving
cuslomers an opporlunily lo ask queslions. Cuslomer lnlormalion Poinls are also parked in lhe slreel
and advisors answer queslions, give advice on waler and energy savings and oller lree waler saving
devices.
More lhan !00,000 cuslomers are being ollered an enhanced service. a home visil lo discuss bills,
a lree waler and energy audil wilh waler saving devices and a lree consullalion wilh Income Max
who oller a lnancial assessmenl and advice on benells and granls. This also includes advice on
supporl larills lor waler bills.
Soulhern Waler has agreed lwo larills wilh Olwal lollowing cuslomer workshops. All cuslomers can
opl lor lhe Changeover Tarill which lakes lhem lrom raleable value lo melered charges over lhree
years. Cuslomers whose bills go up on melered charges and who cannol allord lo pay a higher bill
can go on lhe Supporl Tarill and have lheir bills capped al raleable value. Cilizens Advice 8ureaux
acl as an independenl arbilralor lor lhe larill.
Six monlhs aller swilch over cuslomers receive lheir lrsl melered bill and inlormalion on ways lo
pay lheir bill and lo save waler, energy and money. New bills are colour-coded a green bill means
lheir waler use has gone down and a purple bill shows lhal waler use has increased.
Working in parlnership wilh Walerwise and lhe Lnergy Saving Trusl, lhe company has developed
lools lo provide praclical inlormalion lo help cuslomers save. an inleraclive websile, 'how lo' llms
lor inslalling waler saving devices and discounl vouchers lor 8&Q.
Bad debt
5.18 8ad debl adds an average ol !5 lo all cuslomers' bills. Peducing lhe cosl ol bad debl would
help lower bills, benellling lhose households lhal are slruggling lo allord lheir charges. 8ad debl is a
parlicular problem in lhe waler seclor because households cannol be disconnecled il lhey do nol pay.
Occupiers ol properlies are liable lor waler charges bul cannol be legally required lo pass lheir delails
lo waler companies. ll is dillcull lor waler companies lo pursue deblors lrom renled properlies as
lhere is no obligalion on landlords lo pass on lhe names ol lhe occupiers ol a properly and no way ol
pursuing unnamed deblors.
5.19 Waler companies are already laking aclion lo lackle lhe problem and reduce everyone's bills.
All companies have debl codes ol praclice and lhe induslry, lhrough Waler UK, shares good praclice.
Waler UK has also developed a new web porlal lor launch in 20!2 so lhal landlords can quickly and
Water for Life
67
easily enler lhe delails ol lenanls in lheir properlies and submil lhese lo waler companies. The mosl
successlul companies have slralegies lor idenlilying occupiers so lhey can be billed, lor example
lhrough recording delails lrom landlords, using credil agency dala lo idenlily occupanls and visils by
leld ollcers lo properlies. Olwal's proposal lor a separale relail price limil will increase lhe incenlive
on companies lo address bad debl.
5.20 The Government will consult on different approaches to helping water companies
access occupier details. The consullalion will consider lhe role regulalion could play lhrough
implemenlalion ol lhe provision in lhe llood and Waler Managemenl Acl 20!0 which would
require all properly owners lo provide lhe delails ol lheir lenanls lo waler and sewerage companies
or lo assume liabilily lor bill paymenl. The consullalion will also consider whelher non-regulalory
allernalives could deliver similar or beller oulcomes in view ol lhe Covernmenl's commilmenl lo
minimising lhe burden ol regulalion wherever possible. We will take a decision on the way
forward next year in the light of the evidence gathered from this consultation.
5.21 Debl problems can ollen be linked lo cuslomers' abilily lo pay. Supporl lor slruggling households
and allordabilily measures should help reduce levels ol bad debl. Many waler companies already use
credil relerencing and conlacl wilh cuslomers lo assess who cannol and who will nol pay. They can
lhen aclively pursue lhose lhey believe are choosing nol lo pay and oller supporl and advice lo lhose
slruggling lo do so. Where a company inlroduces a social larill il will be able lo exlend lhis supporl, and
work in parlnership wilh independenl agencies who can provide holislic debl, benells, allordabilily and
ellciency advice.
Peducing high household bills in lhe soulh wesl
5.22 Households in lhe soulh wesl ol Lngland lace lhe highesl waler bills in lhe counlry because ol
decisions lhal were laken when lhe waler induslry was privalised in lhe lale !980s. Al privalisalion
lhe nelwork ol waler and sewerage pipes and olher capilal assels was less well developed in lhe soulh
wesl lhan in olher regions. Since lhen Soulh Wesl Waler has had lo invesl around 2 billion lo raise
sewerage slandards lo lhe same slandards as lhe resl ol counlry. Cuslomers in lhe soulh wesl have
had lo pay lor lhis inveslmenl lhrough lheir waler bills, and lhe cosl has been high because lhere
are a relalively low number ol households in lhe region and high proporlion ol cuslomers are rural,
making il relalively expensive lo serve lhem.
5.23 The Covernmenl believes lhe circumslances laced by cuslomers ol Soulh Wesl Waler are
exceplional, and lhal in order lo deal wilh lhis hisloric problem il should conlribule lo lhe cosl ol
reducing bills. We have therefore decided to fund South West Water to enable it to cut bills by
50 per year for all household customers until at least the end of the next spending review
period. This paymenl will be made lransparenlly so il can be clearly demonslraled lhal all lhe benell
lrom lhis paymenl is passed lhrough lo cuslomers. The Government will legislate to enable bills
to be reduced from April 2013. As wilh olher waler companies, il will be lor Soulh Wesl Waler lo
consull wilh ils cuslomers on whelher lo inlroduce a social larill lo largel lhose in lhe region lacing
lhe grealesl allordabilily problems.
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68
Pelorming lhe markel lor business cuslomers
5.24 The case lor relorm ol lhe waler induslry lo develop a more vibranl and compelilive markel was
sel oul in Marlin Cave's reporl lo Covernmenl. Competition and Innovation in Water Markets. While
recognising lhe successes ol lhe seclor since privalisalion, he concluded lhal change was needed lo
deliver higher levels ol cuslomer service and lackle lhe challenges lacing lhe induslry. He recommended
a package ol changes lo increase compelilion and bring new approaches and ways ol working lo lhe
seclor.
5.25 This While Paper responds lo lhe recommendalion in lhe Olwal review lhal Covernmenl should
provide grealer clarily lo lhe seclor on ils plans lor lhe exlension ol compelilion. ll sels oul our plans
lor relorm, building on lhe slrenglhs ol lhe currenl induslry slruclure and regulalory regime and
relecling lhe Cave review's recommendalion lhal change should be evolulionary and inlroduced
slep by slep. We have decided nol lo inlroduce lundamenlal slruclural change lo lhe induslry such
as lhrough requiring legal separalion ol companies' relail operalions. We do nol wanl lo lake risks
wilh a successlul model given lhe challenges we lace in building lhe resilience ol lhe seclor. The waler
and sewerage seclor has proved allraclive lo inveslors looking lor reliable, low risk relurns, wilh ils
slable regulalory syslem a key laclor in building conldence, we have heard persuasive argumenls lhal
mandaling slruclural change would undermine lhis conldence. We know lhal lhe level ol inveslmenl
required in lhe coming decades will conlinue lo be signilcanl, and lhal lhe markel lor capilal is
becoming increasingly compelilive. We wanl lo preserve lhe lealures ol lhe currenl regime which have
proved so allraclive lo inveslors. Allracling new equily inveslors will help reduce lhe risks around lhe
lnancing ol lhe seclor given ils heavy dependence on debl lnancing. Lnsuring lhe seclor remains an
allraclive prospecl lor inveslors will enable waler companies lo deliver conlinued inveslmenl al cosls
lhal cuslomers will lnd acceplable.
5.26 We also wanl lo mainlain olher slrenglhs ol lhe exisling regime. This slruclure has delivered
benells lor cuslomers and lhe environmenl. Waler companies lake ownership ol provision ol
wholesome drinking waler lrom source lo lap, and have real slrenglhs in long-lerm resource planning,
as well as being connecled lo lheir end cuslomers. These skills will be essenlial in building resilience lor
lhe lulure.
5.27 However, lhere are lealures ol lhe induslry where change is needed and where we believe lhere
are gains lo be had lrom increased compelilion. The Covernmenl's objeclive is lherelore lo caplure and
build on lhe slrenglhs ol lhe exisling regime, and inlroduce evolulionary relorms which will slrenglhen
lhe waler seclor's abilily lo respond lo lhe challenges ol lhe lulure, and improve lhe deal il ollers lo ils
cuslomers. This package ol relorms is also designed lo drive innovalive and less risk-averse behaviour
in lhe seclor, slimulale waler companies lo lnd more cosl-elleclive solulions and minimise cosls lo
cuslomers, and make lhe markel more allraclive lo new enlranls by removing regulalory barriers and
burdens.
Developing a retail market for water
5.28 The Waler Acl 2003 pul in place a lramework lor a limiled relail markel lor waler, enabling very
large waler cuslomers lo swilch suppliers and new players lo enler lhe markel. The regime has nol
worked well. Peslricling lhe abilily lo swilch lo very large waler users has meanl lhe compelilive
markel is loo small lo develop elleclively. 8arriers in legislalion make lhe markel unallraclive lo new
enlranls and have lruslraled cuslomers lhal wanl lo swilch suppliers. Only one cuslomer has changed
suppliers in six years.
Water for Life
69
Competition regimes in the Water Sector
Non-household cuslomers in Lngland wilh premises lhal use 50 million lilres ol waler or more a
year can replace lheir local waler and sewerage company wilh an allernalive supplier under lhe so
called "insel regime" or "new appoinlmenls and varialions regime". These suppliers can purchase a
bulk supply or use lheir own resources. An example ol lhis is an arrangemenl lo manage lhe waler
supply ol a Kodak sile in Harrow where various waler companies have been appoinled over lhe
years lo manage lhe borehole serving lhe sile.
Non-household cuslomers wilh premises in Lngland and Wales lhal use 50 million lilres or more ol
waler a year can also swilch lo a new waler supplier under lhe "waler supply licensing regime".
However, lhey cannol currenlly swilch lheir sewerage provider. To dale jusl one cuslomer has
swilched supplier.
The insel regime also allows developers ol greenleld siles lo choose an allernalive supplier lo lay
down waler and sewerage inlraslruclure and lo slay on as lhe local waler company. These new
enlranl suppliers ollen also provide lhe developers wilh energy and lelecoms inlraslruclure loo.
Albion Waler secured an insel appoinlmenl lo provide sewerage services lo Knowle village in which
il nol only sel prices below lhal ol lhe local waler company, bul maximised lhe use ol exisling
assels, minimised lhe carbon loolprinl and enhanced lhe sile's biodiversily.
5.29 ln Scolland an allernalive regulalory regime has seen around 42 per cenl ol lhe markel
renegolialing lhe lerms ol lheir supplies receiving eilher beller prices or more lailored levels ol
service, and in many cases bolh. The compelilive pressure lrom a lunclioning relail markel has
encouraged lhe exisling supplier lo oller beller services lo ils cuslomers in order lo keep lheir business,
allowed cuslomers lo negoliale improved lerms, and led lo improvemenls in waler ellciency. The
Scollish public seclor is sel lo save around 20 million over lhree years lrom colleclively lendering ils
waler and sewerage services.
5.30 The Scollish experience has demonslraled lhe range ol benells business and public seclor
cuslomers can gel lrom more cuslomer locused suppliers wilh an incenlive lo improve lhe services
lhey oller. While some have simply looked lo reduce lheir bills lhrough simple measures such
as discounls lor direcl debils or aggregaled purchasing, olhers have benellled lrom improved
inlormalion on lheir waler use which has enabled lhem lo benchmark againsl olhers and inlroduce
changes which cul operaling cosls signilcanlly. Olher organisalions have been helped by lheir relail
supplier lo inlroduce more innovalive measures such as rainwaler harvesling.
5.31 We wanl lo see lhe markel develop so lhal waler suppliers work wilh lheir business and public
seclor cuslomers in Lngland lo gel lhe benells lrom a compelilive markel lhal Scollish cuslomers
already enjoy. Cuslomers wanl lo be able lo manage lheir waler and sewerage cosls in lhe same way
lhal lhey manage olher ulililies, choosing lheir supplier (including a single supplier counlry wide),
specilying services lhal are lailored lo lheir needs, and culling lheir cosls. The currenl arrangemenls
are a burden on companies, increase lheir cosls and limil lheir abilily lo become more ellcienl
and grow. lor example, recenl research
27
ciles an example where one mulli-sile cuslomer's cosls
lor handling 4,000 paper bills could be reduced by 80,000 or more a year il il was lo receive one
eleclronic bill.
27 hllp.//www.policyexchange.org.uk/publicalions/publicalion.cgi?id=247
Water for Life
70
5.32 Taking an evolutionary approach to reform, the Government will introduce deregulatory
legislative changes to make the existing competition regime work more effectively. This
will increase competition in the market for water and sewerage customers and expand
opportunities for innovative new entrants to enter the market. Markel enlry is needed lo bring
in new players and new ideas, and as a spur lor exisling companies lo relhink lheir service oller lo
cuslomers. ll will also help shill lhe locus ol companies lrom lhe requiremenls ol lhe regulalor lo
lheir cuslomers, a problem highlighled by lhe Olwal review. While our relorm package locuses on
compelilion in lhe business markel, domeslic cuslomers may benell as well. Waler companies will
need lo become more cuslomer locused and develop new skills lo compele in lhe new relail markel.
Ollering a range ol larills and service packages should become parl ol lheir core business. They will
also be incenlivised lo increase lhe ellciency ol lheir relail operalions il Olwal implemenl lhe separale
relail price limil proposed in lheir lulure Price Limils consullalion.
5.33 We will nol inlroduce changes lhal risk unsellling inveslor conldence in lhe slabilily ol lhe waler
seclor, parlicularly al a lime when new inveslmenl will be essenlial and as compelilion lor capilal
gels lougher. The waler seclor musl remain an allraclive prospecl lor long-lerm inveslors il lhe cosl
ol capilal, and lhe cosl lo cuslomers, is lo remain allordable. ll musl also remain able lo deliver key
Covernmenl objeclives on lulure resilience and supporl lor cuslomers lo improve lheir waler ellciency
and lackle allordabilily.
5.34 The Covernmenl has lherelore decided nol lo lake lorward lhe proposal lor separalion ol lhe
relail businesses ol waler companies lhal was proposed by lhe Cave review. ln view ol lhe challenges
lacing lhe seclor over coming decades, we are adopling an evolulionary approach lo relorm which
seeks lo deliver benells lrom increased compelilion while minimising cosls lo business and avoiding
lhe risks and uncerlainlies linked lo oplions involving separalion. We believe lhal a heallhy compelilive
markel in lhe waler seclor can be achieved wilhoul mandaling separalion ol lhese businesses, and
will inslead relorm lhe exisling Waler Supply Licensing (WSL) and insel regimes lo deliver change
in a lower risk way. Nor do we believe lhere is a case in lhe loreseeable lulure lor opening up lhe
household markel lo compelilion. We will inlroduce legislalion al lhe lrsl opporlunily lo implemenl
lhese relorms.
5.35 As a rst step to reform, we have expanded the size of the market by increasing the
number of business and public sector customers able to switch suppliers. We have inlroduced
legislalion lo increase lhe size ol lhe WSL markel by lowering lhe waler consumplion lhreshold lo
lve million lilres per annum lrom lhe currenl lhreshold ol 50 million lilres. As a resull, lhe number ol
cuslomers able lo choose lheir waler supplier, cul lheir cosls and gel lhe service lhey wanl will have
increased by lhe end ol lhis year lrom around 2,200 lo 26,000. We will then deregulate further
in a future Water Bill by reducing the threshold to zero so that any non-household customer
can tender their water and sewerage services. The Welsh Covernmenl has conlrmed lhal lheir
currenl swilching lhreshold shall remain lhe same.
5.36 We plan to establish a new market for retail water and sewerage services in partnership
with the Scottish Government. This will enable Olwal and lhe Waler lnduslry Commission lor
Scolland lo mulually recognise each olhers' licensees, removing lhe need lo be licensed by lwo
separale regulalors, share inlormalion, and produce joinl markel codes. Licensed waler and sewerage
suppliers will be able lo compele lor cuslomers across Lngland and Scolland (and eligible non-
household waler supply cuslomers in Wales), and cuslomers will be able lo conlracl wilh a single
supplier lor operalions across mosl ol lhe counlry.
Water for Life
7!
5.37 Meaninglul choice is only likely lo develop wilh lhe enlry ol new markel players. We will make
il easier lor businesses lo enler bolh lhe WSL and insel markels. A future Water Bill will introduce
a new, regulated approach to market entry and remove the need for a new entrant to
negotiate terms with each of the 21 incumbent water companies across England, which has
acted as a major barrier to entry. We will remove the requirement for retail licensees to set
up ring-fenced limited companies to qualify for a licence, enabling new entrants licensed in
Scotland to enter the market without setting up a new company, and other utility or service
providers to be able to apply for a licence to enter the water market.
5.38 We will also legislate for the rst time for Ofwat, together with other regulators and
market participants, to establish statutory market codes to increase transparency and set
clear rules and timetables to help the new competitive markets run more effectively and
efciently. These documenls will clearly sel oul lhe righls, roles, dulies and responsibililies ol all
markel parlicipanls, Olwal, lhe Drinking Waler lnspeclorale and Lnvironmenl Agency. Slandard lerms
and condilions, such as lemplale conlracls, will remove uncerlainly, make cuslomer swilching simpler
and be enlorceable by Olwal.
5.39 We will make it more attractive for customers to consider switching their suppliers
by using a future Water Bill to extend the WSL regime to sewerage services. This will enable
cuslomers lo lender lor waler and sewerage services al lhe same lime, and choose lo deal wilh a
single or mulliple suppliers. ll may be parlicularly helplul in lhose parls ol lhe counlry where cuslomers
receive separale bills lor waler and sewerage. Lxlending lhe scope ol WSL could also slimulale a
markel lor recycled waler as an allernalive lo lhal produced lo drinking waler qualily and provide
opporlunilies lor new enlranls lo oller allernalive lrealmenl and disposal services lor waslewaler and
sewage sludge.
5.40 Large mulli-sile businesses, such as relail chains, would like lo deal wilh a single supplier lor all
lheir waler and sewerage needs and signilcanlly reduce lheir adminislralive cosls. The currenl in-area
lrading ban prevenls a licensee sel up by an exisling waler company lrom supplying waler in lhe area
covered by ils parenl or associale company, which means lhey cannol oller lhe joined up nalional
service lhal mulli-sile cuslomers wanl, while new enlranl licensed suppliers are lree lo do so. We will
legislate to remove the in-area trading ban and put all market players on a level footing.
5.41 We will work wilh Olwal lo relorm lhe wholesale access pricing regime lo allow lor ellcienl
markel enlry. This relorm will preserve lhe abilily ol inlegraled waler companies operaling lheir
business in an ellcienl manner lo earn an appropriale relurn on lheir assels, so lhal inveslor
conldence is lully mainlained. lncreasing lransparency in wholesale charges will make il more
allraclive lor businesses lo enler lhe waler and sewerage markel and sharply reduce lhe risk ol
discriminalory pricing. The currenl wholesale access pricing arrangemenls are governed by lhe
cosls principle
28
, which has been widely crilicised as anli-compelilive and giving lillle incenlive lo
incumbenl waler companies lo become more ellcienl. We will use a future Water Bill to remove
the costs principle from legislation and instead introduce a transparent wholesale access
pricing regime that will allow efcient entry by new entrants. This approach will be reinlorced
by Olwal's proposals lo inlroduce a separale wholesale price conlrol as parl ol ils lulure Price Limils
work.
28 The cosls principle is sel oul in lhe Waler lnduslry Acl !99!, as amended by lhe Waler Acl 2003.
Water for Life
72
5.42 We will introduce a similar transparent wholesale charging mechanism for the inset
regime where developers choose a new entrant to be the water company for a new
development. The WSL charging regime will also include a righl lor new enlranls lo negoliale
discounls lor non-household cuslomers lhal reduce pressure on nelworks, lor example lhrough
invesling in a suslainable drainage solulion lhal reduces discharges inlo lhe public sewer syslem.
5.43 We will also introduce a self-supply licence which will enable suitably qualied
customers to become their own new entrant, buy water direct at wholesale prices and reduce
the need to use a retail licensee as a middleman. This has been an allraclive roule lor some
businesses in olher ulilily markels, lor example in lhe poslal seclor where businesses wilh large poslal
needs are able lo supply mail lurlher downslream al lower cosl, and we expecl some businesses lo see
lhis as a chance lo cul cosls and increase ellciency in managemenl ol lheir waler services.
Ensuring fair and competitive markets
5.44 The relail markel lor waler and sewerage services will remain a regulaled markel. Olwal will
need lo use ils licence or concurrenl compelilion powers smarlly, lo prevenl incumbenl companies
lrom discriminaling againsl new enlranls eilher lhrough lhe prices lhey charge lor wholesale waler
supply or by olher non-price lorms ol anli-compelilive behaviour. The Covernmenl would expecl
Olwal or lhe Ollce ol lair lrading lo lake lrm aclion where lhere is evidence ol discriminalory pricing
or behaviour, and will shorlly announce proposals lor improving lhe way concurrenl compelilion
powers are used by lhe compelilion aulhorilies.
5.45 The developmenl ol lhe markel will need lo be monilored carelully. lorcing companies lo
separale and sell lheir relail businesses is ullimalely lhe only way ol removing risks ol discriminalion.
However, lhe Covernmenl does nol believe lhal lhe risks associaled wilh such a lorced reslrucluring
ol companies are acceplable. We do nol believe lhal relail separalion is essenlial lor lhe growlh ol a
heallhy compelilive markel, and we recognise lhe olher challenges waler companies are lacing during
lhe nexl price review period and beyond. Any olher approach lo relail compelilion, whelher lhrough
legal separalion ol relailers or lhe approach Covernmenl proposes based around relorm ol lhe WSL
regime, will require Olwal lo inlroduce saleguards and monilor markel aclivily closely. Olwal already
has some ol lhe lools in place, wilh ils approach lo accounling separalion improving lhe inlormalion
available on lhe cosls ol dillerenl elemenls ol companies' operalions. The relorms lo increase charging
lransparency will also help ensure lair access lo lhe markel.
Increasing upstream competition
5.46 We also wanl lo encourage new enlranls who may have raw or lrealed waler lhal lhey wish lo
sell inlo an incumbenls' nelwork al a lower cosl lhan lhal lor developing new supplies, or who may
have new and innovalive ways ol lrealing and disposing ol sewage, lo be able lo do so under lhe WSL
regime. This will help slimulale a more vibranl wholesale markel lor allernalive waler resources and
sewerage services, and incenlivise incumbenl waler companies lo look al allernalives lo expensive
capilal projecls in meeling lulure demand. The WSL regime should also allow new enlranls lo oller
specialised services lo olher new enlranls, as well as lheir own cuslomers.
Water for Life
73
5.47 We will unbundle the combined WSL licence so that a new entrant wishing to provide
upstream water supply services, such as inputting its own water resources into a water
companys system, will no longer be obliged to provide retail services to its customers. Currenlly
holders ol combined licences are required lo provide bolh relail and upslream services. This change will
lherelore enable all new enlranls lo specialise in lhe services lhey wish lo provide lo cuslomers. lor
example, lhose wilh lheir own waler resources will be able lo concenlrale lheir ellorls on wholesale
aclivilies and leave lhe provision ol relail services lo olher new enlranls beller placed lo provide such
services.
5.48 ln parl, because waler resources lend lo be more limiled in waler slressed areas ol lhe counlry
where lhe cosl ol developing new resources is highesl, large users ol waler have had lillle choice bul
lo go lo incumbenl waler companies lor lheir supplies. The proposals we sel oul in chaplers 2 and 3
lo increase waler and abslraclion lrading will help new enlranls lo idenlily new and cheaper waler
resources lo supporl upslream compelilion.
5.49 To maximise opportunities for new entrants to provide efcient and innovative
wholesale water supply, we will extend their access rights to the water companies
treatment and storage systems rather than just the mains and pipes. This will allow allernalive
suppliers, such as landowners or larmers wilh spare waler, lo inpul waler inlo any parl ol lhe
nelwork (lor example, direclly inlo a reservoir) lo supply new enlranls or lheir own cuslomers. We
will also introduce a network licence to enable new entrants to own and operate their own
infrastructure (mains, pipes, storage and treatment) which is connected to an incumbents
network and used to provide water supply and sewerage services to its own customers and
other new entrants. In doing this, we will also strengthen the role that the Drinking Water
Inspectorate has in approving new entrants before they are issued a water supply licence by
Ofwat. We will also give the Environment Agency a similar role in relation to new sewerage
licences.
5.50 The insel regime has been successlul in bringing new and innovalive enlranls inlo lhe waler
markel. Developers have choice around lhe supplier ol waler and sewerage inlraslruclure lor new
developmenls, bul are lruslraled aboul lhe lime il can lake lo negoliale lerms lor an allernalive
supplier lo oblain lhe necessary conneclions and negoliale lhe lerms ol bulk waler supplies and
sewerage services wilh lhe incumbenl waler companies. As wilh WSL, we will introduce a
requirement for Ofwat to produce statutory market codes and regulated wholesale charges
to make this market work more effectively.
Water for Life
74
Competition in the water and sewerage value chain
Figure x This diagram shows the water and sewerage supply chains and the points at which
competitive pressure will be applied under our market reform proposals.
Reforming the special merger regime
5.51 ln mosl seclors, companies are generally lree lo merge and acquire one anolher unless serious
compelilion concerns arise. This can be a slrong driver lor improving lhe ellciency ol companies,
leading lo improved service and lower cosls lhal can be passed on lo cuslomers. The waler seclor is
one ol a lew seclors lhal has a special merger regime, under which a merger needs lo be relerred
lo lhe Compelilion Commission il lhe lurnover ol lhe acquiring or acquired waler company exceeds
a lhreshold ol !0 million. This reduces lhe likelihood ol any polenlial mergers belween waler
companies and lhe scope lor waler companies lo be laken over by more ellcienl operalors and any
benells lhal mighl be derived lrom lhis.
5.52 The purpose ol lhis regime is lo prolecl lhe way Olwal regulales lhe waler companies. Olwal
idenliles lhe besl perlorming waler company lor cerlain aclivilies and requires lhe olher waler
companies lo improve lo meel ils level ol perlormance. Mergers obviously reduce lhe number ol
comparalors available.
5.53 Olwal's recenl lulure Price Limils consullalion noled lhal lhe ellecliveness ol lhe exisling
comparalive regulalion approach may be diminishing. The Cave review noled lhal olher regulalory
aulhorilies used allernalive approaches lo supporl a comparalive regulalory approach. Adopling such
an approach would allow lor lhe loosening ol lhe merger regime. We are strongly minded to use a
Water for Life
Trading to improve
distribution, lower
costs & benet
the environment
Abstraction
Storage &
Treatment
Distribution
External
re-use
Wastewater
collection
Customer
Foul & Storm
water system
Wastewater
treatment
Disposal
Upstream licences
Competition to reduce
billing & other costs
Upstream licences
Retail
Water
Sources
75
future Water Bill to reform this regime, but will be consulting further with water companies
and others to inform a decision on a higher 70 million threshold to exclude more mergers
from automatic referral to the Competition Commission. There is also a slrong case lor reducing
uncerlainly and burdens around mergers lhal meel lhe lhreshold relerral lesl and we intend to use
a future Water Bill to introduce a two-tier referral system, allowing water companies seeking
to take over another water company to make undertakings in lieu of an expensive referral
to the Competition Commission; lhese mighl include conlinuing wilh separale price conlrols or
divesling parl ol lhe business.
The role of Ofwat in supporting competition
5.54 Successlul delivery ol lhe Covernmenl's objeclives lor increasing compelilion in lhe waler
seclor is only possible il lhe relorm package sel oul in lhis While Paper lollows lhrough inlo Olwal's
regulalion ol lhe waler seclor. Olwal's proposals in ils lulure Price Limils consullalion would
complemenl lhis package by increasing incenlives lor companies lo consider lhe cuslomer lacing
end ol lheir business by inlroducing a separale relail price limil, while lhe nelwork plus sub-limil lhey
propose wilhin lhe wholesale price cap would increase lhe lransparency around upslream access
prices. Olwal's moniloring and regulalion ol lhe new expanded relail markel lor business cuslomers
will also be crilical lo ensuring lair and lransparenl access lor new enlranls.
5.55 Covernmenl's slralegic policy slalemenl lo Olwal will reinlorce lhe slrong sleer in lhis While
Paper on lhe Covernmenl's objeclives on compelilion, and how lhese should be balanced againsl lhe
priorilies ol mainlaining a slable regulalory environmenl allraclive lo inveslors and lhe slrenglhs ol lhe
currenl induslry slruclure.
Licence reform
5.56 During lhe Olwal review il became clear lhal lhere are several dillerences belween exisling waler
company licences, and lhal many conlain archaic language and would benell lrom modernisalion
lo ensure lhal lhey are clear and lransparenl. Olwal is underlaking a projecl on modernising lhe
licences in parlnership wilh lhe waler induslry lo bring lhem in line wilh modern dralling praclices.
Modernisalion ol lhe licences also provides an opporlunily lo address olher issues raised lhrough
lhe Olwal review, such as lhe need lo ensure beller slandards ol service lor housing developers and
landowners. ln order lo lacililale lhe process ol keeping lhe licences up lo dale and lo ensure lhal
lhey conlinue lo promole lhe besl oulcomes lor cuslomers lhe Olwal review recommended lhal once
licences are slandardised, legislalion should be amended lo enable changes lo lhe licence lo be agreed
by a qualiled majorily ol companies. The Covernmenl is working wilh Olwal lo explore lhe case lor
such changes and will conlinue lo supporl Olwal and lhe induslry in lhis work.
Prolecling cuslomers
5.57 The Consumer Council lor Waler (CCWaler) is lhe organisalion which currenlly represenls waler
and sewerage cuslomers in Lngland and Wales. ll represenls lhe views ol cuslomers lo Covernmenl,
lhe regulalors and waler companies, playing a parlicularly imporlanl role during lhe price review. ll
also handles complainls aboul waler companies where cuslomers are nol salisled wilh a company's
response.
Water for Life
76
5.58 As parl ol lhe wider review ol arm's lenglh bodies, Delra and lhe Welsh Covernmenl asked
David Cray lo consider how elleclive lhe currenl arrangemenls were in prolecling waler consumers
and ensuring lhal lheir views inluence lhe way lhe waler seclor is managed and regulaled. Aller his
review began, lhe Covernmenl announced ils inlenlion lo make changes lo lhe inslilulional landscape
lor consumer represenlalion, while leaving open lhe queslion ol whelher secloral bodies, such as
CCWaler would be covered by lhis change. lor lhe waler seclor, lhe proposal would mean lranslerring
lhe consumer advocacy and complainl handling lunclions lo Cilizens Advice and requiring waler
companies lo sel up a waler ombudsman scheme lor resolving cuslomers' complainls.
5.59 David Cray's lnal reporl supporled lhe relenlion ol CCWaler, recognising lhal lhere were risks
in making subslanlial changes lo lhe approach lo consumer represenlalion in lhe waler seclor al a
lime when signilcanl changes lo lhe regulalory arrangemenls, such as Olwal's lulure Price Limils
proposals, are being considered.
5.60 The Covernmenl believes lhal in principle lhere would be benells lor consumers in a single
body, wilh slrong brand recognilion and exlensive cuslomer reach, represenling lhem in all regulaled
seclors. However, il shares David Cray's concerns around lhe liming ol any change in relalion lo lhe
nexl price review. Delra and lhe Welsh Covernmenl will lherelore mainlain lhe role ol CCWaler lo
20!4. 8elore lhal, lhe UK Covernmenl will lurlher consider lhe benells ol moving CCWaler lo a
new single consumer body wilh any change laking place aller lhe price review. Consideralions will
also include how lhis move could be made in a way lhal would relain CCWaler's experlise and deliver
improved oulcomes lor cuslomers. Leading up lo 20!4, CCWaler will be asked lo explore how lhey
could join up more closely wilh Consumer locus and Cilizens Advice on cross-culling areas ol inleresl,
such as reducing lhe level ol cuslomer debl. CCWaler will also be asked lo lake lorward lhe ellciency
savings il has idenliled. The Welsh Covernmenl inlends lo relain CCWaler lo provide a clear locus lor
lhe inleresls ol waler cuslomers in Wales.
5.61 We musl ensure lhal lhe expansion ol compelilive markels does nol creale problems lor non-
household cuslomers lhal decide lo swilch suppliers. Olwal's proposals lo sel delaull larills lor
charges lo non-household cuslomers and our proposal lo legislale lo require Olwal lo produce lhe
lrsl slalulory code ol praclice on mis-selling lor a ulilily markel will, in parlicular, prolecl small and
medium sized businesses lrom becoming less compelilive because ol a decision lo swilch suppliers.
As wilh olher seclors, we will inlroduce mandalory "cooling-oll" periods lor lhose cuslomers lhal
consider swilching suppliers, bul subsequenlly change lheir mind.
5.62 Cuaranleed service slandards ensure lhal all cuslomers receive a minimum acceplable slandard
ol service. We will require all licensed waler suppliers and new enlranl sewerage service providers lo
meel lhese slandards, bul we expecl increased compelilion lo incenlivise all players in lhe markel lo
provide higher levels ol cuslomer slandards lhan lhose laid down by Covernmenl.
5.63 We will legislate in a future Water Bill to improve the statutory enforcement regime
so that Ofwat has the powers it needs to gather information from water companies about
compliance with these guaranteed standards of service. We will also allow nancial penalties
to be applied for infringements over a ve year period as opposed to one year as is currently
the case. This will allow Olwal lo invesligale polenlial breaches discovered in lhe course ol galhering
annual perlormance inlormalion and remove lhe incenlive lor waler companies lo delay reporling
inlringemenls.
Water for Life
77
Supporting developers
5.64 Developmenl is cenlral lo lhis Covernmenl's agenda lor slimulaling economic growlh. Celling
access lo waler and sewerage inlraslruclure is essenlial lor developmenls lo proceed. Where
developers' plans have relecled lhe concerns oullined in lhe previous chapler lhe Covernmenl wanls
lo lacililale lhis access and ensure il is charged lor equilably.
5.65 The Olwal and Cave reviews looked al lhe issues housing developers laced in dealing wilh waler
and sewerage inlraslruclure and lound areas in need ol improvemenl. The reviews idenliled problems
wilh lhe level ol service lhal waler and sewerage companies provide lo developers, how developers
are charged lor connecling lo waler and sewerage inlraslruclure and lhe way Olwal has handled
dispuled cases and complainls.
5.66 The Covernmenl agrees wilh lhe recommendalions lrom bolh lhese reviews. We want
developers to receive much higher standards of service, and we will increase the
transparency of the infrastructure and requisition charges they pay.
5.67 We agree lhal waler companies' licences should be modiled lo help improve lhe service lhal
developers receive and would like lo see lhis implemenled quickly. This would enable Olwal lo lake
enlorcemenl aclion when companies lail lo meel Cuaranleed Service Slandards. We will supporl
Olwal in ils discussions wilh waler companies on inlroducing lhese changes and would expecl waler
companies lo work conslruclively wilh Olwal on lhis approach.
5.68 We will also introduce market codes and charging schemes for the inset regime to
increase transparency and streamline negotiations around bulk supply and sewerage service
arrangements for new building developments. This will be ol parlicular value lo developers ol
greenleld siles.
5.69 The independenl Penlold Peview
29
inlo non-planning consenls made a number ol
recommendalions designed lo reduce burdens on developers, in parlicular by improving lhe
inleraclion belween lhe planning and non-planning consenl syslems. The Peview commended lhe
Lnvironmenlal Permilling Pegulalions (LPPs) as lhe basis lor environmenlal permissions. The LPPs
have been expanded over lhe pasl lour years lo encompass a wide range ol relaled, bul previously
separale, Lnvironmenl Agency and local aulhorily consenling regimes, lo deliver a lexible, risk-based
single lramework lor business and olhers. Lasl monlh, lhe Covernmenl announced ils inlenlion lo
expand upon lhe Lnvironmenlal Permil programme and add more consenls inlo il. We will include
provisions in a future Water Bill to allow for the framework to be expanded to include water
abstraction and impounding licensing, ood defence consents and sh pass approvals.
29 hllp.//www.bis.gov.uk/penlold
Water for Life
78 Water for Life
6. Taking aclion


W
a
l
e
r
w
i
s
e
79
Key commitments:
Using waler wisely
We must use water more efciently and be careful to avoid pollution in using our drains.
We will encourage and incentivise water efciency measures, for example under the Green
Deal. We will encourage voluntary water efciency labelling to enable customers to choose
more efcient products.
We will also collaborate on a campaign to save water and protect the environment,
working with water companies, regulators and customers to raise awareness of the
connection between how we use water and the quality of our rivers.
Delivering lhe While Paper
We will produce a new strategic policy statement for Ofwat and revise our social and
environmental guidance to reect the priorities in this White Paper. We will publish a draft
Water Bill for pre-legislative scrutiny in early 2012 and introduce a Water Bill as soon as
Parliamentary time allows.
6.1 ln previous chaplers we have discussed how waler companies mighl use waler more wisely,
mighl plan and invesl in new and relurbished inlraslruclure, respond lo cuslomers' wishes beller
lhrough lhe lhreal ol compelilion and prolecl lhe more vulnerable members ol sociely unable lo
allord lheir waler bills, while making lhose simply unwilling pay lheir share. 8ul il cannol jusl be lhe
waler companies, lheir regulalors and Covernmenl who acl. We all have a responsibilily lo use our
mosl precious ol resources wisely.
6.2 ll we do nol play our parl in reducing waler demand, in reducing pollulion in our rivers and
slreams, and in reducing lhe lood risk lrom surlace run-oll lrom our driveways and gardens, we pay.
We pay as compeling demands lorce lhe price ol waler up, we pay lor lhe new inlraslruclure needed
lo supply waler, we pay lo repair damage lrom sewer and surlace waler looding, and we pay lor lhe
lrealmenl processes needed lo clean our waler lo a drinkable slandard. We also lace olher cosls, we
musl lnd space lor new reservoirs and our rivers and lheir wildlile will be under grealer pressure.
6.3 So il we save waler, reduce lhe pollulion going down our drains and il we invesl in suslainable
drainage syslems, we are nol only helping sociely and lhe nalural environmenl we are helping
ourselves.
6.4 This presenls us wilh some hard choices. 8uilding new inlraslruclure is expensive, and as waler
cuslomers we will all pay lor il lhrough our bills. New reservoirs may well be opposed lercely by lhe
communilies allecled. ll we use less waler we reduce our need lor new slorage capacily and lhe cosls
we lace. As a counlry we need lo decide how lo balance our need lor waler wilh proleclion ol lhe
environmenl, and reach a colleclive judgmenl on lhe resources and slandards ol supply we wanl
and are prepared lo pay lor in lhe lulure. Currenlly, we build capacily in lhe syslem lo lry lo meel
peak demand in lhe summer and nol have hosepipe bans when we wanl lo waler our gardens, lll
pools and wash cars. Typically, mosl waler companies plan lor lemporary reslriclions once every
!0-20 years. Mainlaining lhese service slandards will cosl more lhan reducing our peak consumplion
ol waler or choosing lo accepl more lrequenl waler reslriclions.
Water for Life
80 Water for Life
6.5 The challenge is nol jusl aboul using less waler, il is aboul using waler dillerenlly. We wasle loo
much ol our drinking waler, lrealing il as a limilless resource. 8ul many ol lhe uses we have lor waler
do nol need il lo be lrealed lo such a high slandard over a lhird is lushed down our loilels or used
ouldoors. We can collecl and recycle waler ourselves, lor example lor walering our gardens. And we
can design buildings in a dillerenl way so lhal lhey do nol use high qualily drinking waler as a delaull.
Using waler wisely
6.6 Lower levels ol consumplion are achievable. Average waler consumplion varies across lhe
counlry, in some areas il is already lower lhan !30 lilres per person per day while in olhers il is as high
as over !60 lilres per person per day. The reasons lor lhis vary, including household lype and average
income, lhe exlenl lo which households are charged on a melered basis lor lheir waler use, and lhe
impacl ol work by waler companies and olhers lo reduce demand. Waler use is ollen highesl, lor
example, in relalively alluenl areas where more homes have gardens.
Figure xi
6.7 We know we can reduce waler use by changing lhe way we use il, by choosing producls which
use less waler, such as ellcienl showers, or by collecling rainwaler lo use in our gardens.
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Average water consumption in litres per person per day 2010-11
8! Water for Life
Using less water in the garden
ln hol and dry wealher, waler used ouldoors can amounl lo hall ol lolal UK usage. ll is slill possible,
however, lo have a beaulilul and produclive garden using less waler.
Install a water butt
Thousands ol lilres ol rainwaler lall on lhe average rool every year. Pulling a waler bull in your
garden is easy, and quile cheap. Many waler companies sell reduced-price waler bulls. Check wilh
your waler company lo see whal lhey can oller.


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Everyday watering tips
Use a walering can inslead ol a hose. ll you do use a hose, use a lrigger lo conlrol lhe low.
Walering early in lhe morning or lale al nighl means less waler evaporales.
Leave planls and shrubs dry unlil lhey show signs ol willing walering loo ollen can keep rools
shallow and weaken planls.
Saving water while keeping your lawn healthy
Lawns are usually lhe lhirsliesl parl ol a garden. A sprinkler can use as much waler in an hour as a
lamily ol lour uses in one day. lnlrequenl soaks are more elleclive as lhey encourage rools lo search
lor waler deeper in lhe ground. Lel lhe grass grow longer in dry spells lo help keep moislure in lhe
soil
Make use of greywater in the garden
You can use waler lell over lrom washing up, waler used lo wash lhe windows, or lhe car, as well
as shower and sink waler. 8ul make sure il is cool and do nol use balhwaler on edible planls!
Plan a water-efcient garden
As lhe climale changes, so will lhe planls lhal do well in your garden. Some lradilional planls may
slruggle wilh less waler, you can keep your garden looking good by choosing droughl-loleranl
planls.
6.8 We ollen lhink saving waler should be lhe responsibilily ol waler companies and poinl lo waler
losl lhrough lheir leaking pipes. 8ul in 2009-!0, almosl a quarler ol waler losl lhrough leakage
was losl in lhe pipes householders are responsible lor which connecl lheir properlies lo lhe waler
company mains. Melering makes il easier lo idenlily lhese leaks so lhey can be quickly lxed. All waler
companies oller some degree ol lree or subsidised repair and replacemenl lor domeslic cuslomers'
supply pipes.
Quick tips for saving water in the home
In the bathroom
Turn oll lhe lap while brushing your leelh or shaving a running lap wasles over 6 lilres per
minule.
Aboul a quarler ol all lhe clean, drinkable waler we use in our homes is lushed down lhe loilel.
8uy a waler ellcienl loilel or one wilh a dual lush, or pul a hippo or olher displacemenl device
inlo your cislern lo save some waler. Throw collon wool, sanilary producls and olher wasle in
lhe bin, nol lhe loilel.
A balh lypically uses around 80 lilres, while a shorl shower can use as lillle as a lhird ol lhal. 8ul
beware as many power showers can use more.
You can ll an aeraled shower head, low regulalors or spray ends on your laps.
Water for Life
83 Water for Life
In the kitchen
lill a jug wilh lap waler and leave il lo cool in your lridge. This way you do nol have lo run lhe
lap lor ages jusl lo gel a cold drink.
A dripping lap wasles al leasl 5,500 lilres ol waler a year. lhal is enough waler wasled lo lll a
paddling pool every week lor lhe whole summer. Mending your dripping lap washer could save
you over !8 a year.
Wash your lruil and vegelables in a bowl ralher lhan under a running lap.
Check your dishwasher. Many dishwaler sellings provide lhe same cleaning power as a normal
cycle, bul wilh less waler and energy.
6.9 Programmes lo improve exisling buildings wilh new waler ellcienl devices and suslainable
drainage syslems (relrollling) can also include lhe provision ol individually lailored advice on waler
ellciency. We welcome any inilialives in lhis area, as well as lhe crealion ol schemes which give
conldence lo cuslomers aboul lhe compelence and recognilion ol lhose carrying oul lhe work.
Thinking more carefully about drainage
6.10 We also need lo lhink more aboul our waslewaler and drainage. Many ol us are nol aware
lhal drains al lhe side ol lhe roads, or rain waler drainage lrom our homes, lends lo drain direclly
inlo our rivers and slreams. ln some places lhis is having a serious environmenlal impacl. We can also
unknowingly pollule lhe environmenl lrom poorly mainlained seplic lanks or misconnecled drains
lrom our homes. And by pulling lals, oil and grease down our drains we cause blockages and cosl
ourselves and olher waler cuslomers' money.
6.11 Surlace waler looding is an increasing problem in our communilies, while we conlinue lo
lace problems lrom combined loul and surlace waler sewers overlowing when il rains heavily. We
will increase awareness among households and businesses ol lhe benells ol relrollling suslainable
drainage syslems (SuDS) lo reduce lhis risk. We know lhal households are more likely lo relroll SuDS
when making changes lo lheir properlies, lor example replacing or laying a new paved driveway,
building conservalories, landscaping, inslalling a new balhroom or rainwaler down pipes or pulling
righl misconneclions. We are working with the water industry and retailers to provide better
information at point of sale to explain the benets of SuDS and promote their use. This
might include basic blueprints and templates for how to ensure that effective connections
to drains and sewers are made, and how to choose and lay permeable paving. We will also
foster a consortium of sustainable drainage ambassadors or champions, who can provide
advice and information on the options available.
84
Yellow Fish
A wide variely ol pollulanls end up in lhe surlace waler syslem
in our lowns and cilies. These come lrom everyday aclions.
delergenl lrom washing cars, wasle lrom an oil change, or
washing oul painl brushes lor example.
Many local issues can be solved lhrough local aclion. The Yellow
lish Campaign involves a communily group slencil painling
yellow lsh on lo lhe drain grill and lhen raising awareness
lhal lhese drains are designed lo carry only rain waler and lhal
anylhing polluling lhal gels pul in lhem will damage lheir local
environmenl.
Changing attitudes to water
6.12 Our allilude lo waler where il comes lrom, whal il cosls, and how we dispose ol il is loo
casual. ll is causing problems now, damaging our rivers lhrough over-abslraclion and pollulion and,
wilhoul change, will cause much more signilcanl problems in lhe lulure. Poor waler qualily is a
social issue, nol jusl an environmenlal one. People in disadvanlaged areas are more likely lo live in
close proximily lo more heavily polluled rivers. And lhe Nalural Lnvironmenl While Paper showed lhe
benells lhal conneclion wilh our nalural environmenl can bring in lerms ol our heallh and well being.
6.13 ll we are lo deliver our vision lor lhe lulure we musl change lhe way we value waler. This will
nol be easy or quick. ll will require aclion across sociely. Covernmenl will play ils parl, bul we will only
succeed il lhis is supporled by aclion by businesses, communilies and organisalions lhroughoul lhe
volunlary seclor. We will nol be slarling lrom scralch. Aclion by groups such as Walerwise, WWl and
Pivers Trusls has already shown how beller inlormalion and praclical help can galvanise supporl and
deliver signilcanl reduclions in pollulion and improvemenls in waler ellciency. 8uilding conneclions
lhal maller lo individuals is powerlul whelher a conneclion lo lheir waler bill and opporlunilies lo
save money or lo lheir local river. We need slrong and consislenl messages lhal speak lo individuals,
and lo give lhem lhe lools lhal help lhem lo make a dillerence.
Water for Life


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Thames21
Thames2! is an environmenlal charily working wilh communilies lo clean up London's walerways.
Thames2! aims lo lranslorm neglecled and lillered walerways inlo areas lhal everyone can use
and enjoy. As well as conlinuing lo lackle lhe hundreds ol lonnes ol liller in London's walerways,
Thames2! is working lo secure long-lerm change by working wilh lhousands ol Londoners and
promoling respecl lor lheir local walerways.
The programme is supporled by a wide range ol lunders. Mosl ol lhe work is carried oul by
volunleers and lhe programme allracls around 9,000 volunleers per year. Only specialised work is
carried oul by conlraclors, such as non-nalive species removal.
The key is lo make volunleering easy. The charily lake responsibilily lor equipmenl, supervision,
heallh and salely procedures, impacl assessmenls and lrsl aiders so lhal lhe volunleers jusl have lo
lurn up on lhe day.
To lake parl and lnd oul more go lo www.lhames2!.org.uk


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6.14 Nol everyone will be easy lo convince. Waler is relalively cheap compared lo many olher
household bills, and we wanl il lo slay lhal way. 8ul lhis means lhal lnancial incenlives lo cul waler
use are weak. Almosl lwo-lhirds ol households do nol have melers. Some waler companies in areas ol
waler slress are rolling oul universal melering programmes, lhough hall lhe households in lhe counlry
will slill nol be melered by 20!5. 8ul waler melering alone will nol drive changes in behaviour, even
when melers are inslalled, cuslomers need lo be supporled wilh advice on reducing waler use, and
inlormalion on why il is imporlanl. Making lhe conneclion belween our use ol waler, our local rivers,
and lhe bills we pay now and in lhe lulure is crilical.
6.15 The Covernmenl is already lunding a number ol projecls lo promole waler ellciency, while
organisalions across lhe counlry are giving praclical advice and help lo householders. The Plug-It
projecl, lor example brings logelher plumbing inslallers, relail oullels, consumers, waler companies,
as well as designers lo co-design, develop and lesl engagemenl processes lo promole waler ellcienl
purchasing and behaviour.
6.16 Waler companies, via lhe Waler Lllciency Nelwork, are developing a sel ol common messages
on waler ellciency. These locus on a range ol household behaviours such as showering, washing and
inslalling waler ellcienl appliances.
6.17 We will use the experience of the Water Efciency Network, Plug-It and other successful
projects, such as Waterwises Tap into Savings work, to improve our understanding of what
motivates individuals to adopt water efcient behaviours and the barriers to them doing
so. This work will include developing and testing messages around why saving water is
important and considering how these can be applied to encourage more water efcient
behaviour.
6.18 We will also make our own contribution to a campaign to save water and protect the
environment, working with water companies, regulators and customers to pass consistent
messages and raise awareness of the connection between our water use and the quality of
our rivers and the ecosystems they support, and to deliver lasting change in the way we use
water.
Incentives to save water
6.19 Waler companies have olher roules lo encourage more ellcienl waler use. Cuslomers generally
pay a lal rale lor lheir waler, even when melered. There is no incenlive lo reduce waler use al
lhe limes when sources are under lhe grealesl slress and lhe cosl ol waler is highesl. As meler
penelralion increases, companies could slarl lo oller a grealer variely ol larills,incenlivise grealer
reduclions in waler use and make charges lairer, lor example by reducing cosls lor winler use and
allaching a higher value lo lhe mosl coslly peak summer use. Peducing lhis peak load on lhe syslem
will be crilical il we are lo reduce lhe need lor inveslmenl in new inlraslruclure.
Water for Life
87 Water for Life
Seasonal Tariffs
We all lend lo use more waler in lhe summer when lemperalures are higher and rainlall generally
lower. This high summer demand has an ellecl on year-round waler bills. Seasonal Tarills are one
way in which waler companies can relecl lhe exlra cosls ol summer waler supply wilhoul selling
lhe volumelric elemenl al a high rale all year round. This can promole responsible waler use in lhe
summer wilhoul unduly penalising households which have lo use a lol ol waler.
Wessex Waler is in lhe lhird year ol a seasonal larill lrial designed lo manage bolh demand and
allordabilily. ln 20!0 il lound lhal overall consumplion lell by 6 per cenl when cuslomers were
charged more lor every !,000 lilres used during lhe summer and less during lhe winler. This
ensured lhal lhe average cuslomer was no worse oll. However, Wessex Waler also lound lhal
whilsl seasonal larills encouraged a slep-change in waler conservalion, some cuslomers assumed
lhal lhe changes were molivaled by a desire lo increase prolls ralher lhan lo conserve supplies.
However, lhe prices charged by all waler companies are regulaled by Olwal lo ensure good value lo
cuslomers. This means lhal lhey cannol increase lheir revenue by inlroducing new larills.
Green Deal
6.20 8eing more ellcienl in our use ol hol waler also saves energy and reduces carbon emissions.
The Covernmenl's "Creen Deal" is a markel mechanism designed lo deliver energy ellciency
improvemenls lo lhe building slock, lunded by privale capilal, al no up-lronl cosl lo lhe consumer.
Hol waler saving measures lhal also save energy may be eligible lor lnance lhrough lhe Creen Deal,
enabling consumers lo save money, save energy and save waler al lhe same lime. As bolh domeslic
and non-domeslic properlies will be eligible, Creen Deal lnance could also be available where, lor
example, businesses wanl lo upgrade lo more ellcienl hol waler lllings.
6.21 The Creen Deal is an opporlunily lo gel largeled advice lo households on sleps lhey can lake
lo improve lhe suslainabilily ol lheir properlies, including measures lo improve waler ellciency. The
Covernmenl is working wilh induslry and olher slakeholders lo develop waler ellciency advice which
will be available when a household or business is looking lo lnd oul more aboul lhe Creen Deal
or undergoing a Creen Deal assessmenl. Waler companies have an opporlunily lo promole waler
ellciency by working wilh Creen Deal assessors who are visiling homes and workplaces.
Save Water Swindon
Save Water Swindon was launched in June 20!0 as a parlnership projecl belween Thames Waler,
Walerwise and WWl. Swindon is in a waler slressed area. lls waler supply is abslracled lrom lhe
Thames and a groundwaler source lhal leeds lhe Piver Kennel. The Piver Kennel is one ol Lngland's
iconic chalk slreams, bul also one ol lhe mosl heavily abslracled rivers in lhe counlry. The projecl
aims lo build underslanding ol lhe conneclion belween waler use and lhe local waler environmenl
and encourage lhe communily lo use less waler.
The largel ol lhe campaign is lo reduce Swindon's demand lor waler by 20 lilres per person per day.
During lhe lrsl year lhe campaign ollered advice on waler-saving behaviours, as well as lree 'waler
saving home makeovers' (relrolls) or lree waler ellciency devices lor residenls lo inslall lhemselves.
Over 2,200 residenls signed up lo lhe 20 lilre challenge in lhe lrsl year and achieved savings ol
around !30,000 lilres per day.
88
The nexl phase ol lhe campaign will promole a whole lown approach, looking along lhe waler
supply chain lrom ils source lo lhe poinl ol discharge back lo lhe environmenl. The projecl aims lo
make addilional savings ol 300,000 lilres per day by lhe end ol lhe second phase, which could save
residenls ol Swindon 400,000 on waler and energy bills.
Tap into Savings: Working in partnership to help communities save water,
energy and money
The Tap into Savings programme was launched lo help residenls, including lhose in social housing,
save waler, energy and money. During 20!0 and 20!!, over 4,500 home visils were carried oul
in Surrey, Wesl Midlands and Lssex during which lree waler and energy ellciency devices were
llled and advice on making lurlher savings given. More lhan !80 local residenls worked in small
LcoTeams, lo lake aclion in lheir homes on waler, wasle and energy.
The programme delivered average waler savings ol 40 lilres per day per home visiled (based on lhe
devices inslalled). Nearly hall ol residenls who had home visils wenl on lo lalk lo lheir lriends and lamily
aboul saving waler and energy.
Overall lhe programme saved more lhan 57 million lilres ol waler per year and reduced emissions ol
climale changing gases by more lhan !85 lonnes ol CO
2
e annually. ll was lhe lrsl waler ellciency
programme lo build in energy ellciency and recycling loo.
lor more inlormalion visil. www.walerwise.org.uk
Product labels and standards
6.22 Producl labels lhal are clear, accurale and widely underslood, can allow cuslomers lo make
inlormed choices aboul lhe producls lhey use in lheir homes, al lhe poinl ol sale. Producl labelling
also enables lhe developmenl ol procuremenl slandards which can be used lo secure a slronger
markel lor waler ellcienl producls.
6.23 There are a large number ol dillerenl labels on waler ellciency in use inlernalionally, bul no
single approach lo labelling in Lngland. Some comparison belween lhe waler ellciency ol producls
is possible lhrough lhe inlormalion on waler consumplion on washing machines and dishwashers
included on lhe LU energy ellciency label. A similar single A-C label specilcally lor waler use would
be likely lo conluse consumers laced wilh lwo labels in lhe same lormal. However, lhere is some
appelile across lhe LU lor developing a dislincl Lurope-wide label relecling lhe waler ellciency ol
producls.
6.24 Meanwhile, lhe developmenl ol lhe 8alhroom Manulaclurers Associalion's waler ellciency
labelling scheme could deliver lhe benells ol a mandalory scheme wilhoul lhe associaled regulalory
burden. Covernmenl is working wilh slakeholders lo harmonise labels and slandards lo minimise
conlusion in lhe markelplace.
6.25 The Waler Supply (Waler lillings) Pegulalions sel slandards lor lhe amounl ol waler used by
key lllings, including WCs, urinals, balhs, washing machines and dishwashers. We will consider lhe
case lor reviewing lhe Pegulalions, bul are nol convinced lhal lhis will provide an elleclive way ol
Water for Life
89 Water for Life
supporling lhe uplake ol lhe mosl waler ellcienl lllings compared lo changes in behaviour and lhe
righl overall economic and planning lramework.
Water efciency in the public sector
6.26 Covernmenl is commilled lo leading by example in lhe way we manage our own eslale (our
operalions and procuremenl). ln 2009-!0 Covernmenl operalions used 36 million m ol waler. ln
lebruary we announced an ambilious package ol commilmenls lo cul our waler use as well as our
greenhouse gas emissions and wasle, and lo buy suslainable and ellcienl goods, while conlinuing lo
deliver value lor money.
Water efciency on the Government Estate
Thames Waler is inslalling aulomalic waler meler reading (AMP) equipmenl al various cenlral
Covernmenl buildings.
The AMP equipmenl is being inslalled as parl ol a projecl lo.
improve accuracy ol billing in order lo supporl Covernmenl deparlmenls' lnancial planning,
idenlily quick win opporlunilies lo reduce cosls,
idenlily wasle lor example cuslomer leaks, in order lo lurlher reduce cosls and supporl bolh
Covernmenl and Thames Waler suslainabilily programmes, and
allow Thames Waler lo lesl lhe melhodology lor delivering an enhanced waler managemenl
service lo cuslomers.
The AMP lrial will operale lor !2 monlhs. The AMP equipmenl will provide on-line waler use dala
lhal will be used lo monilor againsl sile specilc benchmarks ol daily consumplion. Once lhese
benchmarks have been eslablished lhey will be used lo idenlily opporlunilies lor reducing lhe cosl
ol waler charges. A lrial service will include leakage alerls, regular inlormalion on perlormance
againsl benchmarks and dala on-line.
leedback lrom deparlmenlal slall will be used lo inlorm lhe design and developmenl ol a
supporling web based dala reporling porlal. The porlal will simplily ease ol reporling and lacililale
waler ellciency behaviour change. Dillerenl levels ol reporling are envisaged including publically
available perlormance reporls.
Water efciency in business
6.27 Civen lhe pressures on our waler resources il is crucial lhal businesses adapl lo lhese new
circumslances and manage lhe risks lhey lace lrom changes in waler availabilily as ellcienlly as
possible. lnduslries have a range ol oplions lo do lhis such as invesling in waler slorage, induslrial
waler re-use, or air cooling. ll is also imporlanl lhal businesses measure and manage lheir waler use,
and adopl new lechnologies over lime lo improve lheir waler ellciency, such as lhose available on lhe
Covernmenl's Waler Technology Lisl
30
.
30 hllp.//wll.delra.gov.uk/producl_search_landing.asp?
90
6.28 The Covernmenl expecls lhal lhe exlension ol relail compelilion will increase lhe incenlive lor
waler companies lo work wilh lheir business cuslomers lo help lhem reduce lheir waler consumplion
and cul waslage. This has been one ol lhe clearesl benells lrom lhe inlroduclion ol a compelilive
markel in Scolland.
Water impacts in product supply chains
6.29 8ul businesses also need lo lake a broader view ol waler use. Around lwo-lhirds ol all waler
we use is imporled in lhe lorm ol waler used lo make lhe goods we buy. The pressures on waler
supply lrom populalion growlh and climale change lhal we lace in Lngland will also be lell across
lhe world. Today's global populalion ol aboul seven billion is lorecasl lo rise lo around eighl billion
by 2030 and probably lo over nine billion by 2050. Tolal global waler demand could rise by 3560
per cenl belween 2000 and 2025. Waler will become an even more precious resource as aquilers
are exhausled, rainlall pallerns change, sea levels rise and river lows aller. The linal Peporl ol lhe
loresighl lulure ol lood and larming Projecl. Challenges and choices for global sustainability
3!
,
highlighled lhal lhis pressure is likely lo be lhe lrsl issue lo impacl on lhe compelilion lor inpuls lor
lood produclion. This is nol an argumenl lor sell-sullciency, bul ralher lor laking advanlage ol lhe
exporl opporlunilies lor growing global demand lor lood and lo make ourselves more resilienl lo
polenlial shorl-lerm lood supply shocks caused by a more volalile climale. And il we are lo compele in
lhe global markel place lhen we musl make lhe mosl ellcienl use ol our own waler.
6.30 "Waler loolprinling" is a concepl lhal can help businesses consider any risks lo lheir supply
chain by considering lhe hidden use ol embedded waler. To supporl a commilmenl in lhe Nalural
Lnvironmenl While Paper To develop an agreed approach to water footprinting by 2012 we are
currenlly commissioning research lo analyse lhe dillerenl lypes ol lools available lo business lo
undersland, reduce and manage lhe impacls ol lheir waler use.
6.31 WPAP (Wasle and Pesources Aclion Programme) is working on behall ol Covernmenl on
inlegraling lhe measuremenl ol direcl and embodied waler use inlo business and consumer decisions.
WPAP works wilh lood and drink manulaclurers lo conlribule lo a seclor-wide largel lo reduce waler
use (nol in producl) by 20 per cenl belween 2007 and 2020. WPAP is also working wilh developers
and lacililies managers lo embed waler ellciency inlo new and relurbished buildings and wilh DlY
relailers and builders merchanls lo increase lhe sale ol waler ellcienl producls. 8uilding on lhe
previous Rippleffect
32
inilialive (lree waler ellciency on line lools and resources), WPAP is developing
pilol parlnerships wilh waler companies lo promole lhe Rippleffect lools lo lheir cuslomer base
including SMLs.
3! hllp.//www.bis.gov.uk/assels/bisparlners/loresighl/docs/lood-and-larming/!!-546-lulure-ol-lood-and-larming-reporl.pdl
32 hllp.//www.wrap.org.uk/business/sme/ripplellecl/
Water for Life
9! Water for Life
McCain Foods Limited
McCain loods, manulaclurers ol lrozen lrench lries and olher polalo producls, has slaled lhal seeking
opporlunilies lo reduce environmenlal impacls has increasingly become a primary locus ol lheir
business. Key achievemenls include reducing energy consumplion, improving raw malerial ulilisalion,
redirecling 98 per cenl ol lood and packaging wasle lrom ils manulacluring operalions lo recycling
aclivilies, and relurning cleaned process waler inlake back lo local waler courses lollowing lrealmenl.
The company aims lo conlinuously reduce lhe amounl ol waler used in ils manulacluring
operalions by idenlilying and slopping leaks and spillages, moniloring waler use al all processing
slages and oplimising ils ellcienl use.
Al McCain's Whilllesey laclory, a reverse osmosis planl has been inslalled. This equipmenl can
lake used process waler and clean il lo a level suilable lor re-use. This can be repealed many limes
allowing conlinuous recycling ol waler.
The reverse osmosis planl has lhe polenlial lo reduce lhe sile demand lor mains waler supply by a
quarler aboul 250,000 cubic melres or lhe equivalenl ol lhe waler use ol over !,300 homes in
8rilain per year.
Water efciency in agriculture
6.32 lncreasing lhe ellciency ol waler use in agricullure is in larmers' besl inleresls lo improve lhe
suslainabilily, compeliliveness and prollabilily ol lheir businesses. Some larmers are already laking
aclion, wilh one lhird ol larms wilh winler slorage reservoirs and larmers lorming Waler Abslraclor
Croups lo help lhem manage waler resources colleclively. Dala lrom lhe larm 8usiness Survey
33

indicales lhal around 85 per cenl ol larmers are laking aclion lo conserve waler when irrigaling,
55 per cenl ol whom did so lor lnancial reasons. Tools such as lhe LLAl (Linking Lnvironmenl and
larming) Waler Managemenl Tool
34
lo help larmers idenlily key waler uses on lheir larm and lnd new
ways ol saving money and prolecling lhis resource.
6.33 ln lhe liveslock seclor, lhe Dairy Poadmap
35
measures on-larm waler use ellciency on an annual
basis and has largels lor processors lo meel lo reduce on-sile waler use in 20!5 and 2020. The
Lnglish 8eel and Sheep Producl Poadmap
36
includes inilial research inlo lhe waler loolprinl ol beel
and sheep produclion, and lhe Producl Poadmap lor lhe Lnglish Pig lnduslry
37
published earlier lhis
year acknowledges lhe imporlance ol good waler managemenl and promoles knowledge exchange
and local benchmarking ol waler use. As awareness ol lhe issues is exlended, we may see lhese and
olher supply chain inilialives increasingly relecl lhe imporlance ol resilience lhrough lhe exlension ol
largel selling lor waler ellciency.
33 hllp.//www.delra.gov.uk/slalislics/loodlarm/larmmanage/lbs/
34 hllp.//www.lealuk.org/leal/larmers/walermanagemenllool.eb
35 hllp.//www.dairyco.nel/library/research-developmenl/environmenl/dairy-roadmap.aspx
36 hllp.//www.eblex.org.uk/documenls/conlenl/news/p_cp_leslinglhewaler06!2!0.pdl
37 hllp.//www.bpex.org/KTPandD/environmenlHub/PiglnduslryPoadmap.aspx
92
Delivering lhe While Paper
Innovation
6.34 Our new calchmenl approach and lhe opening up ol opporlunilies lor new enlranls in lhe waler
markel are jusl parl ol our ellorls lo involve local people more in lhe decisions lhal direclly allecl
lhem, lo harness lhe power and knowledge lrom volunlary aclion and lree up lhe privale seclor lo
deliver innovalive solulions lo lhe challenges we and olher counlries lace.
6.35 Pesponding lo lhe challenge ol conslrained waler resources bolh home and abroad will creale
opporlunily lor ambilious companies wilh innovalive ideas. The global markel lor waler producls and
services is worlh in excess ol US$300 billion a year. Wilh slrong environmenlal regulalion and world
class science, research and engineering capabilily, lhe UK's environmenl and waler seclor is already
al lhe lorelronl ol global environmenlal lhinking and is helping inlernalional markels solve complex
environmenlal challenges and reach lheir carbon reduclion largels. Covernmenl lhrough UK Trade &
lnveslmenl assisls lhe waler seclor by developing and promoling inlernalional business opporlunilies
lor innovalive goods and services.
6.36 We wanl lo creale a waler seclor in which innovalion can lourish. The Covernmenl supporled
Waler Seclor lnnovalion Leadership Croup will provide leadership and direclion lo drive innovalion
lo meel lulure challenges. The Waler UK lnnovalion Hub will help lake lorward lhe priorily areas
idenliled by lhe Leadership Croup.
6.37 Under lhe leadership ol Sir John 8eddinglon, lhe Covernmenl's Chiel Scienlilc Adviser, public,
privale and lhird seclor slakeholders wilh a slrong inleresl in waler recenlly published Taking
Responsibility for Water
38
. This sels oul priorily aclions lor research and innovalion in bolh lhe UK and
global waler securily conlexl over lhe nexl 20 years. lls lndings and recommendalions will be laken
lorward by a Waler Pesearch Parlnership.
6.38 An innovalion compelilion in waler securily will be launched by lhe Technology Slralegy 8oard
(TS8) in March 20!2. This will be joinlly lunded by Delra, Nalural Lnvironmenl Pesearch Council and
TS8. The inlenlion is lo invesl up lo 3.5 million in lhe compelilion. The largel ol lhe compelilion will
be slep-change solulions lhal have lhe polenlial lo recover !,000 megalilres per day lrom wilhin lhe
blue waler cycle. All aspecls ol lhe waler cycle will be included, lrom resource managemenl, lhrough
demand managemenl lo waslewaler lrealmenl and recycling. The plan is lo supporl bolh lechnical
and commercial leasibilily sludies, and praclical demonslralion ol solulions in use.
38 hllp.//www.bis.gov.uk/assels/bisparlners/goscience/docs/l/!!-!390-laking-responsibilily-lor-waler-research-and-innovalion-lramework
Water for Life
93 Water for Life
Supply chain
Whelher il is making new pipes, developing producls lhal help people save waler, or lhinking ol
new ways lo reduce lhe number ol service inlerruplions, lhe supply chain plays a crucial role in
mainlaining our waler and sewerage services.
The UK waler induslry comprises over 500 companies, employs around 80,000 people and
generales over 3 billion ol overseas business each year.
The second National Infrastructure Plan
39
sel oul how lhe supply chain can benell lrom lhe
conlinued need lor inveslmenl in waler and olher ulililies. We are working on innovalion across
lhe ulililies seclors, locussing on whal we can learn lrom lhe supply chain and how Covernmenl
and ulilily companies can work lo help make lhe UK a key player in inlernalional innovalion. The
Covernmenl will also work wilh Olwal and lhe waler companies lo consider measures lo smoolh
oul inveslmenl cycles in lhe waler seclor lo reduce cosls.
The water company role
6.39 The waler induslry has a key role in delivering our vision. ll is responsible lor providing reliable
and allordable services lo cuslomers, and is an imporlanl sleward ol our nalural environmenl. We
expecl high slandards lrom lhe waler seclor, and will conlinue lo do so. Waler companies have a
crilical role in planning lor lhe lulure. They can ensure waler is allordable by developing social larills
and providing help and supporl lo lhose slruggling lo pay lheir bills. They musl help drive change
in lhe way we use waler lhrough lhe advice and supporl lhey oller lo cuslomers and lhe way lhey
design larills. Their responsibililies and local and regional reach means lhey are well placed lo lacililale
aclion by olhers, such as calchmenl-based approaches lo reducing waler pollulion.
6.40 The waler seclor, lhrough Waler UK, conlinues lo work wilh Covernmenl lo respond lo lulure
challenges and lhe policy priorilies idenliled in lhis While Paper. Covernmenl and lhe waler seclor
have a shared goal ol conlinuing lo provide a suslainable, secure waler supply and waslewaler service
lor all cuslomers al an allordable price. Waler UK has made a range ol delailed commilmenls lo
Covernmenl on aclion lor lhe lulure and sel oul praclical sleps waler companies can lake lo respond
lo policy priorilies, some ol which are highlighled in lhis While Paper. ll will publish an updaled sel ol
commilmenls nexl year lo build on Covernmenl's policy direclion. We welcome lhis posilive response
lrom Waler UK and will conlinue lo work closely wilh lhe seclor lo implemenl lhe commilmenls in
lhis While Paper.
The role of the regulators
6.41 The Lnvironmenl Agency, Olwal and lhe Drinking Waler lnspeclorale logelher provide a slrong
regulalory drive lor delivering lhe objeclives ol lhis While Paper. The Olwal review recognised lhal lhe
balance belween lhe dillerenl regulalors, each wilh clearly delned roles, was one ol lhe key slrenglhs
ol lhe seclor, enabling lrade-olls belween dillerenl objeclives, such as improvemenls lo waler qualily
and impacl on cuslomer bills, lo be made relalively lransparenlly. However, lhe review also noled
lhal lack ol co-ordinalion belween regulalors could increase uncerlainly lor waler companies and
regulalory burdens. Chapler 4 sels oul lhe regulalors' commilmenl lo improving co-ordinalion and
aclion lo improve alignmenl belween lhe dillerenl planning processes.
39 hllp.//www.hm-lreasury.gov.uk/nalional_inlraslruclure_plan20!!.hlm
94
6.42 All lhe regulalors have a role lo play in delivering our objeclives around resilienl waler supply,
improved waler qualily, allordable bills, and improved cuslomer service.
6.43 The Lnvironmenl Agency is commilled lo playing ils parl in delivering lhe While Paper's
objeclives alongside ils work in helping lo deliver lhe Nalural Lnvironmenl While Paper. We expecl
lhe Lnvironmenl Agency lo conlinue lo slrenglhen ils relalionships wilh olher regulalors and work
lo ensure long-lerm, suslainable waler managemenl lhal addresses currenl and lulure pressures
whilsl seeking lo reduce regulalory burdens wherever possible. We expecl lhe Lnvironmenl Agency
lo use ils experience and evidence in working closely wilh olhers (including lhe waler and energy
seclors, waler users, larmers, land managers and local aulhorilies) lo lackle lhe qualily, quanlily and
morphological challenges we lace lo deliver more nalural lunclioning ol our waler environmenl. There
is more lo do in ils role ol underslanding lulure demand and risks, and advising on planning lulure
waler managemenl. To lhis end we expecl lhe Lnvironmenl Agency lo conlinue lo develop and share
evidence on lhe slale ol lhe environmenl.
6.44 The Drinking Waler lnspeclorale is commilled lo ensuring lhal robusl waler supply arrangemenls
exisl lrom source lo lap lo prolecl public heallh and deliver clean sale drinking waler. These
requiremenls are consislenlly reporled as priorilies lor consumers, and lhey conlinue lo be a core
objeclive lor Covernmenl in promoling a suslainable economy. The risk managemenl approach
embedded in lhe regulalory regime provides waler suppliers wilh a clear locus lor suslaining oulcomes
ellcienlly, dealing wilh operalional uncerlainlies, lhe consequences ol climale change and markel
relorm.
Water for Life
95 Water for Life
Ofwat review
The Covernmenl's recenl review ol Olwal considered whelher Olwal's regulalory approach was
ll lor purpose in lhe lighl ol lhe lulure challenges discussed in lhis While Paper. The review
concluded lhal regulalion in lhe waler seclor had worked well since privalisalion. The slabilily and
prediclabilily ol lhe regulalory regime, and Olwal's role wilhin il, had enabled signilcanl inveslmenl
in lhe seclor since privalisalion, delivering benells lor cuslomers and lhe environmenl.
The review idenliled a number ol areas where Olwal needed lo improve ils approach, parlicularly
lo relecl lhe challenges lhe seclor laces lor lhe lulure. The key lndings were.
Olwal had placed loo greal a burden on lhe waler companies lhrough lhe way il regulales. A
subslanlial change ol approach was needed lo reduce lhe cosl ol regulalion and drive cullure
change in lhe companies making lhem less locused on lhe regulalor and more locused on lheir
cuslomers.
More joined up working belween Olwal, lhe Lnvironmenl Agency and lhe Drinking Waler
lnspeclorale was needed, parlicularly during lhe price review process.
Olwal needed lo engage more elleclively wilh lhe companies il regulales and olher slakeholders,
and be more lransparenl aboul how leedback lrom ils consullalion and engagemenl processes
inluences ils decisions.
Covernmenl needed lo provide grealer clarily on lhe longer lerm objeclives lor lhe seclor lo
provide a coherenl lramework wilhin which Olwal can regulale.
Olwal has welcomed lhe review, and is laking lorward lhe recommendalions as parl ol ils lulure
Pegulalion programme. ll has already made progress in several areas, lor example.
The Pegulalory Compliance projecl has proposed a new, risk based approach lo regulalion which
will subslanlially reduce lhe burden on waler companies.
The lulure Price Limil proposals include a new locus on oulcomes, and a number ol measures
lo incenlivise companies lo lake a more innovalive approach, whilsl locusing on delivering lhe
lhings lhal maller mosl lo lheir cuslomers.
Ofwat
6.45 The review ol Olwal led by David Cray was published in July 20!!. Covernmenl has welcomed
lhe reporl, and agrees wilh ils conclusion lhal Olwal's role has been cenlral lo lhe slabilily and
ellecliveness ol lhe regulalory lramework lor lhe waler seclor. Many ol lhe review's recommendalions
are lor Olwal lo lake lorward, and we welcome lhe aclion lhey are already laking in response,
olhers are lor lhe waler companies and olher regulalors. The review challenged Covernmenl lo give
much grealer clarily on ils objeclives lor lhe seclor, ils expeclalions ol Olwal, and beller guidance
on lhe respeclive roles ol Covernmenl and lhe dillerenl regulalors. We accepl lhis recommendalion.
Covernmenl musl sel a clear direclion lor regulalors, and lake a lead on conlenlious policy issues,
such as lhe exlension ol compelilion in lhe seclor. The review's conclusions mirror lhe approach
sel oul in lhe Covernmenl's Principles for Economic Regulation
40
. These emphasise lhe benells ol
independenl economic regulalion, as well as lhe need lor il lo be conducled wilhin a coherenl policy
40 hllp.//www.bis.gov.uk/assels/biscore/beller-regulalion/docs/p/!!-795-principles-lor-economic-regulalion
96
lramework sel by Covernmenl. Covernmenl commilled in lhe Principles lo pul in place lor each
regulaled seclor, slralegy and policy slalemenls lo provide conlexl and guidance aboul priorilies and
desired oulcomes. ll expecls lo do lhis no more lrequenlly lhan once a Parliamenl.
6.46 We will deliver this commitment through a new strategic policy statement for Ofwat
and a revision of our social and environmental guidance, both of which will be published in
2012 in good time to inform decisions on Ofwats approach to the next price review. These
will relecl our policy priorilies lor lhe seclor and lor Olwal sel oul in lhis While Paper.
6.47 This new slralegic slalemenl will sel a clear expeclalion lhal Olwal will use ils regulalory powers lo
deliver lhe longer lerm imperalives sel oul in lhis While Paper, wilh assumplions and lunding decisions
looking beyond lhe immediale lve year planning period. ll will emphasise Covernmenl's priorilies lor
lhe regulalor, including incenlivising a more suslainable approach lo waler resource use, lacililaling
lhe delivery ol new and innovalive approaches, such as calchmenl managemenl, which oller lhe
polenlial lor delivering benells lo cuslomers and lhe environmenl cosl-elleclively, and conlinuing lo
prolecl cuslomers' inleresls, looking lo keep bills low in lhe shorl-lerm, as well as laking a longer lerm
perspeclive on lhe impacl ils decisions will have on allordabilily and resilience in lhe lulure. Olwal's
recenl lulure Price Limils proposals are consislenl wilh lhis broad approach, and Covernmenl wanls lhe
lnal plans lo conlinue lo relecl lhese priorilies.
6.48 The Olwal review idenliled clearly lhal a change ol approach in lhe way Olwal regulales is
needed, conlrming evidence lrom elsewhere lhal lhe way lhal Olwal has regulaled lhe seclor has
conlribuled lo lhe induslry's risk averse nalure. While keeping cosls lo cuslomers allordable remains
crilical, waler companies musl have bolh lhe incenlive and lreedom lo lry novel approaches, lhey
musl believe il lo be worlhwhile lo lake risks, benellling lrom success ralher lhan being penalised lor
lailure. Lnsuring lradilional capilal projecls are nol more lnancially allraclive lhan operalional spend
musl be parl ol lhis reorienlalion ol lhe incenlive slruclure il we are lo see lhe growlh in aclivilies
such as waler lrading lhal are essenlial lor lhe delivery ol lhe Covernmenl's vision lor lhe lulure ol lhe
waler seclor.
Ofwats contribution to sustainable development
6.49 The Olwal review recognised lhal dillerenl secloral regulalors helped balance environmenlal and
waler qualily improvemenls againsl lhe impacl on cuslomer bills. ll recognised Olwal's commilmenl
lo delivering suslainable oulcomes as ellcienlly as possible, bul concluded lhal aclion was needed
lo carry lhis commilmenl lhrough inlo regulalory policies and decisions, lor example lo relecl longer
lerm priorilies or supporl aclivily on waler ellciency. Some slakeholders have argued lhal elevaling
Olwal's slalulory duly lo conlribule lo lhe achievemenl ol suslainable developmenl lrom a secondary
lo a primary duly would help. The review argued lhal lhere were beller ways ol achieving lhis. Olwal
could revise ils regulalory approach lo use incenlives more elleclively and ensure lhal ils decisions
relecl a broader assessmenl ol benells. Covernmenl could also provide a slronger sleer lo Olwal on
how il should inlerprel ils suslainable developmenl duly.
Water for Life
97 Water for Life
6.50 Covernmenl agrees lhal suslainable developmenl musl be lully relecled in Olwal's regulalory
decisions, and agree wilh lhe review lhal il would be benelcial lor Olwal lo explain more clearly how
decisions have laken inlo accounl lhe long-lerm challenges lacing lhe induslry. This will be cenlral
lo our new slralegic policy slalemenl lor Olwal, and lhe revised social and environmenl guidance.
We also welcome lhe work Olwal already has in hand lo deliver more suslainable oulcomes lrom
ils aclivily, such as lhe revision lo ils regulalory approach and developmenl ol a range ol incenlives
and changes lo lhe price conlrol lo beller address lhe long-lerm challenges lacing lhe seclor and
encourage beller oulcomes lor cuslomers and lhe environmenl.
6.51 The Covernmenl's Principles for Economic Regulation emphasise lhe imporlance ol slable and
prediclable lrameworks lo enable economic regulalion lo deliver inveslmenl in lhe regulaled seclors,
bul also recognise lhal lhe lramework lor economic regulalors needs lo evolve lo relecl changing
circumslances lo remain relevanl. The challenges lhe seclor laces makes a slrong argumenl lor a
change ol approach and an unambiguous slalemenl lrom Covernmenl lhal suslainable developmenl
musl be cenlral lo everylhing lhal Olwal does. We will provide the clear statement of
priorities demanded by the Principles for Economic Regulation and use these to set out our
expectations of Ofwat in relation to sustainable development. We will carefully consider the
case for giving Ofwat a primary sustainable development duty to reinforce this.
98 Water for Life
7. Conclusion


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99 Water for Life
7.1 We have sel oul lhe challenge lor lhe lulure. making lhe lransilion lo a resilienl and suslainable
waler seclor. This While Paper sels oul a new lramework lo help prepare lor and deliver lhe aclions
we need.
7.2 The exlenl ol lhe change we lace is uncerlain. The wealher, lnancial markels and people's
behaviour are never easy lo predicl, especially over lhe long-lerm wilh a changing climale. We can be
conldenl lhal lhe way we manage and use our waler resources will need lo change, bul we musl slill
ensure conlinued secure supplies lor households and lo supporl economic growlh, and lhal enough
waler is lell in lhe environmenl lo supporl a heallhy and high qualily nalural environmenl. We musl
saleguard our nalural inherilance. We owe il lo lhe nexl generalion.
7.3 8ul in looking lo lhe lulure we musl nol overlook lhe challenges ol loday lhe over-abslraclion
ol our rivers which is damaging valuable ecosyslems now, pollulion ol our waler environmenl, wasle
and inellciency in our use ol waler, and ensuring waler cuslomers receive high qualily and allordable
service lrom lhe waler induslry. The mosl elleclive responses lo lhese issues will be lhose which sel us
on lhe righl palhway lor lhe lulure.
7.4 There are immediale sleps lor Covernmenl lo lake in implemenling lhis While Paper, parlicularly.
We will publish a draft Water Bill for pre-legislative scrutiny in early 2012 and introduce a
Water Bill as soon as Parliamentary time allows;
We will produce a new strategic policy statement and social and environmental guidance
for Ofwat during 2012;
With the Environment Agency, we will support catchment pilots across the country, with
particular focus on 25 which will be evaluated in early 2013;
We will put in place new arrangements to work with stakeholders on design of a new
abstraction regime in early 2012;
We will intensify our efforts to deal with the legacy of unsustainable abstraction,
publishing information on progress on the Restoring Sustainable Abstraction programme
in 2012;
We will publish nal social tariff guidance in early 2012; and
We will consult on a revised draft guideline for the next water resources management
planning round in spring 2012.
7.5 This While Paper includes several proposals lor deregulaling and simplilying legislalion, lo
reduce burdens on business and slimulale growlh. Olwal's proposals lor reducing ils regulalory
burdens complemenl lhese. The Covernmenl's Ped Tape Challenge ollers a lurlher opporlunily lo
idenlily olher areas where legislalion can be simpliled or removed. Waler legislalion will be under lhe
spollighl lrom lebruary 20!2 as parl ol lhe "Waler, Marine and lisheries" lheme and we welcome
ideas on how we can go lurlher lo reduce burdens on business. However, Covernmenl alone cannol
deliver lhe vision in lhis While Paper. ll will need lo be carried lorward lhrough lhe regulalory regime
by Olwal, lhe Lnvironmenl Agency and lhe Drinking Waler lnspeclorale, and be cenlral lo lulure
decision making by lhe waler induslry, olher abslraclors and large waler users and each ol us as
individuals. The scale ol lhe challenge requires a shill in cullure. Al lhe hearl ol lhis shill musl be a
new approach lo how we all value and use waler.
7.6 Delivering change in our homes and wider sociely will nol be easy, bul aclion will be mosl
elleclive where we deploy clear messages aboul lhe challenges we lace and why lhis mallers lo
each ol us as individuals. We need lo harness lhe enlhusiasm and knowledge ol everyone who
underslands and values lheir local environmenl, lhe drive ol lhose organisalions which are lrusled
lo deliver imparlial advice and lead change in lheir local communilies, lhe ingenuily ol business in
lnding solulions which make il easier lor us lo change our behaviour and reduce our waler use, and
our own sell inleresl. We each have a responsibilily lo ensure waler resources are used suslainably and
we believe lhrough parlnerships belween Covernmenl, lhe waler companies, regulalors, lhird seclor
organisalions and cuslomers we can lnd lhe righl solulions lo deliver waler lor lile.
!00 Water for Life
December 2011 www.defra.gov.uk
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