LGA response to Defra consultation: the Government’s strategic priorities for Ofwat

• The Local Government Association (LGA) is the national voice of local government. We are a politically led, cross party membership organisation, representing councils from England and Wales. 
• Our role is to support, promote and improve local government, and raise national awareness of the work of councils. Our ultimate ambition is to support councils to deliver local solutions to national problems.

• We welcome the updated statement of priorities for Ofwat. Councils have a mixed experience of working with the water companies, and we share Government’s concern that the environmental performance of the water companies has levelled off and in some cases is getting worse. Where river pollution can be traced back to the activities of water companies, there is a real frustration among councils and residents about the lack of action and an appetite for stronger challenge from the regulator. Making the delivery of environmental outcomes an explicit priority for Ofwat is an important step in the right direction.
• Human activity releases nutrients such as nitrates and phosphates into water and at high levels these can pose a serious threat to protected habitats. This is an immediate issue for a number of local authorities where levels of nutrients in the water have been identified by Natural England as dangerously high, and as a consequence planning permission cannot be granted in areas at risk. Water treatment facilities are a critical part of the infrastructure for new development. The water companies must step up to support councils and housebuilders to deliver sustainable new development and we welcome the recognition that this is given in the revised set of principles for Ofwat and the specific reference to nutrient neutrality.

Has the government identified the most relevant strategic priorities for Ofwat? If not, please provide details of the priorities that should be included.

Ofwat has a broad set of responsibilities including consumer protection. The LGA is most interested in the priorities that directly affect local government and we welcome the stronger focus on environmental protection.

Government recently consulted on the draft policy statement on Environmental Principles and in addition to the strategic priorities identified for Ofwat, a requirement to undertake their functions should also be aligned with the outcome of this consultation exercise.

Government should then consider requiring Ofwat to encourage water companies to produce a route map to achieving net-zero by 2030. The route map should include the water companies’ activities and their supply chain and the achievement of milestones linked back to the payment of shareholder dividends.

​​​​​​​​​​​​​​Does the strategic policy statement effectively set out government’s expectations of Ofwat in supporting delivery of our priorities? If not, please identify where these expectations could be made clearer.

The revised statement sets out expectations of Ofwat that will be welcomed by local government, for example in challenging the water companies to support an increase in the use of nature-based solutions, and to prioritise improvements to protected sites. Defra’s 25 year Environment Plan sets out an ambitious programme of reforms and new duties for councils such as the requirement to produce a local nature recovery strategy. It is not clear how councils will be able to engage water companies in this process so it is helpful that the policy statement makes an explicit reference to partnership working, and that Ofwat should use the regulatory framework to ensure that the water companies are tackling nutrient pollution, where appropriate.

Government should consider requiring Ofwat to encourage water companies to meaningfully engage with councils, as primary customers, on strategy development.   

There is a role for Ofwat to ensure that water companies can design and deliver river-basin catchment and nature-based solutions by engaging with the Local Development Plan drafting process, particularly around the Non-Statutory Spatial Framework and the Green Infrastructure Strategy elements, to ensure that land is allocated and designated as necessary for water catchment to address extremes of both water supply shortage and of flooding.

​​​​​​​​​​​​​​Do you consider that this statement to Ofwat is clear and easy to understand? If not, please identify any areas that could be clarified.

An area to be clarified relates to paragraph 21 on pollution. The text sets out the need for water companies to ensure that all measures are needed. However, we know that the issue that has raised much public interest is the repeated contamination of waters despite the use of regulatory instruments. There is a need to review whether the regulatory instruments do comply with the "polluter pays" principle in such a way that they are an effective deterrent. 

​​​​​​​Further clarity is also needed on how there can be upfront investment (with government, private investment and water companies) in water supply infrastructure and water catchment management in water-stressed areas prior to further growth as identified in the planning process.

We welcome further information from Defra and Ofwat on how the statement of principles will be applied, and when councils can expect to see a stronger challenge to the water companies on their environmental responsibilities.