OEP Chair Dame Helen Ghosh gave a speech at an event to mark the publication of a report by the Aldersgate Group called 'The Business Case for a National Water Framework'.
I would like to thank the Aldersgate Group for the invitation to talk to you today about such an important topic, and in the context of such a valuable report. I am old enough to remember the launch of the Aldersgate Group in 2006 when I was Permanent Secretary at Defra as a single-issue business voice on climate change. It is wonderful to see that such an effective and well-supported organisation has thrived since then and expanded its focus so helpfully across the wider environment wherever business has an interest and an important role to play.
As the report cogently and persuasively sets out, the pressures on our water system and therefore on our national resilience are greater they have ever been, with the growing impact of climate change adding to the systemic and structural failures of supply and quality. The impact of these failures is seen now not just in the natural environment but also in the blockages they create in housing development, in business and economic growth, and in public health.
It is not surprising therefore that is a strong appetite for genuine reform from government, the environment sector and wider business and community voices – many represented here today. But even though we are now recognising our dependence on all aspects of water – quality and and supply, it doesn't make it easier to deal with the multiple issues involved. It is as the report emphasises, a complex, interdependent, system.
“Once in a generation” is perhaps an over-used cliché, but I think with the Government’s commitment to the issues, we really do have an opportunity that deserves that description - to get the major reform of water regulation right and drive and sustain the improvements needed.
OEP’s headline messages
The regulation of the water system in all its many aspects has long been a priority for the OEP. We have run several formal Investigations into related issues – on the regulation of Combined Sewer Overflows; the Farming Rules for Water; and (currently) the failure to achieve Good Environmental Status for the marine environment. We have issued a Report on the implementation of the Water Framework Directive Regulations and subsequently launched a related investigation focussing on River Basin Management Plans which is continuing.
There is a lot of common ground with the OEP’s view and the picture presented in the report presented today, although, of course, we are not completely aligned. Nor is it for the OEP to endorse or ‘back’ its broader structural and financial recommendations. That is for others and I look forward to hearing views in the Panel session later. But here are some key points from our experience in relation to environmental outcomes and regulation.
The importance of effective implementation
I see that the foreword to the Report lays the blame for the multiple failures of the water system on its confused and fractured structure, rather than on failures of implementation. So structure is understandably the focus of its recommendation. But we know from our experience that if the (as we hope) well thought through regulatory regime is to produce the outcomes needed, how it is implemented in practice remains key. We have seen too many cases of regulation - in the water system and elsewhere - that is essentially fit for purpose but nonetheless fails to deliver intended outcomes because they have not been well implemented.
For instance, the conclusion we reached in our report on the effectiveness of the WFD regulations was that the problem was not the regulations themselves, but the way in which they were implemented. Not surprising then that our national Water Framework outcomes are in the bottom quartile of European performance.
To be more specific about the implementation failure there, the place-based actions to address pressures on specific water bodies that were required by the Water Framework Directives were never adequately put in place. This, in our view, is a key reason for the very poor outcomes that were achieved.
The Aldersgate report sets out a vision for an integrated structure of bodies responsible at national, regional and catchment level to deliver collectively a new set of National Targets, whose outcome would be monitored by us at OEP as part of the Government’s Environmental Improvement Plan. In the end, local and regional action has to add up to the right hill of beans.
Whatever the form of any new regulatory regime, it has to focus on effective implementation at the level which affects outcomes, and be appropriately resourced. We would strongly argue for well-developed National Targets to provide a clearer line of sight on the overall environmental state, but there is no point in setting a target if you don’t have the delivery plan in place setting out how it will be achieved at all levels in the system and the resources in place to do what needs to be done. So, to learn the lessons of what has worked and what has not – place specific plans are important, targets have a role to play – but how they are put into practice is crucial.
Urgency
The next key point from us would be about urgency. The intention to reform is laudable and to be welcomed. But that does not negate the need for urgent action now, that must be progressed alongside the efforts to reshape things for the future.
The challenge facing us will only grow as the impacts of climate change increase. This last summer rang a loud alarm bell. Delays will only make things harder in the long run. That is not to say everything must be done all at once. Prioritisation and phasing of work is key. But it can’t wait for a new vision to land. The likely implementation date for the proposed Water Reform Bill is at least two years away and some elements probably yet further. Progress must be made now.
We do recognise that government is making progress in some of these areas such as on reforming the agricultural diffuse pollution regulations, in the implementation of the Environmental Land Management System, and in planning for the 2029 Price Review. But the foot needs to be kept firmly on the pedal.
A comprehensive, cross-government approach
Like the authors of the Report, we would also urge that reforms result in a comprehensive approach that addresses all pressures on water and coherence across government policies and frameworks. While sewage still gets most of the headlines, as the report highlights it is less significant than agricultural pollution, and abstraction, road run off and chemical pollution also significantly affect the quality of our water.
As the Report rightly says, water scarcity and pollution are not just “water sector” problems but arise from the activities of other sectors such as land-use, energy and housing. Tackling these pressures must recognise this interdependence, which means that the reforms of the water sector must effectively address all of these pressures, and work alongside other government policies and initiatives. Reform of the water companies which gets all the headlines is only one element of a far more complex system-level approach that is required. This is not Defra’s challenge alone, it’s a Government challenge.
What does good regulation of the water system look like?
So, what do we believe should be the key features of good regulation of the water system?
Like the Aldersgate Group – who put the emphasis on multi-disciplinary and whole system approaches - the OEP has developed generic principles for good environmental regulation. While ours were developed with a specific scenario in mind - where regulators oversee regulated bodies, rather than a broader definition of a regulatory system – I think there is common sense in them, and value in using them to think about how reform can deliver lasting environmental outcomes and strengthen accountability across the system.
Environmental regulation should have a clear, evidence-based purpose and objectives, linked to achieving a significant environmental improvement
Environmental regulation should allocate clear and appropriate roles and responsibilities, linked to delivering a significant improvement
Environmental regulators should be given and make effective the proportionate use of, the right tools to promote compliance and achieve outcomes
Environmental regulation should include meaningful engagement with regulated parties and others
You might like to think about these principles as this important conversation continues today, and we shall certainly have them at the forefront of our minds as we learn more about the proposed reforms of how this country manages water quality and supply.
Identifying blockers
Before I go, I want to stray off topic briefly and mention some work the OEP is undertaking that I think will be of interest to this audience. We last week launched a call for evidence seeking examples of practical or regulatory barriers getting in the way of sensible action to protect and improve nature. We like to call it “Top of the Blockers”. Our aim is to help identify practical changes which would make it easier for landowners, land managers and businesses to go further and go faster for nature.
It will also support regulators and government to focus on the outcomes sought for nature recovery – very much in the spirit of Dan Corry's review – by tackling the barriers that may be preventing or slowing action towards those goals. Details are on our website – I do hope some of you will have some contributions to make.
Once again, thank you to the Aldersgate Group for inviting me to speak, and for this report, which is an important intervention that demonstrates the complexity of the water challenge, and the need for a response which is practical, pragmatic, comprehensive, coherent – and increasingly urgent.
More information about the Aldersgate Group report can be found here: Good quality, abundant water must be at the heart of economic growth - Aldersgate Group
