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3 hours ago
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Rachel Reeves’s Treasury is looking to keep millions of pounds levied on polluting water companies in fines that were meant to be earmarked for sewage cleanup, the Guardian has learned.
The £11m water restoration fund was announced before the election last year, with projects bidding for the cash to improve waterways and repair damage done by sewage pollution in areas where fines have been imposed.
However, the Treasury is in discussions about keeping the money to use it for unrelated purposes at a time of huge pressure on the public finances and rising debt interest costs.
The move would be hugely disappointing to small projects that have bid for the money to clean up sewage-ridden waterways and were expecting to get the cash last July, only to see it delayed by the election.
Although £11m is only a small pot of money, environmental charities believe the fund is projected to rise substantially as the regulator begins to get tougher on polluting water companies. Last summer, it emerged Thames, Yorkshire and Northumbrian Water would be fined a record £168m between them for a “catalogue of failure” over illegal sewage discharges into rivers and the sea.
The issue is politically significant as there is huge public anger about sewage pollution and both Labour and the Liberal Democrats challenged the previous government over its poor record on holding the water companies to account at the last election.
Tim Farron, the Lib Dem environment spokesperson, said: “We must have urgent clarity on where this funding is going.
“It took long enough to levy fines on the worst perpetrators of this pollution – water companies that contaminated our beautiful seas, rivers and waterways with dirty sewage.
“Now we learn that this government is trying to siphon off those hard-won penalties to go straight into the Treasury pot. Under the water restoration fund, that money was earmarked for good reason – the people who polluted our water should pay for it to be cleaned up.
“The government must publish their plans for the water restoration fund now, to reassure the public that polluters’ fines will be used to restore clean water to Britain – not to plug holes in the Treasury’s purse.”
One Whitehall source said there was a live debate about the issue within the Treasury and that the department was trying to find ways of keeping the cash, which is handed over by the regulator.
Environmental charities have been suspicious for months that the water restoration fund would not survive after there being no news about whether bids would be approved.
Their concerns were further fuelled by a parliamentary answer this month, suggesting the issue is not settled, saying: “Defra is continuing to work with His Majesty’s Treasury regarding continued reinvestment of the water company fines and penalties on water environment improvement.”
A group of charities wrote to the Department for Environment, Food and Rural Affairs (Defra) last week seeking assurances that the fund would not be cancelled.
Ali Morse, the water policy manager at the Wildlife Trusts, said: “We’ve long called for these fines, which previously went direct to government, to be used to help the degraded waterways which were polluted by the offenders in the first place. Funds currently in the pot must now be allocated to drive action on priority issues, such as restoring protected sites blighted by nutrient pollution, and enhancing chalk streams. Far from considering discontinuing the water restoration fund, UK government must enact legislation to ensure that the fund helps waterways recover.”
James Wallace, the chief executive of River Action, said: “The new government was elected on the promise to sort out the dreadful state of our rivers and the profiteering water industry. Any slackening of investment in restoration, especially a fund made up of polluter fines, sends completely the wrong message.
“The obsession with growth at the cost of the environment that enables our economy is madness and a clear signal that Labour is gambling our future to pacify the rapacious demands of international finance markets. History will judge harshly those political leaders whose short-term policies broke our climate and nature. No water, soil and wildlife, no food, jobs and economy.”
Asked about the Treasury considering keeping the money from pollution fines, a government spokesperson said: “For too long, water companies have pumped record levels of sewage into our rivers, lakes and seas.
“This government has wasted no time in placing water companies under special measures through the water bill, which includes new powers to ban the payment of bonuses for polluting water bosses and bring criminal charges against lawbreakers.
“We’re also carrying out a full review of the water sector to shape further legislation that will transform how our water system works and clean up our waterways for good.”
