wessex water business plan 2025 30

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Wessex Water proposes record levels of investment

• Biggest ever support package for customers to ensure bills are affordable for all

Wessex Water is proposing its largest ever investment in water and sewerage services to improve the health of rivers, reduce pollution and create around 2,000 extra jobs across the region.

Around £3.5 billion of new investment is proposed between 2025 and 2030 – more than double the current five-yearly spend of around £1.5 billion – subject to regulators approving Wessex Water’s business plan, published on 2nd October 2023.

Recognising the need for a step-change in infrastructure investment, Wessex Water is planning to boost the local economy as it delivers multimillion pound schemes across the region providing employment, apprenticeship opportunities and secure work for the local supply chain.

As well as providing security of water supply, ensuring the water system can cope with the growing demands from population growth and climate change, there will be a huge focus on improving river health, which will include:

• Reducing discharges from storm overflows through a programme of work that will include nature-boosting wetland creation – a record £400 million being invested. 
• Stripping out nutrients from wastewater discharges in response to nutrient neutrality rules, unlocking new housebuilding across many parts of the region without damaging the water environment – a £900 million commitment.  
• Safeguarding rivers and groundwater sources through demand and leakage reduction work so 16% less water is abstracted from the environment, while meeting everyone’s needs for the long-term. 

Consultation with customers showed more than 60% supported the plan, but it will come at a cost. While the exact amount bills need to rise will be determined by the regulator, Wessex Water said it could average around an extra £13 a month in real terms by 2030. Bills will still be lower in real terms than they were 15 years ago, but any increase will be unwelcome and particularly difficult for customers struggling to make ends meet.

Recognising this, Wessex Water has committed to be the first company to eliminate water poverty by 2030, ensuring nobody spends more than 5% of their disposable household income on their water bill. To keep water bills affordable for all, it is also expanding its industry-leading affordability assistance programme.

Chief Executive Colin Skellett said: “This plan is all about striking the best possible balance for people and the planet at a time of crisis. “We face a cost of living crisis; a climate and nature crisis; and a crisis of confidence in the water sector. For all these reasons, public and political scrutiny is rightly at an all-time high. At Wessex Water, we have recognised that we did not act quickly enough on storm discharges, we will now step up, inspire confidence and rebuild trust. “For customers, we expect by 2030 average bills will have risen by £13 a month in real terms, after a decade of rises being held below inflation. We don’t underestimate how unwelcome this will be for many. “We have minimised the increase by pursuing alternative and innovative approaches wherever possible, and we commit to protecting those who will struggle to pay. Our business plan contains the best balance we have been able to strike between increasing investment and keeping prices affordable.”

The investment in infrastructure will be shared between customers and Wessex Water’s long-term owner YTL, which is committed to ensuring the company remains financially resilient.

Mr Skellett added: “We’ve listened closely to our customers so the plan invests in areas that they care about. It will be challenging for us all, requiring shareholders to provide more investment and customers to pay higher bills.

“We are far from starting from scratch; we’re currently investing £1.5 billion between 2020 and 2025, which includes work well under way on reducing storm overflows, but recognise there’s more to do.”

Wessex Water’s business plan is based around eight priority areas that customers say are most important to them, which includes providing safe reliable water; sustainable abstraction to ensure we have enough water to meet the needs of people and nature; having an effective sewerage system to reduce the impact of storm overflows and sewer flooding; and providing excellent customer experience.

Wider environmental benefits include decarbonising the business and contributing to the wider net zero and circular economy agendas, while also increasing biodiversity.

Ofwat will scrutinise Wessex Water’s business plan for 2025-2030 before making an announcement next year determining how much customers can be charged.

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CCW’s review of water companies’ 2025-30 business plans

A report to Ofwat

The Consumer Council for Water (CCW) is the statutory consumer organisation representing household and non-household water and sewerage consumers in England and Wales.

Because customers cannot choose their water provider, it’s especially important that their voice is heard in how the sector delivers their services and protects the environment.

CCW is an integral part of the five-yearly Price Review process. We scrutinise water companies’ business plans to make sure the customer voice is heard at every stage of the process.

Since these plans were published, at the beginning of October 2023, our teams have been going through them in detail. This work includes assessing service improvements, investment and affordability support.

We have assessed plans to see how well they reflect evidence of customers’ expectations and priorities, and whether they adequately address areas where some companies are currently performing poorly. The business plan should also show how it is a five-year milestone in a longer-term strategy.

The context for this price settlement for the water sector is a cost-of-living crisis, a changing climate and a strong focus on the environment. So consumers need to see the outcome from PR24 as being affordable, sustainable, and delivering a noticeable change in service or environmental protection.

This overview document provides CCW’s views on issues that feature in all or most of the companies’ plans.

We have also produced specific detailed assessments of each company’s plans, which we have shared with them and discussed their priorities and the trade-offs they have made.

Our key recommendations for Ofwat ahead of its draft determinations

• CCW wants to see all the water companies doing everything they can to eliminate water poverty. Via Water UK, the water companies (except Dŵr Cymru Welsh Water) have all made a Public Interest Commitment (pdf) to make bills affordable for all households with water bills more than 5% of their disposable income by 2030. Ofwat should require all the water companies which are not committing to end water poverty to offer greater financial support to their customers in the draft determinations. Ofwat should place a regulatory commitment on companies to use a proportion of future outperformance to fund affordability assistance.
• The PR24 investment programme is massive. But it must be deliverable and it must get delivered. Customers must see tangible improvements for their money. If they don’t, trust in the water sector – already at a 12-year low – will fall even further. Ofwat must require companies to explain to the people they serve what actual benefits they or the environment will get in return for increases in their bills.

Ofwat should favourably consider companies who clearly demonstrate that their stakeholders have scrutinised and challenged their customer engagement plans effectively and can show how customer views have been used to form their plan. Likewise, Ofwat should scrutinise companies who have isolated stakeholders and/or only selectively used customer views to justify plans that were already set.

• CCW understands that water companies need to spread investment over a longer term to prevent further bill increases. It is important that any deferment of investment as a result of these trade-offs does not lead to a risk in service quality for customers or have a negative impact on the wider environment.
• CCW wants Ofwat to set companies challenging performance commitment targets for 2025-30 that reflect customers’ expectations for improvements and make poor performers improve. Performance commitment targets must also reflect where bill payers’ money is being spent – in some business plans, the high level of investment proposed does not translate into ambitious targets in those areas of service.
• Customers will see a big increase in their water bills and would not like their hard-earned cash taken off them if it is unlikely to be spent as planned, or to pay for investment or operational improvements that were funded in the past. Consumers must be assured that they are not being asked to pay twice and that there are strong protections in place to return their money to them in the event of failure to deliver.
• We all need plentiful supplies of water. But this is at risk because climate change is already putting strain on the country’s water resources. Ofwat must make companies demonstrate how behaviour change forms part of their strategies to ensure supplies are resilient for us all, now and in the future.
• From CCW’s consumer research , we know that customers do support the use of nature in managing water – and they are happy to pay extra for it. Yet nature-based solutions have been taken out of many PR24 plans in favour of building concrete tanks. Ofwat should scrutinise the reasons behind the companies’ choices about how they plan to reduce the number of storm overflow spills.
• Ofwat should hold water companies to account for the commitment they made on achieving net zero carbon emissions by 2030 (pdf) .
• Customers should not have to pay higher costs due to inefficient financial decisions a company made in the past.

Overview of CCW’s assessments

Under PR24, water companies are proposing considerable bill increases. The average rise is 40% after inflation [1] . The highest planned increases are Southern Water (70%) and Thames Water (56%) once inflation is added. Both these companies are currently performing poorly against targets for delivery of water and wastewater services.

All the companies have tested the acceptability to their customers of these business plans. Their research shows that consumers do recognise the need for investment – overall, an average of 68% of customers support the stated outcomes of the companies’ plans. But they expect to see companies addressing high-profile areas of poor performance, particularly the reliability and resilience of services, and protecting the environment.

Some companies (Yorkshire Water, Dŵr Cymru Welsh Water and Hafren Dyfrdwy) propose to load more of the bill increases into the first year of the price control period (ie 2025). In Yorkshire Water’s case, customers did support this bill profile when they were asked. Some of the water companies have told CCW that their proposed year-one increases are to increase revenue to ease what they see as financeability risks. CCW’s view is that if customers’ bills increase, they need to see what they are getting in return for their money.

Given that cost-of-living pressures are likely to still be high in 2025, Ofwat should consider smoothing out the impact of the bill increases to help customers’ budgets.

Any spikes early on in the five-year period need to be fully justified. Water companies must demonstrate to Ofwat that they need the money upfront rather than have it spread over the five years 2025-2030. They must also prove that they are prepared to spend that money as quickly as possible after it’s taken from bill payers. Money should not be sitting in water companies’ accounts if they’re not in a position to invest it quickly.

[1] Based on a forecast of CPI-H inflation of 2%pa. Before inflation the average increase is 26%. The weighted average before inflation is 31% for water and wastewater companies and 15% for water-only companies.

As part of PR24 water companies tested their business plans among customers for acceptability and affordability. All but one used prescriptive guidance set by CCW and Ofwat. This means results from different companies are directly comparable.

The results show that while there was, on average, 68% acceptance of what companies propose to deliver, the average level of customers who say they can afford the bill increase was very low at 16%.

The majority of people said that their bill is either unaffordable now; will be in the future; or they don’t know if they will be able to afford it.

According to the National Institute for Economic and Social Research , falling real wages and rising bills and debt levels have hit households in the bottom half of the income distribution hardest, leading to a shortfall in their real disposable incomes by up to 17% over the period 2019-2024.

So increased bills will hit customers harder in 2025-2030 than they would have done in previous price reviews. It is paramount that customers see tangible improvements for their money. If they don’t, trust in the water sector – which is already at a 12-year low – will be further eroded.

Ending water poverty

CCW wants to see all the water companies doing everything they can to eliminate water poverty. Via Water UK, the water companies (except for Dŵr Cymru Welsh Water) made a Public Interest Commitment (pdf) to make bills affordable for all households with water bills more than 5% of their disposable income by 2030.

There is a wide gap between the large proposed bill increases in PR24 and the small percentage (16%) of customers who say they can afford them. Companies face a big challenge in helping customers who struggle to pay their water bills, now or in the future.

Many companies highlight increases in the total number of people they’re helping. Yet very few water companies are aiming to eliminate water poverty through PR24. For example, Hafren Dyfrdwy will increase the number of customers receiving some form of support from 3.7% of customers in 2022-23 to 8.2% by 2030. However, 12% of their customers are currently estimated to be living in water poverty.

CCW warmly welcomes the commitments from the companies aiming to eliminate water poverty under PR24 – Severn Trent, Wessex Water, Northumbrian Water (with Essex and Suffolk) and the Pennon group of companies.

Ofwat should require the companies not committing to end water poverty to offer greater support in the draft determinations.

Ending water poverty is only part of the picture. Many people who are currently just about managing will need help to make sure they don’t slip into water poverty. CCW wants Ofwat to encourage companies to provide a wide range of support measures to ensure people in need get support when they need it.

Company funding for those struggling to pay

CCW is encouraged to see some companies using funds from their own investors, shareholders or parent companies to support customers struggling to pay their bills using a range of affordability support measures – United Utilities, Dŵr Cymru, Yorkshire Water and SES.

In addition to its voluntary contribution, Yorkshire Water has committed to use a proportion of its future outperformance to eradicate water poverty.

CCW would like to see all companies making such commitments.

Ofwat should place a regulatory commitment on companies to use a proportion of future outperformance to fund affordability assistance.

Customer funding for social tariffs

CCW is pleased that many water companies [2] have secured agreement from their customers to increase their social tariff for PR24. However, some water companies’ customers haven’t agreed to support an increase in the in-company cross subsidy – eg South Staffordshire and Cambridge Water.

A single social tariff would end water poverty by providing a single funding pot that would offer guarantee financial support across England and Wales.

[2] Anglian Water, Hafren Dyfrdwy, Northumbrian Water, Severn Trent, South East Water, Southern Water, South Staffs and Cambridge Water, Thames Water, United Utilities, Wessex Water, Bristol Water, Bournemouth Water, Yorkshire Water, Portsmouth Water

CCW agrees that sewage pollution must be reduced. Companies must successfully deliver their environment programmes to meet consumers’ expectations and so increase trust in the sector.

Much of the 63% increase in proposed expenditure for PR24 (compared to the 2019 final determinations) [3] is required by legislation. The Water Industry National Environment Programme for England ( WINEP ) and the National Environment Programme for Wales (NEP) are significantly higher than equivalent programmes in previous price controls, reflecting new UK and Wales legislation.

There will be a particularly large increase – £9 billion of the overall £95 billion proposed total expenditure across all plans – in work to deal with storm overflow spills.

Companies’ consumer research did broadly show that customers do want to see the outcomes that the WINEP and NEP should deliver. An average of 68% of customers find the PR24 plans acceptable.

But the WINEP/NEP must actually be deliverable – and get delivered. It must lead to tangible environmental improvements that customers can see or experience.

CCW questions the deliverability of some of the larger programmes proposed in PR24. Some water companies have not managed to deliver the programmes they committed to in PR19 – most notably, Southern Water, Thames Water and United Utilities.

CCW is also disappointed to see that nature-based solutions have been taken out or reduced in some water companies’ plans in favour of building hard asset-based solutions. It’s quicker to produce concrete tanks than it is to design and install sustainable drainage solutions or partnership-based catchment management. Yet these nature-based solutions improve the environment and reduce the pressure on treatment processes.

We know some companies – South West Water, Affinity Water, Northumbrian Water and Wessex Water – have successfully used nature-based solutions. Some companies engage well with the Environment Agency or Natural Resources Wales to identify where nature-based solutions can be used.

However, the interpretation of the UK and Welsh governments’ strategic priorities for Ofwat could undermine the use of catchment-wide, nature-based solutions and sustainable drainage schemes. Companies seeking to quickly go beyond the proposed annual average target of 20 spills per storm overflow may be deterred from using more sustainable, but longer-term or more uncertain, solutions.

From CCW’s consumer research , we know that customers do support the use of nature-based solutions – and they are willing to pay extra for it, and for it to take a longer to deliver the outcome. So it is a shame that target-hitting could be put in conflict with supporting the wider environment. This does nothing to increase trust in wastewater companies. Fewer than half of people in England and Wales currently trust them to protect the environment.

Ofwat should scrutinise the reasons behind the companies’ choices on how they plan to reduce the number of storm overflow spills and address other sources of pollution to make sure they are getting the best long-term solution for the customer and the environment.

[3] £54605m totex allowed for in 2019 Final Determinations, £90189m totex proposed in PR24 business plans.

Several water companies have deferred some of the investment they had planned to use to improve the resilience of their infrastructure. Instead, they have put that money into the large WINEP/NEP environment investment demanded by the legislation.

Similarly,  some investment earmarked for meeting Water UK’s Public Interest Commitment (pdf) for the companies to achieve net zero carbon emissions for the sector by 2030 has been dropped to accommodate the WINEP/NEP requirements.

From talking to the water companies about their plans, we know that they have made several trade-offs in their investment choices in order to accommodate the WINEP/NEP.

While we accept that companies need to spread investment over a longer term to prevent further bill increases, it is important that any deferment of investment as a result of these trade-offs does not lead to a risk in service quality for customers or have a negative impact on the wider environment.

The Climate Change Committee is clear in its Sixth Carbon Budget that front-loading carbon reduction reduces the cost and is the most effective way to minimise the UK’s carbon emissions in order to meet the Paris goals.

Where companies are deferring investment to replace assets such as lead pipes, mains or upgrade treatment works, CCW is concerned that this may increase the risk to service delivery. Addressing these issues after 2030 may cost more – leading to an increase in bills for customers who could have got the same result more cheaply five years earlier.

PR24 includes many plans to roll out smart meters, especially in areas of higher water scarcity. CCW supports smart metering because it gives water companies and customers data to identify leaks and water usage patterns – which can be used to change consumers’ behaviour to reduce demand.

A sector in which public trust is at a 12-year low needs to keep its promises.

CCW has concerns about some companies’ ability to deliver the large programmes of work they are planning for PR24. In the current price control period (PR19), we already see companies struggling to meet their commitments – and this is with much smaller programmes of work.

Thames Water and Southern Water are currently performing poorly on several key metrics that are important to customers. So delivering the scale of improvement in their plans over the 2025-30 period seems to us to be extremely challenging.

Customers will see a big increase in their water bills and would not like their hard-earned cash taken off them if it is unlikely to be spent as planned. Consumers will need assurance that strong enough protections are in place to stop that happening.

Consumers may be concerned that a large investment is needed just to ‘catch up’ on asset resilience, especially for Thames Water. They may question why costs permitted in previous price controls have not delivered the required resilience improvements.

Customers must not pay twice. Ofwat needs to assure customers that any 2025-30 allowances do not include schemes to address asset resilience that should have been delivered under earlier cost allowances.

Ofwat’s incentives should drive companies to deliver their commitments to customers and the environment. If companies fail to do this, they must return that money to consumers.

Several companies ask for lower Outcome Delivery Incentive (ODI) penalty and reward rates than those set by Ofwat. Some say the rates do not reflect their customers’ priorities – eg Anglian Water. Some say the risk of penalties is too great because it affects their financeability – eg Dŵr Cymru Welsh Water.

Ofwat should set rates that are consistent with the figures already set so they are strong enough to drive performance improvement. This is especially important in areas where companies are currently performing poorly.

Some companies – Thames Water and Wessex Water – have diverged from Ofwat’s assumption for the Weighted Average Cost of Capital (WACC). This is unacceptable because it means the bill impacts presented in the plan are inflated to reflect a higher financing cost assumption than Ofwat has indicated is a suitably efficient WACC.

Ofwat should not be held to ransom by companies saying that they cannot deliver improvements for customers and the environment without exceptional costs being allowed that may be inefficient or unjustified.

Several plans have a range of cost adjustment claims that are for areas of operational expenses (eg power costs) that a company says are uniquely higher in their area. Ofwat should scrutinise these costs to ensure that any claim is truly exceptional.

If additional cost allowances are given in draft determinations, they should enable the company to deliver value to customers that is comparable to the costs allowed.

Ofwat should not allow higher cost allowances for companies seeking to decrease risks in the WACC, ODI rates, performance commitment targets and other financial incentives or efficiency challenges to mitigate losses caused by past structural financing choices. Customers should not have to pay higher costs due to inefficient financial decisions a company made in the past.

The starkest example of this is Thames Water, whose plan appears to be dependent on Ofwat allowing it some leeway to accommodate its perilous financial position due to high debt and uncertainty over its future equity funding.

We all want plentiful supplies of water, but this is at risk in the UK, with climate change already putting strain on water resources.

Ofwat must direct companies to be proactive in helping customers change their behaviour and reduce their water use. CCW has made a proposal for a single umbrella body – ARID – to provide overall strategy; coordinate all the demand management activities; provide funding for new demand side projects; and evaluate them via a central evidence base so future investment can be targeted at the programmes that deliver the best results.

Several companies have set strategies in PR24 to reduce leakage and invest in new water resources and smart meters. This is an essential part of the toolkit to preserve water resources for the future. But company plans are light on how companies will actually help customers change their behaviour to reduce their water use. For example, smart metering alone won’t deliver the demand reductions that are required. It must be accompanied by specific plans to exploit the data and the opportunities that smart metering brings.

Ofwat must require companies to show how behaviour change forms part of their strategies to ensure the country’s water supplies remain resilient and reliable for all.

Companies’ research shows that customers place an increasing importance on water companies reducing their carbon footprint. Companies need to be part of the multi-sector work needed to achieve net zero carbon emissions to address climate change, but the business plans show that some companies will not achieve the sector’s Public Interest Commitment to achieve net zero carbon emissions by 2030.

Ofwat should hold water companies to account for that commitment they made on achieving net zero carbon emissions by 2030.

Performance commitments (PCs) track and incentivise how well companies improve their delivery of service. If targets drive improvements in consumers’ priorities, customers should see evidence of improvements in return for their bill increases.

CCW wants Ofwat to set companies challenging PC targets for 2025-30 that reflect customers’ expectations about improvements; that make current poor performers improve; and that reflect where money is being spent.

Many of the water companies offer stretching targets as part of PR24 and are aiming for the upper quartile of performance in areas that are either customer priorities or where they are currently performing comparatively poorly.

However, some companies are proposing comparatively poor targets (ie aiming for the lowest quartile by 2030) in areas of service where the company’s research shows customers expect them to improve. In these cases, Ofwat should satisfy itself in its draft determinations that those targets actually meet customers’ expectations .

In some cases, the high level of investment planned has not translated into ambitious targets in the relevant areas of service. This is particularly the case in environmental improvements, where some companies’ targets for bathing/river water quality, pollution incidents and storm overflows do not match the programmes they propose.

All companies are committing to roll out smart meters. CCW welcomes this, though this has not always translated into ambitious targets to reduce leakage, per capita consumption or business demand. Companies have made a Public Interest Commitment (pdf) to triple the rate of leakage reduction by 2030, yet not many companies will achieve this according to their plans. We would like Ofwat to increase the companies’ targets where high cost investment should be driving greater ambition.

Only two companies offer customer experience and developer experience (C-MeX and D-MeX) targets because these metrics are currently under review. Once the new metrics are set, companies must engage with CCW on their proposed targets ahead of the draft determinations. These metrics should drive improvements in the customer service experience and reduce complaints, so they should be suitably challenging, especially for the poor performers.

To underpin their plan proposals, companies have done a lot of research into the needs and expectations of different consumer groups. The credibility of the price review relies on how well companies have listened to their customers and made plans that deliver what customers want.

The introduction of centralised research – especially the prescriptive CCW/Ofwat guidance for testing plans – ensured good practice was generally followed and that results are comparable across the sector.

The introduction of the ‘Your Water Your Say’ online challenge sessions also ensured companies have been more accountable to their customers. Some companies received over a hundred questions from interested customers before, during and after the events.

However, we see variation in how well different companies engaged with their customers and then incorporated this feedback into their plans.

CCW has seen some good examples of business plans that reflected evidence from customers – Dŵr Cymru Welsh Water, Northumbrian Water and Wessex Water.

However, some companies didn’t follow CCW/Ofwat’s principles of good customer engagement. And some did not demonstrate how their customers’ views are reflected in their plan – eg South East Water.

Several companies need to be better at allowing their stakeholders to view, scrutinise and challenge how they engage with customers as they develop their business plan proposals. Some companies also need to be better at showing how customers’ views have been used to build their plans.

If companies cannot demonstrate that their proposals reflect customer evidence, Ofwat should only allow the company’s request if there is a convincing technical case for allowing such a proposal (eg evidence of risk of service failure).

There are variations in how well water companies engaged with their stakeholders in the Independent Challenge Groups (ICGs).

Some companies – eg Wessex Water, the Pennon group of companies, Severn Trent and Northumbrian Water – worked well with their ICGs, letting them scrutinise the plan’s building blocks and the customer evidence to support it. It’s clear that the ICGs’ challenges influenced the plan.

However, some ICGs were frustrated by a lack of engagement with their companies. One ICG’s influence faded in the latter stages of the business plan development as the company met them less often so opportunities to challenge were reduced – Portsmouth Water. And in one extreme case, the relationship between the company and its ICG broke down completely – South East Water.

Hafren Dyfrdwy declined to have an ICG and hired one person to act as its customer engagement expert instead. This led to reduced resource, stakeholder engagement and challenge.

If companies are not fully transparent and do not engage with their ICGs, their plans are not sufficiently scrutinised or challenged by stakeholders. This means plans are not as customer-focused as they should be. CCW is reviewing how ICGs were deployed in PR24 to identify more effective and inclusive customer engagement for future price reviews.

Companies must communicate clearly and frequently to their customers what tangible results they are getting in return for their bills going up. This could be better service delivery; recognisable improvements to the environment; and/or reductions in water poverty.

Both Ofwat – in its price determination announcements – and the companies should also show customers the potential impact of forecast inflation on bills for 2025-30, even if this can only be based on Treasury forecasts at present. If customers are shown average bills that do not reflect the impact of inflation, that is somewhat misleading.

Transparency over both the price tag and the benefits proposed at PR24 is a vital component towards rebuilding trust in the sector. People need to understand what they are paying for.

CCW supported Ofwat’s introduction of long-term adaptive planning principles in the price review methodology. We are pleased to see this has led to improved clarity in how companies have presented the long-term strategy that the five-year plan sits underneath.

Companies identified a core pathway to delivering long-term outcomes, and identified alternative paths in case different economic, political or environmental circumstances arise.

In some cases, this has shown how some areas of investment are being deferred to future price controls to accommodate shorter-term WINEP pressures.

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What is your business plan?

Our latest business plan sets out what we will be delivering in the next few years up to 2025.

To put this plan together we carried out our biggest ever consultation with customers, with more than 140,000 people providing feedback through surveys and independent focus groups giving their views on bills and services, including the views of our have your say panel.

In line with our social and public purpose, our business plan shows how the value we create is shared between investors and the people, businesses and communities we serve.

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• Environment
• Environment Agency business plans

Environment Agency business plan 2024 to 2025

Published 20 May 2024

Applies to England

© Crown copyright 2024

This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected] .

Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.

This publication is available at https://www.gov.uk/government/publications/environment-agency-business-plans/environment-agency-business-plan-2024-to-2025

1. Introduction

We are the Environment Agency ( EA ), a non-departmental public body established in 1996 and sponsored by the  Department for Food and Rural Affairs ( Defra ). In our roles as regulator, operator, adviser, responder, and research centre, we are tasked with:

• protecting and enhancing the environment as a whole
• contributing towards sustainable development

Our remit primarily covers England, though our influence and collaboration with other UK environmental bodies and partners extends beyond England’s borders. England represents approximately:

• 13 million hectares of land
• 22,000 miles (35,000 km) of river
• 3,100 miles (5,000 km) of coastline seawards to the three-mile limit, which includes 2 million hectares of coastal waters

Through our work we contribute towards the UK government’s 25 Year Environment Plan ( 25YEP ) which launched in January 2018. It set out 10 ambitious goals relating to key aspects of our remit including:

• the environment
• biodiversity
• air quality
• waste reduction
• climate change mitigation

The Environment Act 2021 legally enshrined the commitment to refresh the 25YEP every 5 years. In 2023 the first review of the 25YEP resulted in the Environmental Improvement Plan ( EIP ). The plan builds upon the vision of the 25YEP and sets actions to achieve its goals. It reflects the UK’s commitment to environmental stewardship and global biodiversity conservation.

Key areas we contribute to include:

• halting biodiversity decline
• resource management
• climate change adaptation
• enhancing beauty and heritage

EA2025 – our current 5-year corporate action plan – comes to an end in March 2025. It reflects the ambition of the 25YEP .

This business plan sets out our priorities for 2024 to 2025. It will help focus our delivery as we transition to a new corporate action plan in our 30th anniversary year.

2. Foreword from the Chair

As the primary environmental regulator in England, we exist to create better places for people, wildlife, and the environment. We are here to:

• protect and improve the environment
• support sustainable development

This business plan represents a hugely important and exciting step forward for the Environment Agency. It will guide our delivery towards this mission for 2024 to 2025.

As Chair, I regularly meet with our partners, stakeholders, and communities up and down the country. They tell me they want the Environment Agency to:

• keep rivers clean
• hold polluters to account
• protect homes and businesses from the devastating impact of flooding

Their expectations are clear, and we must strive to meet them. Ultimately, we will be judged on our performance and the outcomes we deliver. We must therefore find ways to enhance and improve it in everything we do.

In the year ahead this includes:

• supporting our people to be more integrated and able to work more effectively as one team
• increasing transparency
• improving the way we use data and information to inform our decisions

This is already happening with regards to our role in ensuring people and wildlife have clean and plentiful water. This will continue to be a huge focus for the organisation. It remains one of the biggest challenges we face but also one of the biggest gifts we can give to future generations. This plan highlights work we will do this year to improve water quality. I look forward to meeting many of our new recruits who will drive this work forward in the year ahead.

We will contribute to green growth and a sustainable future for the country through our continued work on:

• the Flood and Coastal Erosion Risk Management Programme
• maintaining our strong performance on regulation

We can look back on 2023 to 2024 and be proud of what we have delivered. Through this business plan we can also look forward with a sense of optimism and determination. We know that if we can deliver it, we can achieve excellence as a leading environmental regulator. And more importantly make many people’s lives, and the places and environments in which they live, much better.

Alan Lovell, Chair

1 April 2024

3. Foreword from the Chief Executive

Our 2024 to 2025 business plan marks the next stage in our journey. We shall focus on:

• meeting the aspirations and standards the public hold for us
• expanding our work on water quality and waste management
• committing to challenging but realistic efficiency and savings targets

We start the year having achieved very good results in 2023 to 2024. This includes:

• protecting more homes from flooding
• delivering an excellent incident response
• cleaner healthier air (year-on-year reduction in pollutants)
• protecting people and the environment through effective regulation (97% compliance at permitted sites)

Our customer service improved too, as we met Freedom of Information deadlines and service standards for permitting.

We have delivered these improved results whilst managing one of the wettest winters on record.

Three years into the second flood asset capital programme , we have protected an additional 88,272 properties (101% of target) on top of more than 314,000 homes protected under the first 6-year programme. Over the last winter period, sadly almost 7,000 properties did flood (with over 240,000 properties protected) which underlines the on-going threat flooding poses to people’s lives and livelihoods.

I pay tribute to all our staff who worked tirelessly, often through weekends and holidays, to deliver an effective response to the weather and flooding we experienced last year.

As we look to 2024 to 2025, we will meet 2 major challenges. Firstly, to deliver a step change in our work on water quality. This follows the government’s approval to invest up to £53m in a new water inspection, enforcement, and data capability. This will ensure we can play a key part in delivering the government’s accelerated Plan for Water , assessing our progress and contribution against our targets and performance framework. We will need to work with all parties to move the dial on water quality and we are determined to succeed as a regulator in this domain.

Our second challenge will be to realise a major step forward on waste management. The coming year has many critical milestones as we deliver the government’s ambitious waste strategy. Core to success will be finding our voice as a confident regulator, which responds to the concerns of communities impacted by poor waste management and waste crime.

Our people are of course at the heart of what we do. In the year ahead we have set targets to improve diversity, building on our success in the last year. We want to introduce new talent schemes, particularly for under-represented groups, expand our work in sponsoring early career professionals, and sign the Armed Forces Covenant.

We know we can rely on our talented, passionate, and skilled staff to deliver for the environment and our communities in the year ahead.

Philip Duffy, Chief Executive and Accounting Officer

4. Final year of our 5-year corporate plan – EA2025

2024 to 2025 will be the final year of our current 5-year corporate action plan – EA2025 .

• reflects and connects with our people’s passion to protect and enhance the environment
• maps our varied and wide-reaching work to the ambition set out in the 25 Year Environment Plan ( 25YEP )

In the period of EA2025 the world came to grips with the Covid 19 global pandemic. For the Environment Agency, EA2025 helped us retain our sense of purpose and come through an enforced transformation on working practice. The pandemic also heightened the public’s awareness and appreciation of the environment and the places people live.

Our delivery of EA2025 has been tracked and published on GOV.UK in regular quarterly updates of our corporate scorecard . Whilst some of the measures have evolved over the period between 2020 to 2024, we can track our progress in delivering for the places and communities we serve. Our results in 2023 to 2024 are the latest in that series.

Looking ahead, we shall replace EA2025 with our new corporate action plan in 2025 when we will celebrate our 30th anniversary. We are focusing increasingly on the things we are uniquely placed and empowered to do to deliver against our long-term goals set out in EA2025. This focus aligns with:

• growing expectations of the public
• contributing to the delivery of the government’s Environmental Improvement Plan ( EIP )
• other significant contributions we make across a range of government policy and environmental legislation, including net zero and levelling-up

This 2024 to 2025 business plan will help us focus on:

• leveraging our roles (regulator, adviser, operator, responder and research centre)
• the powers given to us by government (as part of our statutory duties and legal responsibilities) to deliver on and progress the ambition set out in our long-term goals

In renewing our corporate plan, we shall take the opportunity to ensure we provide clarity to our people, our partners, and stakeholders, those we regulate, and the public on:

• our purpose as an organisation and our vision for the future
• how we shall bring all the resources we have to bear in delivering against that vision

5. Our performance in 2023 to 2024: making a difference

The Environment Agency use a red, amber, green system to see how we are performing:

• green - we are performing at or above the target(s) set
• amber - we are falling slightly short of the target
• red - there are improvements to be made

This table shows the red, amber, green scores for the measures plus the actual and target figures.

5.1 Corporate scorecard 2023 to 2024

6. our priorities and focus for 2024 to 2025.

In 2024 to 2025 we will do all we can to better enable our people to meet the challenges we face in the years ahead.

To do this means embarking on a journey of transformation. This is crucial if we are to secure the developments needed to improve our services to the public and to those we regulate.

A fundamental part of this journey will mean driving efficiencies and delivering better outcomes. In 2024 to 2025 we will focus on:

• developing and recruiting people with new skills
• applying new digital technology tools
• embracing a culture of innovation and agility
• providing clarity on priorities
• streamlining how we do things
• removing duplication
• speeding up decision making and action

Transformation will also underpin our drive to deliver efficiencies against our grant-in-aid and charges income. This will all mean we are better able to align our resources and effort to secure the best possible outcomes for people and the environment.

Our people are central to our future success. We will therefore continue to:

• prioritise their health, safety, and wellbeing
• provide opportunities for personal development and offer flexible working
• provide an inclusive and supportive working environment that reflects the diversity of the communities we serve

7. Focus areas for the year ahead

Our focus on water will mean a significant uplift in resources for our work to improve water quality, and options to address water quantity. We will :

• hire our first new water regulators and begin training them, as we expand our water industry water quality regulation teams from 130 staff to 340 by the end of the year
• deliver 4,000 inspections of wastewater and storm installations, and we will publish our findings
• look at options to use near real time event duration monitoring data, when it becomes available, as a development from the new data capabilities to provide mapped data on storm overflow spills and flow to full treatment data, which are already in use by Area teams
• complete 4,000 agriculture outcomes and farm inspections
• invest an additional £5.8m in 2024 to 2025 in water industry enforcement activity, enabling us to effectively tackle the worst offenders and make full use of voluntary undertaking and variable monetary penalties to tackle serious environmental offending impacting water
• continue to drive water industry investment through Price Review 2024, including securing options to close the 5 billion litre-per-day gap between supply and demand, and ensuring that the water industry deliver on their legal obligations to improve the water environment
• work with all water abstractors to help them understand and secure their water resilience
• deliver government initiatives to identify new water resource options, enable more efficient water use and return more water to the environment
• produce comprehensive classifications for all bathing waters, incorporate new bathing water designations in our operational activities, and ensure action plans are in place to address risk of non-compliance
• deliver the requirements of the River Basin Management Plan cycle and maximise Water Framework Directive delivery to 2027
• increase our Water Environment Improvement Programme delivery to £14.5m through partnership-working, delivering outcomes on Water Framework Directive measures
• deliver the Environment Agency elements of the Plan for Water

7.2 Flood and Coastal Erosion Risk Management Programme

In the year ahead we will:

• continue to deliver the government’s £5.6bn programme for flood protection and resilience including year 4 of our current six-year capital programme; the £200m flood and coastal innovation programme and the £25m natural flood management programme
• deliver the £100m Frequently Flooded Allowance to protect communities that have suffered repeated flooding, and the £75m Internal Drainage Boards fund to protect agricultural land and rural communities
• publish our next National Flood Risk Assessment ( NaFRA2 ) - this will provide an up to date understanding of both current and future flood risk for rivers, the sea and surface water
• develop our long-term investment plans for future flood and coastal resilience in advance of the next spending review
• complete the renewal of our commercial frameworks and establish a new charter for working collaboratively with our suppliers
• develop a strategy for improving the performance and reliability of our flood and navigation assets
• deliver on our Category 1 responder role to deliver a flood warning service under the Civil Contingencies Act (2004)

7.3 Waste and resources regulation

We will work to support the government’s ambitions for waste reduction through:

• focusing on our compliance work on poor performing waste management operators and directing resources to sites presenting a high fire risk or risk of abandonment
• increasing our emphasis on ‘upstream’ interventions, undertaking waste classification, waste acceptance and producer responsibility checks to prevent harm - such as the handling and disposal of non-permitted waste and sulphate waste as landfill and deposit for recovery sites
• directing our response to waste crime on the greatest threat, risk and harm, using best practice in risk assessment - this will mean closing high-risk illegal sites, stopping illegal waste exports and the mis-description of waste
• strengthening our intelligence-led approach and our collaboration with partners to target effort on offending and criminality in the waste sector
• our Waste Regulatory Reforms Programme to develop a new delivery model for new duties and introduce the Extended Producer Responsibility for packaging - this is worth £1.2bn per annum to the UK’s Gross Domestic Product

7.4 Regulation

We will be a confident regulator and maintain our strong performance on regulatory activities, including:

• focusing on high-risk activity, including Control of Major Accidents Hazards ( COMAH ), landfill regulation and abandoned sites, hazardous waste, agriculture compliance, oil refineries, nuclear sites, and radioactive sources to minimise adverse impacts on the environment and communities
• using our regulatory and advisory roles to support the nuclear sector’s contribution to sustainable development by delivering regulation and advice across the civil and defence nuclear lifecycles - delivering the programme to prepare for the regulation of Advanced Nuclear Technologies ( ANT ), including fusion
• ensuring we have a sustainable and class-leading permitting system
• supporting climate resilience and environmental protection and development of decarbonisation – Carbon Capture Utilisation and Storage ( CCUS ), hydrogen, decarb ready, advising government, developing regulatory approaches to innovation, implementing relevant legislation
• spatial planning – influencing strategic planning to identify opportunities for improving environmental and climate resilience. This includes working in partnership with others to protect, create and restore wildlife rich habitats and support nature recovery. Identification of environmental limitations that may shape and inform development programmes, particularly around water quality and water scarcity.
• focusing on our service to customers, delivering permit reviews, reservoir permits, Environmental Permitting Regulation ( EPR ) permits, water industry permits, digitalisation and standardisation of low-risk permits. We will adopt the new triage approach to enforcement, ensuring it is timely, intelligence-led and target effort based on threat, risk, and harm.

7.5 Organisational transformation

We will modernise our services and working environment through:

• creating a new unit in the business - the Strategy, Transformation and Assurance Directorate - to deliver ‘do it once’ services, improve our IT-enabled transformation effort, raise standards in our offer to our staff and provide better assurance of compliance across the business
• identifying and targeting key functions such as permitting that can benefit from digitalisation and service revision, through which we will deliver better customer experience and improved operational efficiency
• progressing towards our high ambitions for our staff through keeping them safe, strengthening our culture, offering a new talent scheme, greater interchange, new governance and initiatives to improve representation of staff from minority ethnic backgrounds by 1.5 percentage points
• improving our employee offer through targeted skills development, attraction and recruitment actions, and a continuous focus on how we reward our people, all guided by our People Strategy
• maintaining our performance against the Information Commissioner’s Office ( ICO ) standards for Freedom of Information and advancing plans to proactively publish more information

7.6 Efficiencies and value for money

We will improve management of our finances and value for money by:

• delivering £15m efficiencies to fulfil our Spending Review commitment, whilst maintaining performance
• reprioritising £8m of spending towards front line water quality work, which will be delivered by efficiencies
• reviewing more of our fees and charges, to ensure that the true cost of services is met by those that use them and bring our charges into line with other government bodies
• establishing a robust commercial plan to make best use of our assets to deliver greater taxpayer value and improve maintenance of our assets wherever possible
• continuing our close collaboration with the National Audit Office ( NAO ) to improve our understanding of our asset base, with a view to removing remaining accounting qualifications and holding significantly improved technical data

7.7 Providing advice to government

We will deliver on our role as the government’s adviser on pollution and environmental risks by:

• reinforcing our nuclear programme, with dedicated focus on Sizewell C nuclear power station
• continuing our programme of managing emerging threats, including work with the Health and Safety Executive on the management of per- and poly-fluoroalkyl substances ( PFAS or ‘forever chemicals’), the implementation of our Methane Plan, and further advisory work on emerging technologies
• reviewing and revising our monitoring work for further opportunities to leverage digital technology to improve the insights and evidence it provides
• advising on, influencing, and implementing planning reforms and levelling up agenda through informing changes to the town and country planning regime and accelerated Nationally Significant Infrastructure Project delivery
• providing a strategic overview role on all sources of flood risk from rivers and the sea
• driving the government’s waste reform projects in partnership with Defra , to deliver a more circular economy and reduce waste crime

8. How we will know we are succeeding

Our 2024 to 2025 priorities, targets and corporate scorecard measures.

8.1 Incident response

We will prepare for, respond to and support recovery from high-risk flooding and environmental incidents including major incidents.

Target and measure for 2024 to 2025

We will target 90% resilience in our capability to respond to incidents.

8.2 Capital programme

We will deliver the agreed capital programme for both the Environment Agency and Risk Management Authorities to better protect properties from flooding by 2027 and deliver wider environmental benefits.

We will target:

• a cumulative total of 114,000 properties better protected from flooding as part of the second programme of the Flood and Coastal Erosion Risk Management Capital Investment Programme (2021 to 2027)
• 80% on track / complete innovation actions delivered in flood and coastal resilience to adapt to a changing climate

8.3 Planning

We will influence local authority planning decisions and Nationally Significant Infrastructure Projects ( NSIPs ) to deliver good environmental outcomes.

• 97% of local authority planning decisions that we successfully influence
• 97% of Development Consent Orders ( DCOs ) for Nationally Significant Infrastructure Projects ( NSIPs ) that we successfully influence

8.4 Asset operation and maintenance

We will maintain our assets to ensure reliable operation and response.

We have a target of 94.5% of assets at required condition. The winter storms between 2023 and 2024 have had a significant impact on existing assets. While we will endeavour to repair and maintain our assets, the more likely outcome for 2024 to 2025 is 92%.

8.5 Compliance

We will ensure effective compliance with a focus on our statutory duties.

• 97% compliance with environmental permits
• reducing the number of serious environmental incidents from permitted sites, activities, and sources we regulate directly to an annual limit of 150

We will deliver the Environment Agency elements of the Plan for Water.

• conduct 4,000 water company compliance inspections
• target 90% of non-compliant water company sewage treatment works to be brought back into compliance
• target completing 4,000 agriculture outcomes and farm inspections

We will reduce the impact of regulated and illegal waste on the environment.

We will target at least 90 high-risk illegal waste sites ( IWS ). They will be ‘stopped’ which means either:

• there is subsequently no activity for a minimum of 28 days
• that site has been brought into compliance

8.8 Habitat restoration

We will deliver environmental enhancement and restoration where we have a statutory duty.

We will target creating or restoring 1,250 hectares of wildlife-rich habitat, delivering Environmental Net Gains to benefit people and wildlife.

8.9 Sustainability

We will deliver our corporate sustainability commitments to meet government targets.

• reduce our carbon emissions to 250,697 tonnes
• become a net zero organisation by 2045 to 2050

8.10 Transformation

As part of a wider transformation programme, we shall review and revise our end-to-end services and the use of digital technology to support our people to deliver.

We will target the equivalent of £15m savings in grant-in-aid and £8m savings in charges income.

8.11 People

Our people’s safety is our top priority. We also want people to be their best selves when working at the Environment Agency and strive to ensure our people reflect the diversity of the communities we serve.

• a 0.11 Lost Time Incident ( LTI ) frequency rate limit per 100,000 hours
• a rate of 50% of executive managers who are female, and 7.6% of staff from minority ethnic backgrounds

9. Our funding

The Environment Agency’s total budget for 2024 to 2025 is £2,086m. This is an increase of £125m compared to our £1,961m budget in 2023 to 2024 and includes:

• government approval to invest up to £53m to deliver the Plan for Water
• a £9m increase in water resources charges relating to Kielder Water in Northumberland (the largest man-made lake in Northern Europe)

As shown in the table, funding to deliver:

• our flood related outcomes is predominately received from government
• environment protection outcomes is predominately generated through our fees and charges

This budget has been allocated across the business to:

• maximise our ability to deliver as one organisation
• enable the delivery of our priorities set out in this business plan

We are committed to efficiencies as a public body. We will deliver £15m of efficiencies this financial year to fulfil our Spending Review commitment. We have also committed to provide an additional £8m from existing resources to fund the commitments set out in the Plan for Water. We aim to deliver these savings by efficiencies. As such a new corporate scorecard measure has been included to capture this commitment. 

Our budget will also change throughout 2024 to 2025 as we are expecting to receive £5.8m to fund water quality enforcement. Our charge income may also increase depending on the outcome of charge reviews in progress.

We are also looking to the future and will develop an over-arching funding strategy to prepare us for future years. This will include proposals such as:

• a commercial plan
• maximising cost-recovery
• work to a prioritised fees and charges programme
• gaining agreement to have greater flexibility in our funding

The aim is to enable us to be more agile and responsive to fast evolving priorities so we can deliver the expectations placed upon us.

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