Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Deferred
Publish monthly list of housing and commercial developments delayed or blocked by Environment Agency
Conclusion
Defra and the Environment Agency have been far too slow in planning for the future and this now hinders economic growth. Recommendations this Committee made to Defra five years ago around accelerating the pace of investment have not been acted on, which has proved to be shortsighted. Water companies now need to build 10 new reservoirs, when none have been built in the last 30 years. Meanwhile, supply shortages and failure to increase wastewater treatment capacity are already having a negative impact on housing and business development. The EA has slowed development plans for new homes in key areas including Cambridge and Oxford due to concerns about capacity in water and wastewater systems. Neither Defra nor the EA could tell us how many proposed new homes have been delayed or denied planning permission due to concerns about water or wastewater. We are aware of one major commercial investment in the east of the country whose planning permission was turned down due to insufficient water supplies. Current approaches to finding solutions, such as Defra’s new minister-led taskforce and cross-regulator work to support infrastructure development, are focussed on large infrastructure projects. But housing plans may change more quickly than current planning cycles, or the price review funding cycle, currently allow. recommendation a. The Environment Agency should write to the Committee, alongside the Treasury Minute response to this report, setting out how it will work with water companies to ensure planning solutions are prioritised prior to planning applications, to limit delays to development brought about by objections. 4 b. By the end of 2025, the Environment Agency must be in a position to publish a list of all housing and commercial developments, including a list of the number of homes, that it is delaying or blocking. It should update this list every month. c. The Environment Agency should ensure it is actively monitoring and enforcing compliance with discharge perm
Government Response Summary
The government agreed with the recommendation, stating that the Environment Agency (EA) already monitors and enforces compliance with discharge permits. However, it did not commit to the specific requests for the EA to write to the Committee or publish a monthly list of delayed developments, instead referring to water company investment and Ofwat's proposed mid-AMP growth reopener.
Government Response
Deferred
HM Government
Deferred
The government agrees with the Committee's recommendation. Recommendation implemented Growth within a sewerage catchment must not lead to a breach of environmental permits. The Environment Agency monitors and enforces compliance with environmental permits using its regulatory powers to protect the environment. Water companies, through their investment and planning functions, create the capacity for their wastewater assets to accommodate the additional capacity needed for growth. If this leads to a deterioration of performance, this may result in enforcement action, in line with the Environment Agency’s Enforcement and Sanctions Policy. A water company is also legally required to comply with its environmental permits as part of its licence of appointment. Again, noncompliance that contravenes this licence may result in enforcement action by Ofwat. The Environment Agency supports sustainable growth, ensuring that it does not cause permit breaches or environmental pollution. The water industry now has a statutory duty to produce Drainage and Wastewater Management Plans (DWMPs). These plans will outline how companies intend to extend, improve, and maintain a resilient drainage and wastewater system over the next 25 years, considering pressures from climate change, urban creep, and population growth. 3d. PAC recommendation: By the end of 2025, Ofwat must set out a clear path by which it could reopen the price review if needed to permit new investment that pertains to new housing developments, commercial developments and economic growth. The government agrees with the Committee's recommendation. Duty. On 15 March 2025, the Chief Executive of Ofwat wrote to water companies asking what more could be done to accelerate the delivery of major projects to support economic growth and remove the barriers to doing so. Ofwat has been assessing and developing ideas raised by companies in response. In order to allow increased flexibility of funding mechanisms for water companies, Ofwat consulted in July 2025 on a proposed in-period adjustment mechanism for critical cost areas where costs remain uncertain. This process will give companies earlier certainty over costs that will be recovered at the next price control period, and if necessary, provide access to additional revenue in this period. It covers several critical areas of investment including projects that may benefit new housing development, commercial developments and economic growth. Ofwat is also proposing to introduce greater flexibility into the regulatory framework through a mid-Asset Management Period (AMP) growth reopener. This mechanism would enable water companies to apply for additional funding during Asset Management Period 8 (2025–30) in response to higher-than-expected growth in population, households, or business demand, with adjustments made to allowed revenue at the end of AMP8. Companies would be able to submit proposals between March and May 2027, allowing Ofwat to assess whether they are on track with their existing AMP8 commitments before considering any additional allowances. To be eligible, companies must provide sufficient evidence in their proposal, such as evidence of growth in demand and what progress they have made in delivering their existing commitments.