The Green Alliance is calling for the UK's new post-Brexit farm subsidy scheme to be better aligned with water companies' environmental spending.

Introducing the paper, From blue to green How to get the best for the environment from spending on water, Angela Smith MP, chair of the All-Party Parliamentary Group on Water and a member of the EFRA Select Committee said:

“EU regulations have played a crucial role in raising standards and in driving changes to the structures of the water sector.”

“As this report clearly explains, at present we are subsidising farming practices that pollute our waterways, with water companies being forced to pick up the tab.

“And so we must ensure that any subsidy scheme that comes after Brexit is taken as an opportunity to increase environmental standards by, for example, incentivising farmers to play their part in avoiding pollution of our watercourses.”

According to the report, the water sector is a significant private funder of environmental improvements in the UK. Between 2010 and 2015 water company spending on environmental improvements was more than double that spent by the Department for Environment Food and Rural Affairs (Defra) on pollution abatement and the protection of biodiversity and landscape.

However, it warns that if measured in terms of ecological health, England’s waters are in a poor and, in some instances, declining state. The report says this poor health reflects the wider decline in the UK’s natural environment which is “largely attributable to farming and land management practices, with agriculture being the single biggest cause of water quality problems.”

According to the Green Alliance, the costs of cleaning up water have “arguably been driven up by farming subsidies which have failed to curb sub-optimal agricultural practices”, resulting in excessive run-off of pollutants from farmland to rivers and groundwater.

Aligning public payments to farmers and water company spending to achieve common environmental objectives should result in efficiency gains, and much better returns on investment, the report says.

Key recommendations in the report include:

• Enshrining the existing legal commitment for water in the EU Water Framework Directive into the new Environment Bill
• Accelerating the adoption of ‘catchment management by default’ to enable water companies to pursue innovative, large scale programmes without being penalised where schemes fail to deliver as anticipated
• Designing the new Environmental Land Management System which will replace the Common Agricultural Policy to enable co-investment by the public and private sectors.

Nationalisation - Water UK warns shortage of government spending could hit environmental standards

Responding to the publication of the new Green Alliance report on environmental investment in water, Water UK Chief Executive Michael Roberts said:

“Water companies believe passionately in a healthier, greener nation and the positive contribution we make to it. Before privatisation, the water industry in England was starved of funding and damaging the environment – a key driver in why the industry was privatised.

“By 2020, the water industry will have spent around £25 billion on environmental work since 1995 to improve the quality of our waterways – and we want to go even further. That’s why water companies, always striving to do more in the public interest, are proposing major new environmental investment which will help improve 8,000km of rivers.

“This new report sets out clearly not just what has been achieved but how much more still needs to be done, and rightly draws attention to the importance of continued high levels of investment in the natural environment.

“Water companies are playing their part in planning, funding and delivering the vital improvements which need to be made in the future. But if that future also sees the water industry in England taken into government hands, there’s a danger that environmental standards will suffer again as they did in the past due to a shortage of government spending.”

According to the Green Alliance, the proposals in the policy paper would save the government unnecessary spending and keep water bills down.

The government’s goal to restore the natural environment within a generation, coupled with its proposed reforms to public payments to farmers after the UK leaves the EU, have created “the possibility of a radically different policy framework for managing land and water”, the report says.

Click here to download From blue to green How to get the best for the environment from spending on water