The Environment Agency (EA) has increased its abstraction licence charges –the first time the EA has raised the cost of licences in ten years.

During this time the Agency said that both the work and costs of managing water resources has increased and it has not been not fully recovering costs for the water resources service it needs to provide.

The current scheme of abstraction charges has been in place since 1993.

The current application charge has two tiers:

1) a lower application charge (£135); 

2) a higher application charge (£1500).

For the majority of those who pay the lower application charge, the cost of the work the Agency does around the application is mainly recovered through the annual charge.

The proposed annual charge framework is based on cost recovery for the water resource management activities the EA carry out to protect the environment and the rights of those who have an abstraction licence. The EA says that the breadth and diversity of activities requiring licences means that there is significant tailoring of the regulatory activity to different licensable activities.

The proposed annual charge is made up of 2 parts:

• a base charge that covers the costs for activities the EA carry out for all licence holders
• additional charge factors for those licence holders where the Agency has to do extra work

Announcing the increase, the Agency said the new charging regime will be fairer, ensuring high-volume users pay more, whilst also bringing in an additional £25 million each year to help cover the costs of its water resources work.

According to the EA, the funding is needed to secure sustainable water resources for the environment, business, and society – the new charging framework will help protect the environment and England’s long-term water supply.

Businesses, including water companies and farmers must hold a licence to abstract more than 20 cubic metres of water a day from a river, stream, canal or groundwater, and pay charges for this from 1 April 2022.

The new rules have been approved by government and published in the Environment Agency’s response to the review of water resources abstraction charges and the outcome of its consultation.

The Water Resources Review of Charges aims to create a fairer system where people pay for the services they receive and those abstracting a lot of water, such as water companies, will pay more, supporting behavioural change to use water more economically.

England is facing increased pressure on its water resources due to population growth and climate change. Without action, by 2050 significant water shortages in parts of the country have been predicted and some rivers could have between 50 and 80 percent less water during the summer.

Based on recent projections, more than 3.4 billion additional litres per day will be needed in England by then, an increase of 23% on today’s supplies.

The new charges – which have not changed for the past 10 years –will be based on:

• the volume of water taken from the environment
• where the water is taken from
• how much of that water is returned to the environment

The new charging framework will secure £25 million in additional income each year to protect access to water and meet environmental challenges, including to help protect England’s sensitive habitats, such as chalk streams.

The Environment Agency said the increase in funding from charges would enable it to make further investment in:

• protecting future supplies through maintaining and operating infrastructure, including water transfer schemes, gauging stations, weirs and sluices
• modernising the water abstraction licensing system through digital transformation
• protecting and enhancing the environment through a more sustainable approach to water abstraction with increased emphasis on rare and sensitive habitats, such as England’s unique chalk streams

Sir James Bevan - "we need a system that allows us to charge fully and fairly for the services we provide"

Sir James Bevan, Chief Executive of the Environment Agency, said:

“The biggest long-term threat to the environment, our economy and our lifestyle is water quantity – simply having enough for people and wildlife.

“In the face of the climate emergency, population growth and rising demand for water, we need to ensure that all those who use water, and rely on it for their business, can continue to do so now and into the future, as well as better protecting our rivers and aquifers.

“As part of this we need a system that allows us to charge fully and fairly for the services we provide to preserve water supplies and help businesses meet their needs in a sustainable way that protects the environment.”