Sir James Bevan, CEO at the Environment Agency, has told the House of Lords Industry and Regulators Committee that “population growth, climate change and public awareness have led us to where we are” with regard to ongoing problems with storm overflow sewage discharges.

The Environment Agency Chief was appearing alongside Alan Lovell, Chair, Environment Agency in a live evidence session on Tuesday last week as part of the peers’ current investigation into the work of water sector regulator Ofwat.

Both of the Agency's top officials also expressed their concerns about the possibility of potential further cuts in the EA’s monitoring activities in the course of the evidence session.

Alan Lovell began the evidence session by expressing his concern about the possibility of potential further cuts in the EA’s monitoring activities, telling Committee members:

“We work closely with Ofwat ….Within that remit, monitoring plays a key role, on which we shall give some details. We spend a lot of money on it, which mostly comes from charges that we levy. We are not perfect at it, and we can and will do better with enhanced technology. On the other hand, we have concerns about, and we know that we have to make every good use of the resources that we have.”

Describing regulation as one of the key tools in the EA’s toolbox, Sir James Bevan told the Committee that the Agency was in constant dialogue with the water companies “at pretty much every level”.

“We robustly enforce those rules when we think they need to be duly enforced…it is a pretty robust and effective framework”, he continued. The overall state of our waters “is significantly better” than it was 20 years ago. “One of the main reasons for that is investment by the water companies, and the other main reason is robust regulation by the Environment Agency,” he added.

Commmittee Chair on Ofwat’s work with EA: “perception from some witnesses is that this is a creaking relationship”

Chair of the Committee Lord Hollick asked Sir James how the EA’s relationship had worked with Ofwat and how had it developed during his seven years as chief executive, commenting:

“The perception from some of the witnesses is that this is a creaking relationship—my word, not theirs— and that it works fitfully.”

Sir James Bevan refuted the suggestion, saying that during his tenure both organisations had also brought into closer alignment their overall strategic goals.

“Ofwat no longer focuses solely, if it ever did, on price and the customer; it now factors the environment into the requirements that it puts on water companies. We no longer focus solely on the environment, although that will always be our primary concern; we are also engaged on issues with the water companies that complement what Ofwat is doing—for example, in supply and customer service,”he explained.

Questions to EA on sewage spillage and pollution: “can Government influence how often you monitor discharges?”

The Committee went into some length in its questioning on sewage spillage and pollution.

Sir James Bevan responded by saying:

“For example, we share data with Ofwat. When we know about spills and we have data that is relevant to that, we share it with Ofwat. We share data and analysis. We collaborate in tackling poor behaviour from the water companies when we see it. A good example is the prosecution of Southern Water. Last year, we secured a record £90 million fine against Southern Water for very significant pollution of rivers and coastal waters, and we ran that investigation, which was a criminal investigation, in parallel with Ofwat’s own investigation, which was of a different nature but complemented what we were doing. Ofwat also imposed heavy penalties on Southern Water. That is a good example of practical collaboration to tackle spillage and poor behaviour.”

In response to a question from Baroness Bowles of Berkhamsted with regard to the relative independence of the agency, he said:

“Like Ofwat, we operate as an independent regulator. Our regulatory decisions are completely impartial, taken by us, and we do not involve the Government in that at all….we take independent regulatory decisions, and we have an independent voice.”

Pursuing this line of questioning, Baroness Bowles asked the EA Chief:

“Does that mean that the Government would not influence, for instance, your relative expenditure in different areas? Could they influence how often you monitor discharges, or could they tell you, “No, don’t spend any more money on that. Go and spend it somewhere else”?”

Acknowledging what he described as “the power of the purse”, Sir James said that Government can and do earmark funding the EA receives in the form of grant income for particular functions e.g. increasing the number of inspections of farms and water companies over the next two to three years. However, the EA properly takes independent regulatory decisions, “some of which the Government of the day might not like.”

In response to Baroness Bowles’ suggestion that the purse strings could therefore limit the extent to which the EA could bring about regulatory actions, because if the Agency could not inspect it could not find out wrongs, Sir James said:

“There is a broader issue, which we can come on to if you like, about the amount of resource that we have had over the last decade or so, which has affected our ability to regulate in certain ways.”

EA Chief on storm overflow issues “Population growth, climate change and public awareness have led us to where we are”

Lord Blackwell then raised the issue of storm overflow sewage discharges and asked Sir James whether if the EA went back 10 or 15 years, whether it would have been possible to make “whatever investment was required to avoid that happening.”

“If so, why did that not happen? Was it a regulatory failure, or was it to do with government policy?” he asked.

Sir James Bevan began by saying that the state of UK waters “really is mixed” and highlighted that the Victorians designed the combined sewer overflow system, which is now more than 100 years old.

“What has changed since the Victorian era is, first, population growth; we have more people and therefore more sewage. Secondly, there is climate change; we have more and more violent rainfall and that is causing more spillage. Thirdly, in the last five years or so, there has been much greater public awareness of combined sewer overflows and a demand, which we share, for improvement. Those things have led us to where we are,” he explained.

The EA had first, “on the basis that sunshine is the best disinfectant,” required the water companies to put monitors on their 15,000 overflows, all of which will have monitors by the end of 2023. This had produced data demonstrating that the overflows were spilling far more frequently and for longer than anyone, including the Environment Agency, had been aware of.

Sir James on sewer overflows: “it is a £100-billion or £200-billion problem"

He told the Committee:

“Since that became apparent a couple of years ago, we have been working with Ofwat, the water companies and the Government to bear down on the problem.

“It is a £100-billion or £200-billion problem. The cleanest and obvious solution is a modern system that separates sewage from rainwater. Those things exist, but the estimate of the cost of retrofitting the whole country to that system is in the region of £100 billion to £200 billion.”

Lord Blackwell sought further clarification whether in part, this had arisen because the Environment Agency were not aware early enough of the scale of the problem until the monitors were fitted.

Sir James Bevan replied:

“I do not think anybody, not even the water companies, was aware of the scale of what was going on, because until a few years ago people had not really thought that it was an issue of particular importance. The fact that there has been greater public and media scrutiny of what is happening, which I welcome, has helped both us and the water companies to focus on the issue.”

He refuted Lord Blackwell’s query whether “no trade-off decision was explicitly taken that this was going to cost too much and push prices up too much,” adding “there was always regulation.”

The EA Chief continued:

“The challenge was effectively monitoring the thousands of sewage treatment works and overflows, and it was not until it became apparent that we had a real problem that we insisted on those monitors going on. They are now both at the end of the pipe; by the end of next year, 15,000 of those overflows will have monitors, and they are almost all done. We have also insisted on having monitors on the sewage treatment works themselves. By the end of 2024, all those sewage treatment works will be monitored.”

Lord Sharkey: Jonson Cox said water cos “did not in fact necessarily need monitors to know that something was badly wrong”

Lord Sharkey continued with the question of storm overflows and monitoring - referring to evidence from former Ofwat Chairman Jonson Cox:

“ He told us that the water companies did not necessarily need monitors to know that something was awry in relation to storm overflows. He suggested that companies volunteered data when it became clear that the rollout of the new monitors was likely to show significant non-compliance.”

Sir James Bevan said that overall, the water sector “is pretty good at abiding by the terms of most of its Environment Agency permits, with some exceptions, including on sewage spillage.”

“We have to be careful about making judgments about the whole sector,” he suggested, “because some parts of it are very well run, and other parts are very badly run.”

Lord Sharkey then asked whether he agreed with Mr Cox that the water companies “did not in fact necessarily need monitors to know that something was badly wrong.”

Sir James Bevan responded:

“I hope you will understand that we have to be careful not to go into great detail about that question, because this is subject to the investigation that we are currently running, which might end up in court.”

He referred back to the sequence of events saying it was not until the Environment Agency insisted “a few years ago” that the water companies put monitors both on their combined sewage overflows and on their sewage treatment plants, which was designed to identify whether the plants were treating the amount of sewage that they are required to treat by their permits before they spill.

It was at that point, he said, “that some of the water companies came to us and said, “We think that when you see the data we will find that at least some of our sewage treatment works are not compliant”.

At that point, he added, “we decided that we needed a much broader investigation, which is now under way.”

He again declined to answer Lord Sharkey ‘s follow-up comment that the implication is that “at least some of them had known for quite a long time that the situation was entirely unsatisfactory. Why do you think that was not reported to you earlier?”

Sir James Bevan said:

“I would rather not go into detail, because that is obviously a question we are seeking to answer in the investigation. I think it is conceivable that at least some of the leaderships of those companies were not aware, because there is always a risk of gaps between leaderships and front-line workers. It is quite hard to believe that some of the people working on the ground at some of the sewage treatment plants did not know that those plants were failing to meet the terms of their permits, but that is something that we will have to establish through our investigation.”