Environment Secretary Steve Barclay has announced today that up to £11 million in water company fines and penalties will be reinvested back into a new Water Restoration Fund (WRF).

All water company environmental fines and penalties since April 2022 have been ringfenced to directly improve the water environment.

The Water Restoration Fund will offer grant funding on a competitive basis to support local groups, farmers and landowners and community-led schemes, bolstering their capacity and capabilities for on-the-ground projects to improve the water environment. This could include activities that improve biodiversity and community access to blue and green spaces in areas where water companies have been issued with fines or penalties.

Announcing the launch of the Fund, the Department for Environment, Food & Rural Affairs said it follows significant action taken in recent months to hold water companies to account, including:

a ban on bonuses for water company executives where firms have committed serious criminal breaches, subject to Ofwat consultation

plans to quadruple the Environment Agency’s regulatory capacity, enabling them to carry out 4,000 water company inspections by the end of this financial year.

Funding for the Water Restoration Fund will come exclusively from water company fines and penalties. The penalties and fines are additional to any reparations that water companies make when they have breached environmental regulations.

Environment Secretary Steve Barclay said:

“I know how important our precious waterways are to local communities and to nature, which is why we’re taking tough action to ensure our regulators are well-equipped to hold those who pollute them to account.

“Through the Water Restoration Fund, I will be making sure that money from fines and penalties – taken from water company profits only – is channelled directly back into our waterways.

“Community-led projects are vital to improving and maintaining water quality across the country, and this fund will help build on that success.”

The fund will be open to a range of organisations in England, including farmers and landowners, eNGOs, Local Authorities, catchment partnerships, National Parks and National Landscapes.

The £11 million in fines and penalties collected will be allocated for water improvements in the water company areas on which they were accrued in:

• Anglian Water: £3,085,000
• South West Water: £2,150,000
• Thames Water: £3,334,000
• United Utilities: £800,000
• Yorkshire Water: £1,600,750

Applicants will have an eight-week window to apply from today, with grant awards expected to be issued from late July.

Natural England’s chief executive Marian Spain said:

“Natural England welcomes the creation of Defra’s Water Restoration Fund, using the money from water company fines and penalties to improve water and wetlands for nature and people, and looks forward to supporting Defra to make good use of the funds now available.

“The fund is a great opportunity for landowners, communities and nature bodies to help make a real difference to the condition of our Sites of Special Scientific Interest and to restore natural processes in catchments to provide the nature and health benefits that society needs from water.”

Rivers Trust - £11 million “just a fraction of investment needed to restore our rivers”

However, Mark Lloyd, Chief Executive of the Rivers Trust has expressed disappointment at the announcement, commenting:

"Whilst any money that goes towards improving our water environment is helpful, this £11 million is just a fraction of the investment needed to restore our rivers, given that no stretch of river in England is currently in good overall health.

“What's more, it is hard to see how this fund will improve the health of our waterways as the Government claims, when it is entirely resourced from water company fines and therefore relies on environmental damage happening in the first place.

“We are disappointed to see yet another Government scheme rolled out without warning and consulting with stakeholders. We need to see a major boost in funding and resources to improve our water environment to go alongside this particular funding stream, enabling a truly integrated approach to land and water management that will deliver for nature and for everyone."