Ofwat has launched a consultation on the Environmental Incentives Common Framework, a draft guidance for environmental incentives which will support sustainable new homes.
The government is also determined to ‘transform’ the planning and environmental assessment system, according to the housing and environment secretaries, as reports emerge that changes to nutrient neutrality rules can be expected in the forthcoming Planning and Infrastructure Bill.
This article highlights key features of the draft Environmental Incentives Common Framework and points out the recent changes to the nutrient neutrality rules and how these could also support sustainable housing.
The consultation aims to simplify the environmental incentive process for developers and support wider uptake, creating a framework that is consistent and clear. The consultation closes on 10 September 2024. The consultation relates primarily to English water companies, for which Ofwat regulate developer charges through the new connection charging rules.
Population growth, economic development and climate change collectively put significant pressure on UK water resources in England and Wales. UK water companies provide 14 billion litres of clean water for public water supply each day. However, the National Infrastructure Commission has recommended, due to increasing pressures, around 4 billion litres of additional water a day will be needed in England by 2050. Half of this deficit will need to be met through increasing the supply of water. The remainder will need to be met through measures including improving water efficiency, reducing demand and cutting wasted water.
In aiming to simplify the process for developers and encourage support wider uptake, Ofwat is proposing to introduce a common framework for environmental incentives that is clear and consistent.
The key features of Ofwat’s draft Environmental Incentives Common Framework are:
Developers can play their part in reducing water demand and the impact on the environment by making new homes more water efficient, through more water efficient fixtures and fittings, and include sustainable drainage solutions (SuDS). The financial incentives offered by water companies can make it more commercially viable for them to do so.
Many water companies currently offer developers discounts on their new connection charges for meeting certain standards of water efficiency or sustainable drainage. These are described by Ofwat as ‘environmental incentives’. The range of incentives on offer is wide, the levels of efficiency being incentivised are variable (and in some cases, relatively unambitious) and the principles and processes set by each water company for agreeing incentives are, in many cases, specific to that company.
The housing secretary, Angela Rayner, and the environment secretary, Steve Reed, have written a joint-letter to environmental groups stating the government wants to ensure a ‘win-win’ for housebuilding and nature, adding: “Nature recovery remains a top priority alongside the need to overhaul the planning system, grow the economy, and reach net zero. This is not a matter of choosing one of these priorities over another. Sustained economic growth depends upon a healthy natural environment.”
The letter continued to say that ‘when it comes to the planning system’s role in providing the nature and housing we need, we know that the status quo is not working’.
“Environmental assessments and case-by-case negotiations of mitigation and compensation measures often slow down the delivery of much needed housing and infrastructure. Meanwhile, the condition of our environment, and even our most important habitats and species, has declined over a sustained period. This is a lose-lose situation, for our economy, the public and for the natural environment”, it stated.
The letter, published on 21 July, was shortly followed by a report in The Times that the government is planning to bring in changes to nutrient neutrality rules through the Planning and Infrastructure Bill, announced in the King’s speech last week.
According to the newspaper, the government is set to propose that developers will be allowed to begin work and agree to environmental mitigation measures during construction, rather than beforehand. It adds that the government has said that new homes could only be occupied once the mitigations were in place, and that this would allow for development to be sped up without compromising the environment.
For more information, please contact the energy and resource management team.
