Water pressure: The complex impact of water and nutrient neutrality on housing development

July this year was the driest July in England since 1935 at only 35% of the average rainfall expected.  The prolonged dry spells we have been experiencing have, unsurprisingly, resulted in declarations of droughts in many areas of the UK and the introduction of hosepipe bans.  Whilst many are noting the much emptier than usual reservoirs, greater scrutiny has also been placed on water companies over what many argue is chronic under investment in infrastructure, the huge wastage from leaks, (reportedly 2.4 billion litres a day) and the discharge of untreated sewerage into our seas and rivers when the rain finally does fall on baked ground.

No new reservoirs have been built since 1991 despite the need for an additional 30 being identified as necessary to secure the country’s water supply.  The first new reservoir will be built near Portsmouth, but is not expected to open until 2029.

Despite only recently being pushed to the forefront of the country’s consciousness, the planning world has been grappling with major issues associated with water for some time.  This is where the concept of neutrality comes in.  It can be broken down into two parts: nutrient neutrality and water neutrality.

What is the difference between nutrient neutrality and water neutrality?

The construction of buildings has the potential to negatively impact ecosystems through the discharge of additional nutrients (primarily nitrogen and phosphorus) which pollute water bodies causing eutrophication and algal blooms.  This can be through agricultural activities, the use and occupation of buildings (where untreated or partially treated sewage and wastewater enters rivers over and above the limits that water companies’ permits allow) and through surface water run-off.  Nutrient neutrality is achieved where the nutrient load created through additional wastewater (including surface water) from the development is mitigated.

Water neutrality differs from nutrient neutrality in that it is concerned with the amount of water which is being used by developments, rather than its quality.  Natural England has defined it as follows:

“For every new development, total water use in the region after the development must be equal to or less than the total water-use in the region before the new development.”

This has been triggered by a decline in wildlife in the Arun Valley (an internationally designated site which lies within the Sussex North Water Resource Zone).  In one particular area of the Valley, this decline has been attributed to a reduction in water supply from several layers of rocks from where water is currently being abstracted which is having a significant impact on a rare type of snail (the Little Whirlpool Ramshorn Snail) that is on the verge of extinction.  Also, the impacts of water abstraction cannot be ruled out as the cause (or partial cause) of the decline in wildlife in other areas of the Valley.

In October 2021, Natural England released a position statement stating that all new development which would lead to an increase in water demand must demonstrate water neutrality.

Why is it an issue?

Natural England has advised that a total of 74 LPAs (equating to 14% of England’s land area) should only allow development where they are ‘nutrient neutral’.  A list of LPAs which are affected can be found here.

Further, Natural England has advised that developments within the Sussex North Water Resource Zone (which lies within parts of Crawley Borough, Horsham District, Chichester District and the South Downs National Park Authority) can only proceed where they are water neutral.  A map of this area can be found within the Sussex North Water Resource Zone paper (November 2021) located here.

This has, in effect, placed a moratorium on most development in these areas with housing being particularly affected.

Despite not being within an area identified by Natural England, last month Wealden District Council passed a resolution requiring all relevant applications to take into consideration the impact on watercourses, including impacts on sewage outflow into watercourses, requiring Southern Water to clarify which treatment works will be managing the sewage and if there was sufficient information to assess the impact.  This has resulted in an indefinite delay to planning consents in the District.

What are the potential solutions?

For nutrient neutrality, the advice is that proposals can be acceptable where they are accompanied by a Habitats Regulations Assessment (HRA) which demonstrates that development will avoid or have a neutral effect on nutrient pollution, or be supported by an appropriate mitigation strategy if the development would have an adverse effect on a protected site.

In Autumn 2022, the Government will table an amendment to the Levelling Up and Regeneration Bill (LURB) which will place a new statutory duty on water and sewerage companies in England to upgrade wastewater treatment works to the “highest technically achievable limits” by 2030 in nutrient neutrality areas.

Natural England will establish a Nutrient Mitigation Scheme where developers can purchase ‘nutrient credits’ to ensure overall neutrality.  The scheme will be open to all developers but SMEs will be prioritised.  The scheme will not be a requirement but an option to discharge mitigation requirements more efficiently.

For water neutrality, development proposals need to submit a water neutrality statement alongside applications which confirms that there would be no increase in water consumption resulting from the development, (e.g. through a combination of water efficiency, water recycling and offsetting measures) and includes a water budget showing details of the baseline and proposed water consumption, any mitigation measures proposed and mechanisms to secure them in advance of occupation/use.

For most developments, this will likely mean targeting a reduced water consumption below the Building Regulations (Part G) requirement of 110 litres per person per day for dwellings.  The lowest feasible and realistic consumption rates are considered to be around 85 litres per person per day for residential development.  For commercial development, water usage is very much dependent on the type of use.

In reality, most developments will be unable to demonstrate neutrality, particularly major developments, and there is no offsetting financial contribution mechanism currently in place to help facilitate development.  Work is still being undertaken to understand the scale of the problem and what solutions can be put in place.

What is the impact on housing?

The impact of both water and nutrient neutrality requirements on housing delivery has been very significant and encompasses large parts of the country.

The inability to permit new homes has a substantial impact on five-year housing land supplies of affected LPAs.  Through the Written Ministerial Statement (WMS) given by the Secretary of State for the Environment on 20 July 2022, DLUHC has stated that it will make clear in planning guidance that judgements on deliverability of sites should take account of strategic mitigation schemes and the accelerated timescale for the Natural England’s mitigation schemes and immediate benefits on mitigation burdens once legislation requiring water treatment upgrades comes into force.

DLUHC revising planning guidance

DLUHC will revise planning guidance over Summer 2022 to reflect that sites affected by nutrient pollution forming part of housing land supply calculations are capable of being considered deliverable, subject to relevant evidence to demonstrate deliverability.  It will be for decision takers to make judgements about impacts on delivery timescales for individual schemes in line with the NPPF.

Home Builders Federation warns lengthy timescales will cripple short-term builds

The Home Builders Federation (HBF) has said that timescales for proposed mitigation are still too long and will not aid housebuilders in the short-term.  Since the Habitats Regulations require mitigation to be operational and effective before planning applications can be approved, or reserved matters and conditions discharged, and because it is likely that many of these upgrades will not be completed before 2030 (or even later, allowing for slippage), this solution may not be particularly effective.

In terms of 5YHLS, the HBF is concerned that the WMS signals the Government’s intention to weaken the housing land supply requirement in the affected LPAs.  However, it has stated that there still may be scope for appellants to challenge LPA judgements on the deliverability of mitigation solutions.

SoS dismisses HBF claims

The SoS has also dismissed the legal opinion provided by HBF on the unlawfulness of Natural England’s advice to local authorities that permissions at reserved matters and discharge of conditions stages are caught by the requirement for appropriate assessment.  By HBF’s calculations, 40% of the homes delayed are stuck at reserved matters or discharge of condition stages.  HBF says that it had been led to believe by the Government that it would remain neutral on this point.

What is the impact on Local Plans?

Natural England has advised that water neutrality is best secured via a strategic solution through local plans.  For example, for Horsham District Council, this has meant a lengthy delay in the publication of its Regulation 19 Local Plan as it awaits updated evidence.

A strategic-wide solution across the affected councils is still being developed, with a joint study currently being undertaken into the issue.  Parts A and B have been published, with Part C expected in September 2022.  Part C will allow for local mitigation solutions to be developed which will include both short and medium-term measures to be adopted as part of local plans such as financial contributions.  This will sit alongside a wider strategic solution developed by Southern Water.

Southern Water is looking towards securing alternative water sources and will have to address the issue of water neutrality as part of its next water resource management plan in 2024 (WRMP24).  Given the need to find funding and the length of time it will take for large-scale water resource schemes to be designed and delivered, it is unlikely that any scheme proposed in the WRMP24 will be able to contribute to water resources until 2028 at the earliest.

Southern Water will also look into reducing leaks as part of its existing infrastructure with an objective to reduce leakage by 15% by 2025 and by 50% by 2050.

Again, this is a medium to long-term solution which does not address the key issue of the significant number of developments which are currently being held up.

Who is responsible in tackling the issue?

There is a question here as to who is responsible for resolving this issue.  Is it the water companies or is it the housebuilders?  Or is it Natural England or, in fact, central government?

In reality, it is probably to some extent a mix of all four.  Housebuilders have the responsibility to build environmentally efficient homes which will not unreasonably contribute to climate change or cause significant environmental damage.  Equally, there is also a limit as to what can be achieved technically and viably which many sites unable to bear additional costs, taking into consideration the need to provide affordable housing, shortages in building materials and inflationary impacts.  However, when housebuilders are implementing mitigation measures to help build much needed homes, it can seem futile when considering the extraordinarily high levels of water being leaked each day due to poor infrastructure and the amount of raw sewage being dumped into watercourses with seemingly little consequences.

Natural England has a duty to protect our environment but also to facilitate discussions between parties, carefully taking into consideration the impacts of each course of action.

The scale and severity of the housing crisis is yet to be fully grappled with by central government, with the Conservative leadership candidates either promising an end to “Stalinist housing targets” or proposing a complete ban on homes built in the Green Belt.  This cannot be framed as an effort to improve the environment as last year the Government voted against a clear legal duty for water companies to progressively reduce sewage discharges from storm overflows.

According to a recent Telegraph article, newly appointed Prime Minister, Liz Truss, is planning to scrap the nutrient neutrality requirement, calling it “Brussels red tape”.  Whilst it may be considered positive in terms of enabling housing development to recommence in affected areas, it does not get to the root of the issue of the current wastage in the system (pun intended) and the collaborative approach needed to end the housing crisis and deliver on the crucial targets required to avoid a climate catastrophe.

The environment and housing are topics likely to remain high on the agenda for our new Prime Minister, even with the cost of living crisis, meaning that hopefully, the situation will begin to improve.