Environment Agency could save money through more efficient water management

The Environment Agency could save at least £450,000 per year through more efficient water resource management, with the potential to save between £1 million and £2 million as a result of internal cost reallocation.

These are the findings of a report by the National Audit Office assessing the Agency’s performance in water management.

The results are fairly mixed but do praise the Agency for their “well-managed and professional” services and conclude that there is “scope to improve efficiency”.

At present the Agency spends around £114 million a year in England and Wales to ensure that sufficient water is available to meet public need. It collects and monitors data from a network of 14,300 sites and regulates the use of water through a system of water abstraction licences, enforcing licence conditions where necessary.

This is paid for through charges to around two-thirds of the 47,600 licence holders.

However, the NAO found that a number of the 14,300 monitoring sites are used jointly for water resource management and flood defence functions, but the cost of the sites is not allocated appropriately between the two functions. In most regions this means that the water resource management effectively subsidises flood defence.

The NAO estimates that water abstraction licence holders are paying between £650,000 and £1.7 million in excess charges as a result and that better cost allocation would allow licence fees to be reduced by this amount.

It does point out, though, that the flood defence function would still have to be funded from somewhere.

The report also notes that, despite 1,500 sites being added to the Agency’s network in England alone over the last three years, a growth of 12%, no one group within the Agency is responsible for control of that network as a whole.

This increases the risk that there are an excess number of sites, a risk that could be avoided through clearer responsibility for planning the network.

In addition, the report recommends equalising pay throughout the country. At present, the operations delivery staff rates vary from region to region – from a low of £13 per hour in the North East to a high of £27 per hour in the Thames region.

If all areas consistently applied the lower internal charging rate, the NAO says, £330,000 a year to Agency water abstraction functions could be transferred elsewhere in the Agency.

This does, of course, ignore the difference in the cost of living between the two regions mentioned and subsequent regional pay differences.

Finally, the Agency should assess the potential for savings through the use of new technology, the NAO says. A Technology Evaluation Group has already been established to consider this issue.

The NAO report was welcomed by the Environment Agency. Chief Executive Barbara Young said she was pleased that the service was found to be well managed and professional: “We nevertheless recognise the need for continuous improvement and we will follow up those areas where the NAO identifies some scope for efficiency and cost savings,” she added.

“Most of the NAO’s recommendations relate to re-allocation of costs. This will benefit water abstraction licence payers, but resources will still need to be found to fund the balance attributed to other areas such as flood risk management.”

A number of the recommendations are already underway through the Agency’s Modernising Water Resources Regulation Programme, she said, which would save up to £1 million per year.

By David Hopkins

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