On 9 April 2024, DEFRA announced the launch of the long-awaited Water Restoration Fund.  The Fund was initially announced in the Government’s Plan for Water in April 2023, but further details on how the scheme would work had not been released until this latest announcement. 

The Fund will offer £11 million of grant funding, raised from fines and penalties collected from the following water and sewerage companies (WaSCs) between April 2022 and October 2023: 

  • Thames Water
  • Yorkshire Water
  • Anglian Water
  • United Utilities
  • South West Water

Grants will be issued to support projects in the geographical areas where those fines or penalties were issued, meaning projects outside of the areas serviced by the affected WaSCs will not be funded via the scheme.   

Funding will be provided on a competitive basis for projects which “focus on improving and preventing further deterioration of the water environment”, which could include projects which seek to reduce diffuse pollution in urban and rural areas, manage the sustainable use of water resources, restore and develop water and wetland habitats for wildlife or support public access to green and blue spaces. Up to 100% of project costs may be covered.  Those eligible to apply for funding include farmers, environmental or other NGOs, national park authorities, local authorities, landowners and catchment partnerships. 

Grants will not pay for “work or activities which the grant recipient, or any member of their partnership has a statutory duty to undertake, or that are fully funded by other sources”.  This 

 The grants available include:

  • short-term grants: between £75,000 - £250,000, to fund projects of between six and 12 months long. Project start dates are from July 2024; and 
  • long-term grants: between £500,000 - £2 million, to fund projects between 12 and 30 months long.  Project start dates are from July 2024.

Applicants will have until 23:59 on 7 June 2024 to submit applications. Applications will be considered by the Rural Payments Agency against a reasonableness test and various technical assessment criteria. Further guidance can be accessed on DEFRA’s website. 

It remains to be seen how the Fund will work in practice and which projects will be successful in achieving funding.  However, in the context of a squeeze on Government environmental spending and the introduction of unlimited variable monetary penalties (VMPs) for various environment-related offences in December 2023, this suggests a change in direction in terms of how the Government plans to fund water environmental restoration projects. 

There remains a question about how the fund interacts with the enforcement of pollution offences by the Environment Agency, particularly the use of civil sanctions.  The Agency has previously signalled its support for Variable Monetary Penalties as a tool for enforcement and the availability of this fund would make this seemingly quicker process attractiveas part of improving the wider environment.  However, it is also likely to reduce the attractiveness of Enforcement Undertakings whose key benefit (aside from avoiding the time and costs of a prosecution) has always been the ability to contribute to local restoration projects.   It will be interesting to see how this develops.

[Written by Helena Sewell]

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