Water companies plan to spend just 2% of their budget on natural infrastructure to help the pollution-hit environment, charities have warned.

Regulator Ofwat has given draft approval to a water industry budget of £88 billion for the next five years with £35 billion of which is enhancements.

But only £2billion is for natural solutions such as the creation of reedbeds and wetlands which can help tackle pollution, water quality, flooding and drought.

Ellie Ward, senior policy officer at Wildlife and Countryside Link, said: “Water companies must pay for the pollution they have caused and get our waterways back on track – as homes for wildlife and places where we can relax and keep healthy.

“These business plans still fall short on the action rivers, lakes, streams and coastlines need. 

“The Government’s upcoming review of the water sector must help remedy this through tougher monitoring and enforcement, ringfencing fines for nature recovery to ensure water polluters really do pay, and accelerating the use of nature-based solutions to meet environmental targets.

From flooding our rivers with sewage to leaky pipes wasting billions of litres of water, the industry’s actions have hurt the environment. 

“Poor practices have caused untold harm to our rivers and wildlife, contributing to declines in iconic species like the Atlantic salmon, otters and Mayflies.”

Ofwat has told water companies that over the next 5 years they can spend £35 billion on “enhancements” relating to pollution, water quality, climate change resilience and customer service. 

This is triple the level of investment in the previous five years and includes £10 billion to reduce harm from storm overflows and £545 million on reducing leakage through smart technologies and better data.

Company plans and Ofwat’s draft decisions show companies are relying heavily on expensive concrete infrastructure investment to tackle pollution, water quality and resilience.

Nature groups are disappointed that spills from storm overflows will still affect 38% of bathing waters and 53% of protected nature areas by 2030.

Dr Emily Smith, environment manager at the Angling Trust: “We welcome the significant uplift in environmental expenditure that is being proposed by water companies for 2025-2030.

“This will go some way to tackle the urgent need to rectify years of underinvestment that has contributed to the severe decline in our rivers, lakes and seas. 

“However, whilst it was great to see the spending being proposed and to see the ambition in some areas, it was still lacking in others, particularly the limited spending on natural solutions. 

It was also hard to see what this spending will actually deliver on the ground. Before final determinations, there needs to be a clearer indication of what this spending will translate to in terms of environmental improvements and outcomes.”

A proposed average 21% hike in bills in England and Wales is on the card for customers.

Ofwat has said it wants firms to limit rises for households to an average of £19 per year until 2030.

Although the proposed average rise will put more pressure on households, it is a third less than the amount requested by water companies.

The bill hike is intended to fund investment for improvements such as replacing leaking pipes and reducing sewage discharges into rivers and seas.

It comes as suppliers face increasing scrutiny over and public anger over their environmental and financial performance, as well as executive bonuses and pay.

Ofwat set out its policy proposals in draft determinations published in July 2024 for consultation ahead of a final decision in December.

A Water UK spokesman said: “We share campaigners’ view on the importance of using nature to end sewage entering our rivers and seas. In many cases, natural solutions can achieve the same, or better, results than grey infrastructure while enhancing the environment and costing less. We want Ofwat to give water companies more flexibility to deploy natural solutions where the evidence suggests they will work better.”

An Ofwat spokesman said: “We have received responses on our 2024 Price Review draft determinations from many organisations, including water companies, customers, environmental and consumer organisations, and investors. Inevitably these reflect a diverse range of views on the proposals we have made. We will consider all of these responses carefully over the coming months and set out our final decisions on 19 December.”