Cash-squeezed NRA looks at privatising enforcement

The improvements to the water environment achieved by the National Rivers Authority (NRA) over the past four years will be in serious jeopardy if the public expenditure statement at the end of November forces further cuts in its budget, the authority has warned in its latest corporate plan.1 Cuts already ordered by the Department of the Environment (DoE) are eating into its programmes on water quality, alleviation of low flows and other core functions, and will force it to shed 600 staff. The plan also reveals that the Government's "market testing" initiative has led the NRA to examine the possible privatisation of all its activities, including licensing and enforcement.

The five-year market testing programme is one of the plan's most controversial features. The programme will embrace all of the NRA's regulatory functions, and opens up the prospect of private companies issuing discharge and other consents, carrying out sampling and site inspections, and becoming intimately involved in enforcement.

Selected elements of the programme include:

The remarkable thing about this programme is that at no point have the Government or the NRA initiated a public debate about the fundamental principles at stake. Instead, the privatisation of regulatory activity is being contemplated simply as a means of securing "value for money".

Following the public expenditure settlements of the past three years, the NRA has already been forced to contend with reductions in its previously planned spending and Government grant-in-aid (GIA). In 1991, for example, it was told to expect a GIA from the DoE of £82 million in 1994/5. This was cut back to £75 million last year, and the NRA is now planning on a further cut to £69 million in November.

In addition, the NRA was told by the DoE that its initial plan for 1993/4 was inadequate, and was ordered to prepare a revised plan which incorporated a 10% efficiency saving for each of the next three years. This has bitten deeply into its planned spending on its seven core functions.

In last year's corporate plan, the NRA's expenditure in these areas was budgetted to rise from £439 million in 1992/3 to £518 million in 1995/6 - a 6% increase in real terms after a 1.5% per annum efficiency improvement was taken into account. But its revised plan for 1993/4 shows spending on core functions rising to only £446 million by 1995/6 - a freeze in real terms if it is assumed that it can achieve the 10% per year efficiency improvement demanded by the DoE.

Whether the NRA will in fact be able to achieve a 10% saving must be in doubt. The plan says that the target poses a "very significant and difficult management challenge." And it goes on to warn about the consequences of any further cuts in the budget.

"We believe we have struck the right balance and would therefore vigorously resist demands for further savings or suggestions of further reductions in GIA," the NRA says. "Such arbitrary action would, in our judgement, pose a serious threat to the NRA's whole raison d'etre and would lead to a rapid decline in the environmental improvements which have been hard won by the NRA in its four years of existence."

The impact of the revised plan on spending on core functions is shown in the table below. The first column shows budgetted expenditure this year. The three subsequent columns show how the NRA has had to cut back its proposed expenditure for 1995/6 since drawing up last year's corporate plan and this year's original baseline plan. This year's plan assumes an annual inflation rate of 4% which should be taken into account in interpreting the figures along with the 10% per annum efficiency improvement target.

The "efficiency" drive will have a substantial impact on employment levels. Instead of remaining at the present level of 7,950 assumed in the original plan, staff numbers are to be trimmed to 7,390 - including 90 water quality and 78 water resources personnel - over the next three years, excluding the effects of the market testing programme.

Higher "efficiency" will also mean reductions in the NRA's activity. Some examples are given below. In one or two cases the NRA's inability to achieve its earlier objectives is also attributable to Government inaction.

  • Discharge monitoring: The NRA claims that it will "monitor more discharges" from 1993/4 onwards. This is true in the sense that the projected number monitored will rise from 15,200 this year to 15,630 - 15% of the total - in 1995/6. However, the targets in last year's plan were to monitor 16,100 discharges this year and 17,000 in 1995/6.

  • Sampling: Likewise, the NRA claims that it will carry out more sampling, taking 415,000 samples this year and 416,000 in 1995/6. But last year's targets were 436,000 and 440,000, respectively.

  • Analyses: This is one area where the NRA intends to do better than in last year's plan. The total number of analyses will rise from 6.48 million this year to 6.50 million in 1995/6. Last year's plan suggested an increase to only 5.0 million analyses in 1995/6.

  • Pollution incidents: The NRA's response to pollution incidents has been improving, with about 90% of incidents to be attended within a target time this year. It intends to keep the figure steady in subsequent years. However, this target appears to be based on an unrealistically small number of incidents. The plan assumes that there will be 20,300 incidents in each of the next three years - 10,000 less than last year.

  • Contaminated land and abandoned mines: The plan says that water pollution from these sources is a "major concern". Although initial surveys of the extent of the problem have been completed, further work has had to be put on hold until the Government clarifies legal and operational responsibilities for clean-up. The NRA's capacity to initiate clean-up programmes itself is hamstrung by lack of funds.

  • Statutory water quality objectives: In its two previous corporate plans the NRA had hoped to begin introducing SWQOs - long-term water quality improvement programmes for individual catchments - from 1992, and then 1993. But it has been thwarted by the Government's failure to introduce the necessary regulations. The current plan expresses concern about the delay, warning that it "may lead to further deterioration in water quality."

    The NRA's preparations for SWQOs have been going well. It now expects to complete management plans which will form the basis of proposed SWQOs for all 189 catchments by 1998, five years ahead of last year's target. The NRA now hopes to introduce at least two pilot SWQOs in each of its eight regions per year.

  • Pollution black spots: The NRA is more pessimistic this year about the rate at which bathing waters and the most polluted estuaries will be cleaned up. In 1991/2, it had expected 99% of the 432 designated bathing waters to comply with EC standards by 1994/5. This year, however, it expects the compliance rate to reach only 78% by then.

    Likewise, in 1991/2 it had been planning to reduce the length of the most polluted class D estuaries to 40 kilometres by 1994/5. The current length is 83 kilometres, and this year's plan projects no improvement until 1995/6.

    The NRA is more optimistic this year about the rate at which the dirtiest class 4 rivers can be eliminated. It hopes to reduce their length from 478 kilometres this year to 416 next year, with a target of 50 kilometres in 2005.

  • Low flows: The NRA's plans for alleviating low flow problems in rivers have been drastically cut back. In its past two corporate plans, it had hoped to implement solutions on 24 rivers by 1994/5. But this has now been scaled back to just 12 by 1996/7. Lack of resources is one obstacle, and the Government's failure to introduce legislation amending the compensation regime for changes in abstraction licences is another.

  • Abstraction inspections: The NRA has stepped up its monitoring of compliance with abstraction licences, but its inspection rate remains well short of target. In 1991/2, the last year for which figures are available, it carried out 13,055 inspections against a target of 24,125.

    The NRA has responded to the budget cuts by reducing the number of planned inspections, which are now to build up to 19,200 by 1995/6. This is 25% short of the target in last year's plan of 25,500 inspections in 1995/6.

  • Research: The NRA's R&D budget for 1993/4 is £7.3 million - a 21% cut on last year's plan. The report notes that the current level of funding is inadequate to pay for research needed to support even the NRA's priority initiatives in its core functions.

    The plan tells a similar story on fisheries, conservation and recreation. Existing targets for ecological surveys and habitat improvement in river corridors have not been met, and monitoring of the status of fisheries is also behind schedule. The latest plan revises targets in these and other areas downwards.

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