Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, what assessment his Department has made of the potential impact on small and medium-sized developers of the withdrawal of water neutrality requirements and associated credit schemes; and whether he plans to introduce a refund or compensation mechanism for developers who purchased credits in good faith before the policy change.

Water Neutrality has only been applied in Sussex North and Defra has not run any credit schemes for water neutrality in Sussex North.

Natural England withdrew its position statement advising water neutrality for new development in the Sussex North region in October 2025 following close joint working with Southern Water, the Environment Agency, Defra and environmental partners. This work has delivered a robust package of measures that protects the Arun Valley’s internationally important wetlands while allowing sustainable housing growth to resume, unblocking around 21,000 homes. By ending a four‑year pause and restoring certainty to the planning system, the withdrawal supports small and medium‑sized developers by allowing stalled development to proceed again.

We recognise that some developers engaged with local water neutrality mitigation schemes, including the purchase of water credits, in good faith during the period in which the approach to water neutrality applied. Defra does not operate or hold a financial interest in these schemes, which have been developed and managed by local authorities or private providers. As such, questions relating to refunds or compensation are a matter for the relevant scheme operators, who are best placed to advise on their individual policies and arrangements.