Boyer director Matt Clarke weighs up how Cambridge needs to address its water shortage to allow growth in the city.

Last Summer Housing Minister Michael Gove announced plans to invest considerably in Cambridge as ‘Europe’s Silicon Valley’ including the intention to deliver up to 250,000 additional homes under the Government’s Cambridge 2040 vision.

Further announcements have followed, including those issued in the context of the Spring Budget and in recent days, which have both tempered the scale of their aspirations (it is now 150,000 new homes, by 2050) and added some more detail on how key challenges to delivery will be tackled.

There is no doubt that investment in Cambridge is an astute economic move: already, the University alone makes a total net economic impact on the UK economy of nearly £30 billion annually – almost four times that of football’s lucrative Premier League. Investing in the University and wider Greater Cambridge ecosystem will have a significant beneficial impact on the overall economic health of the UK.

Cambridgeshire is a popular location for a wide variety of reasons and already has one of the fastest growing populations, most notably within the 25-to-34-year-old age group (+20.6 per cent in the period between the 2011 and 2021 censuses), suggesting a strong pull factor from job opportunities generated by the University and the many tech and life sciences employers, and evidence of the continued success of the ‘Cambridge Phenomenon’.

The Greater Cambridge area has, in recent times, therefore grappled with the challenges of delivering sufficient new homes to fuel this economic growth potential in a sustainable manner. Strategies have included both Green Belt releases and a series of new settlements. Notably, of the five new towns initiated in England in the last decade, two were in Cambridgeshire, at Northstowe and Waterbeach, themselves following on from that at Cambourne.

Housing shortfall

With Cambridge’s housing market characterised by acute affordability issues, the need to address demand through considerably increased supply in order to boost the availability of homes, including those for key workers, is long over-due. According to the Government’s recently published report The Case for Cambridge, the city is the most unequal city in the UK – and this risks jeopardising future, sustained economic growth.

Affordability is an ongoing challenge for Greater Cambridge, with average house prices over 12 times the average salary in 2022 for the City and the affordability ratio for South Cambridgeshire not too far behind, each having worsened over the past decade. According to The Case for Cambridge, in the last 10 years house prices in Cambridge have increased by 78 per cent and pay by only 23 per cent. Furthermore, 31 per cent of all households are now renting, significantly above the English average of 19 per cent. Finding solutions to this affordability problem, most notably through increased housing delivery, will be critical to realising Cambridge’s long-term economic potential.

When the Cambridge 2040 vision was first outlined and then subsequently reinforced at the end of 2023 the local political response was somewhat tentative, with key delivery challenges invariably raised with regards to infrastructure, sustainability and specifically in relation to water supply.

Introducing the water supply issue

In order to deliver committed strategic housing allocations in Cambridgeshire, let alone to accommodate a further 250,000 new homes, the complex issue of water capacity must clearly be addressed.

Climate change has resulted in many regions (especially in the East) experiencing long dry periods. Although storms and extreme weather events deliver rain, the intensity is often so great that the water cannot be captured and stored effectively.

The Cambridge Water supply area relies primarily on ground water. The Environment Agency has stated that any new housing development should do so without increasing abstraction levels and risking deterioration to the existing water bodies in the area.

The Agency has objected to a number of strategic planning applications on the grounds of water stress and its concerns over the resulting environmental impacts of water abstraction on water courses in the supply area. Recent announcements suggested that as many as 9,000 new homes on committed strategic sites are currently being blocked as a consequence.

Progress on the emerging Greater Cambridge Local Plan has also been impacted, whilst clarity is gained on resolution of this issue – with the net result being that (both current and future) development is delayed and the housing shortage exacerbated.

Two recent planning appeals have challenged this issue through public inquiries, namely the Brookgate scheme at Cambridge North (for 450 homes and employment development) and that at Darwin Green in West Cambridge (phases 2 and 3, for 1,000 dwellings). Both appeals have been recovered for determination by the Secretary of State with the decisions currently awaited. Clearly these will provide a valuable indication of the Government’s stance on water stress in the sub-region in due course, putting recent announcements on related measures to the test.

Government commitment

In The Case for Cambridge, the Government commits to resolving the problem, stating: “Our first priority is water scarcity, which is holding back development and risks causing environmental harm. It is vital that the city has the water supply it needs to support long-term growth, including a new reservoir in the Fens and a new pipeline to transfer water from nearby Grafham Water. We are also making a one-off intervention to support growth in the shorter-term by delivering water savings through improved water efficiency of appliances in existing buildings that can offset new homes and commercial space.”

The Government also promises to deliver a unique offsetting intervention (as set out in Addressing water scarcity in Greater Cambridge: update on government measures) having already established a Water Scarcity Group, in order to unlock the current blockage.

The Water Resources Management Plan

In February this year, Cambridge Water issued its third draft Water Resources Management Plan (WRMP), the earlier iterations having been objected to by the Environment Agency. The 25 year strategy, as required, demonstrates how Cambridge Water will ensure the continued supply of safe clean water while protecting and improving the environment.

The plan’s targets include a 50 per cent reduction in leakage from 2017/18 levels by 2040 (10 years ahead of the government target); a reduction in household consumption (to 110 litres per head per day) by 2050; building on the already low household consumption (as compared to other regions); a nine per cent reduction in non-household consumption by 2038, and universal metering by 2030.

The supply options include a short-term water transfer from Grafham Water (25 miles west of Cambridge); a proposed new Fens Reservoir, to be located close to Chatteris (25 miles north of Cambridge) and associated transfer infrastructure, and reuse of effluent water which feeds into Cherry Hinton Reservoir in Cambridge.

Due to the significant infrastructure associated with a number of these supply options (which are projected to cost over £700m), the benefits will be staged: the Grafham Transfer in 2032, Fens Reservoir in 2036 and effluent re-use in 2041.

It remains to be seen whether the Environment Agency will support the latest WRMP (albeit the decision to approve this rests with DEFRA and OFWAT), and in turn the extent to which they will support projected levels of future development before the planned supply options are fully in place. A phased approach, balancing longer-term growth with delivery of the proposed supply infrastructure could realistically be anticipated.

Innovative Measures: Water credits system and nature-based solutions

In its update on measures for addressing water scarcity in Greater Cambridge (noted above) published alongside the Spring Budget the Government announced a ‘one-off commitment’ to introduce a water credits system in Cambridgeshire which it believes will help unlock the 9,000 homes and 300,000 square metres of commercial space that are currently held up in the planning system due to water scarcity concerns.

The water credits system, which is due to launch later this year, would give developers the opportunity to offset the water demands of development through the purchase and sale of water credits to ensure they have a neutral impact on water demand. The system would be overseen by a market operator and the credits would initially be provided through the retrofitting of properties (both commercial and residential) with Government investment.

Alongside this the Government is also undertaking a pilot to understand the scope for nature-based solutions to enhance the long-term flow of water bodies and improve resilience to floods, as well as seeking innovation in agricultural water resource management.

There are no details available about how the credits system would work with the planning process, but the announcement states that the Government will work with the local planning authority, developers, the EA, and other key stakeholders on its implementation.

Co-ordination and timing

One of the Environment Agency’s key concerns is the way in which local authorities engage with water companies to plan development in line with available water resources.

Coordinating water supply and new housing development is compromised by the different timescales for local plans and WRMPs and the very long-term delivery of water infrastructure such as new reservoirs. In the Greater Cambridge context this has arguably led to the undesirable position that has ensued with regard to the delayed grant of planning permission, and in turn delivery, of sites whose allocation had been confirmed through Local Plans adopted in line with the current WRMP.

Funding for infrastructure projects is controlled by OFWAT and is reviewed only on a five-year basis, which makes it difficult for the water authorities and local authorities (whose boundaries invariably do not align) to change their infrastructure planning to address significant changes in local circumstances. The scale of infrastructure involved and the typically cross-boundary nature of the required longer-term solutions mean that a good case could be made for a truly strategic planning approach at national, or at least regional level.


Clearly the water scarcity situation must be resolved quickly both to unlock much-needed housing on sites already allocated in local plans and to allow future growth to be appropriately planned, whether in the form of a locally derived housing target or that suggested by the Government’s ambitious Cambridge 2040 vision.

Further guidance from Government this week would seem to underline that they are serious about doing so. Entitled “Cambridge Delivery Group: Establishing a Growth Company – GOV.UK (” this sets out next steps for the already established Cambridge Delivery Group, including the task of establishing a dedicated Growth Company for Cambridge on a trajectory towards creation of a Development Corporation.

The guidance note outlines that the remit of such body would include the acceleration of growth, with explicit reference to unlocking development on sites allocated in the current local plan; developing a long-term growth strategy and importantly supporting cross-government engagement to identify solutions to complex constraints.

Such an approach would undoubtedly assist, or could be argued as essential if Government’s growth aspirations for Cambridge are to be realised. However, some degree of local political opposition can certainly be expected, given that initial suggestions in this regard were not particularly warmly welcomed by the local authorities.

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