Treasury seeking to keep fines earmarked for sewage cleanup

Rachel Reeves's Treasury is seeking to keep millions of pounds levied on polluting water companies in fines and intended to be earmarked for sewage cleanup, the Guardian has learned.

- Rowena Mason, Helena Horton

The £11m water restoration fund was announced before the election last year, with projects bidding to improve waterways and repair damage done by sewage pollution in areas where fines have been imposed.

However, the Treasury is in discussions about keeping the money to use it for unrelated purposes at a time of huge pressure on the public finances and rising debt interest costs.

The move would be hugely disappointing to small projects that have bid for the money to clean up sewage-ridden waterways and were expecting to get the cash last July, only to see it delayed by the election.

Although £11m is a small pot of money, environmental charities believe the fund is projected to rise substantially as the regulator begins to get tougher on polluting water companies. Last summer, it emerged Thames, Yorkshire and Northumbrian Water would be fined a record £168m between them for a "catalogue of failure" over illegal sewage discharges into rivers and the sea.