Current status: Answered by Gillian Martin on 12 February 2026
To ask the Scottish Government, in light of the reported urgent need for enhanced environmental monitoring, water quality management and regulatory capacity, for what reason it has reduced funding for Scottish Water and the Scottish Environment Protection Agency in its draft Budget 2026-27.
The overall reduction to Scottish Water’s 2026-27 allocation does not reflect a reduction in spending, but an increase in interest to be received by Scottish Government on voted loans issued to Scottish Water. Voted Loans remain consistent with 2025-26 levels at £170m. The Hydro Nation allocation has reduced from 2025-26 levels in line with contractual commitments.
In comparison to the 2025-26 ABR position, the Scottish Environment Protection Agency’s (SEPA) allocation has reduced 1.8%. However, the ABR comparator includes in-year transfers predominantly for delivery of River Basin Management Plans and Marine funding which are expected to be repeated in 2026-27. Compared to the 2025-26 Budget Bill, SEPA’s funding has actually increased by £1.9m, to enable SEPA to deliver its statutory responsibilities.
SEPA will also receive in-year funding (in line with recent years) that will support, for example, the Water Environment Fund. ‘Core’ funding for SEPA has therefore increased with project funding to be confirmed in-year, in line with standard practice.
SEPA funds 57% of its operating costs from charging schemes, applying the principle of 'polluter pays'. SEPA’s income forecast increases by 5% in 2026-27, reducing demand for public funding.