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Water companies have come under fire for missing targets on pollution, leaks and supply interruptions (Andrew Matthews/PA) (Image: PA Wire/PA Images)
Water companies are facing a hefty £157.6million fine for failing to meet essential targets on pollution control, leak reduction, and minimising supply disruptions, while customer satisfaction plummets, Ofwat has announced.
According to Ofwat’s latest annual performance review of water firms, customers can expect a cut in their water bills in 2025-26 as a result of these penalties, with the total amount of rebates being determined this December.
In a damning indictment of the sector, not a single water company managed to reach the regulator’s top “leading” status, with Anglian Water, Welsh Water, and Southern Water relegated to the bottom “lagging” category, leaving the other 10 companies rated “average”.
Each year, Ofwat assesses the performance of England and Wales’ water providers against ambitious benchmarks they set back in 2019 for a five-year cycle concluding in 2025, with financial repercussions for missing the mark.
The regulator has made it clear that these figures remain tentative until the completion of its thorough review process.
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Not one company achieved the regulators top category of leading (Rui Vieira/PA) (Image: PA Wire/PA Images)
Despite pledges from water companies to slash pollution incidents by 30 percent, a meagre two percent decrease has been achieved. The report from Ofwat also highlighted that the industry is slipping further away from crucial goals concerning pollution and internal sewer flooding.
Ofwat’s chief executive, David Black, commented: “This year’s performance report is stark evidence that money alone will not bring the sustained improvements that customers rightly expect.
“It is clear that companies need to change and that has to start with addressing issues of culture and leadership. Too often we hear that weather, third parties or external factors are blamed for shortcomings. Companies must implement actions now to improve performance, be more dynamic, agile and on the front foot of issues. And not wait until the Government or regulators tell them to act.”
He added: “As we look towards the next price control, the challenge for water companies is to match the investment with the changes in company culture and performance that are essential to deliver lasting change.”
Thames Water moved up a category from “lagging” to “average” as it met some performance targets on leakage and supply interruptions.
Despite this, the heavily indebted London water provider will have to pay £56.8million, the biggest fine for the fourth straight year. Anglian Water’s fine is £38.1million, Yorkshire Water’s is £36million and United Utilities’ penalty is £33.2million.
The penalties are separate from an ongoing Ofwat investigation into all 11 of England and Wales’s water firms, which ordered three companies to pay £168million in fines in August, in the first results of the probe.
Here’s the full list of how much water companies will pay out in 2025/26:
- Thames Water – 56.8million
- Anglian Water – 38.1million
- Yorkshire Water – 36million
- United Utilities – 33.2million
- Southern Water – 31.9million
- Welsh Water – 24.1million
- South West Water – 17.4million
- South East Water – 8million
- Wessex Water – 5.3million
- Affinity Water – 5.2million
- Bristol Water – 1.9million
- Portsmouth Water – 1.1million
- South Staffs Water – 0.7million
- Severn Dee – 0.2million.
Some water utilities are also creaking under high levels of debt or face criticism over dividends to shareholders and executive bonuses.
Labour has taken a firm stance, advocating for reduced sewage spills and even suggesting radical legislation that could imprison obstructive company executives for up to two years.
Steve Reed, Secretary of State for the Environment, Food and Rural Affairs, commented: “Our waterways should be a source of national pride, but years of pollution and underinvestment have left them in a perilous state.
“The public deserves better. That’s why we are placing water companies under special measures through the Water Bill, which will strengthen regulation including new powers to ban the payment of bonuses for polluting water bosses and bring criminal charges against persistent law breakers.”
He added: “We will be carrying out a full review of the water sector to shape further legislation that will fundamentally transform how our entire water system works and clean up our rivers, lakes and seas for good.”
A recent Environment Agency report delivered another blow, revealing that nearly one-fifth of the nation’s water supply is lost to leaks before even reaching household taps.
James Wallace, CEO of River Action, has lambasted the paltry fines imposed on water companies, stating: “This might sound like a lot of money but frankly it is a drop in the ocean for polluting water companies that have handed billions in dividends and interest payments to investors.”
He continued: “Clean and abundant water and healthy ecosystems are fundamental to human life and our economy.”
Mr Wallace also criticised the lack of stringent consequences for environmental damage, adding: “Yet, water companies continue to pollute the nation’s waterways without facing the full force of the law or sufficient penalties.”
Mike Keil, head honcho at the Consumer Council for Water (CCW), said: “Poor performance on pollution incidents and a failure to protect thousands of households from the misery of sewer flooding will do little to reverse the unprecedented decline in people’s satisfaction and trust in water companies, which is reflected in our research.
“Customers will rightly question why some companies should be trusted with more of their money for future investment when they are struggling to deliver on their existing commitments.”
He concluded by stressing the need for tangible improvements: “People need to see and experience changes which convince them the industry cares as much about the environment as they do.”