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Industry regulator Ofwat has proposed £168m of fines for three of England’s biggest water companies for failing to manage their wastewater treatment works, including a £104m fine for Thames Water.
The penalties result from severe mismanagement of sewage treatment works, including systemic failures in the use of storm overflows, causing extensive environmental damage and impacting customers, the watchdog said.
Ofwat’s chief executive David Black said the watchdog’s biggest ever investigation had uncovered a “catalogue of failure” and showed that the firms “routinely released sewage into our rivers and seas, rather than ensuring that this only happens in exceptional circumstances as the law intends”.
The proposed penalties are subject to consultation but would see Thames Water fined £104m, Yorkshire Water fined £47m and Northumbrian Water fined £17m – equating to 9 per cent, 7 per cent and 5 per cent of the companies’ relevant turnover. Ofwat is permitted to impose fines of up to 10 per cent.
The firms will not be able to recover the money to pay for any proposed penalties from their customers, according to Ofwat, which said it would ensure that customers are not charged twice where additional maintenance is required.
Speaking to Sky News, Mr Black accepted that Thames Water “faces serious challenges” but said it was “not a relevant consideration” for the watchdog that such a penalty could tip the struggling utility firm into bankruptcy.
Welcoming the “meaningful penalties”, campaigner Charles Watson, chair of River Action, said Ofwat had been “for so long toothless” but was “finally waking up to the scale of the public’s outrage”.
Criticising water companies for paying out billions in shareholder dividends, Mr Watson warned that so long as this was permitted, “pollution will continue to be a highly profitable activity with inadequate incentives for the water companies to fix their creaking infrastructure and stop filling our rivers with raw sewage”.
Celebrating that “this rogue industry [is] finally paying the price for years of pollution”, Greenpeace UK’s director of policy Doug Parr urged Ofwat to “bring in a full ban on shareholder dividends and bonuses for these serial polluters” and said ministers should recognise that water industry privatisation has failed.
Surfers Against Sewage chief executive Giles Bristow said the fines are “a win for campaigners” but “illustrate the sheer state of disrepair of our broken water industry”, and vowed to make sure Ofwat keeps its pledge that firms will not be able to recover the money from customers.
The proposed fines relate to the first three cases in Ofwat’s wider investigation, with the regulator promising to continue to work as quickly as possible on its investigations into the remaining eight of the 11 water firms in England and Wales.
Mr Black said: “The level of penalties we intend to impose signals both the severity of the failings and our determination to take action to ensure water companies do more to deliver cleaner rivers and seas.
“These companies need to move at pace to put things right and meet their obligations to protect customers and the environment. They also need to transform how they look after the environment and to focus on doing better in the future.
“Looking to the future, we want to transform companies’ performance under our new price control that starts in April next year, so we reduce spills from sewage overflows by 44 per cent by 2030 compared to 2021 levels.”
Welcoming the fines, environment secretary Steve Reed said it was right that those responsible for the “unacceptable destruction of our waterways” should “ face the consequences”.
Vowing to “fundamentally reform the water sector”, Mr Reed said the new government had announced initial steps in its Water (Special Measures) Bill to cut sewage pollution, protect customers, and attract investment to upgrade crumbling infrastructure – with further legislation in the pipeline.
Ofwat said its investigation had found that more than two-thirds of Thames Water’s wastewater treatment works with Flow to Full Treatment (FFT) permits had capacity and operational issues, while one in six of its storm overflows were found to be in breach of regulations.
Yorkshire Water’s wastewater treatment works were in better shape, with just 16 per cent of them having operational issues. But 45 per cent of its storm overflows were in breach. Three per cent of Northumbrian Water’s wastewater works had issues, while 9 per cent of its storm overflows were in breach.
A Yorkshire Water spokesperson said the firm was “disappointed” with the proposed fine and that it had “cooperated fully” with the investigation. Pointing to a £180m plan to reduce sewage discharges before April 2025, they added: “We will be responding to the notice by 10th September.”
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