Water watchdog to impose huge fines on companies for sewage spills

Ofwat proposes £168m in fines for three water companies following an investigation.

Thames Water, Yorkshire Water and Northumbrian Water could face a £168 million penalty following an investigation into their sewage treatment works.

The water regulator, Ofwat, said it had ‘uncovered a catalogue of failure’ by three of England’s biggest water firms resulting in ‘excessive spills from storm overflows’.

Ofwat’s chief executive David Black said:

‘Our investigation has shown how they routinely released sewage into our rivers and seas, rather than ensuring that this only happens in exceptional circumstances as the law intends.’

The penalties proposed will see Thames Water fined £104 million, Yorkshire Water fined £47 million and Northumbrian Water fined £17 million.

Unacceptable destruction of our waterways

Ofwat has proposed £168 million of fines for three of England’s biggest water companies for failing to manage sewage spills, as the first batch of results from its biggest ever investigation into the industry.

In an announcement, Ofwat said the firms ‘failed to ensure that discharges of untreated wastewater from storm overflows occur only in exceptional circumstances, which has resulted in harm to the environment and their customers’.

It added that there was a ‘strong correlation’ between high spill levels and operational issues at their wastewater treatment sites, ‘which points to these companies not having properly operated and maintained their wastewater treatment works’.

It said the firms had failed to upgrade their assets where necessary, and had been slow to grasp their obligations to limit pollution from storm overflows.

Environment Secretary Steve Reed welcomed the fines.

‘The unacceptable destruction of our waterways should never have been allowed – and it is right that those responsible for illegally polluting our rivers, lakes and seas face the consequences,’ he said.

The Government recently announced its intention to reform compensation in the water sector.

Ofwat said 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% of them having operational issues. But 45% of its storm overflows were in breach.

And 3% of Northumbrian Water’s wastewater works had issues, while 9% of its storm overflows were in breach.

Customers won’t foot the bill for these fines

Ofwat chief executive David Black has reassured customers the burden of £168 million of fines on three water firms will fall on investors.

‘Customers can be reassured these fines sit with investors, not with customers of the water companies.’

However, Alex Neill co-founder of Consumer Voice said:

‘Customers have already paid the price for these sewage spills. Ofwat would have applied performance penalties, reducing how much these companies could charge their customers, if they had correctly reported the number of pollution incidents.’

Thames Water’s fine amounts to 9% of the company’s turnover, just under the 10% maximum Ofwat is allowed to impose.

Mr Black said, ‘That recognises the seriousness of the breaches we have uncovered.’

When asked whether this fine might tip the struggling utility firm into bankruptcy, he admitted that Thames Water ‘faces serious challenges’ but said it was  ‘not a relevant consideration’ for the watchdog.

Legal action against water companies over pollution concerns

Professor Roberts is taking legal action against six water companies on behalf of 20 million households over allegations of under-reporting pollution incidents and over-charging customers as a result. 

Anglian Water, Northumbrian Water, Severn Trent Water, Thames Water, United Utilities Water, and Yorkshire Water are all accused of failing to reveal the true scale of sewage discharges and spills made into UK waterways.

They are accused of breaching competition law because any under-reporting could have affected the price they could charge customers.

The competition court will consider whether to grant permission for the claims to go to trial at a hearing on 23 September.  

Professor Carolyn Robert commenting on the Ofwat fine said, ‘The pressure on water companies to behave responsibly, both in terms of their environmental obligations to minimise sewage spills, and in the charges they levy on customers, is building. This proposed fine by Ofwat should send a strong signal that much of the current position could have been foreseen, and that appropriate investment in water infrastructure must be made.’ 

Roberts also told Consumer Voice that the claims she filed against these companies ‘is not a fine but an intention to return money to customers.’

Trust in the water sector at an all-time low

Household trust in water companies hit an all-time low earlier this year. Customers need some serious convincing that companies can be trusted to protect the environment.

In a statement released on their website Thames Water says, ‘We have been notified by Ofwat that it has reached the next stage in its investigation on our management of wastewater treatment works and our sewer network. We take this matter very seriously and have cooperated at every stage of Ofwat’s investigation. We regard all untreated discharges as unacceptable, even when they are permitted, and are taking action to improve the health of our rivers as a key area of focus and investment. 

‘This is the latest stage in the investigation process and we will continue to cooperate fully.  Where appropriate, Ofwat may decide not to issue an enforcement order, or decide to impose a reduced or no financial penalty at the conclusion of the consultation period, in light of a commitment from the company to taking appropriate measures to secure compliance and provide redress for failures identified. 

‘We are encouraged that Ofwat recognises that in order to resolve the issues identified any redress needs to be deliverable, affordable and financeable. We will continue to engage with Ofwat and will respond to the consultation in due course.

‘The investigation by the Environment Agency into all water and wastewater companies in England and Wales continues. Currently, there is no indication of any date for this investigation to reach a conclusion.’

A Yorkshire Water spokesperson told us,  ‘We take our responsibility to protect the environment very seriously. Last year, we apologised for not acting quickly enough and announced our £180m programme to reduce discharges from our storm overflows before April 2025.

‘We are disappointed with Ofwat’s response to their investigation into our wastewater treatment networks. Since the start of this process in November 2021, we have cooperated fully with the investigation and we will continue to seek clarity on their Draft Penalty and Enforcement notice. We will be responding to the notice by 10th September. 

‘We and our customers care deeply about river health and we want to provide reassurance that we have already taken considerable action to improve. For the past two years we have been industry leading for our wastewater treatment works compliance, we have more robust processes and procedures in place, and we have finished work at 10 storm overflows with 44 on site, and 66 due to start soon as part of our £180m investment programme. Our business plan for 2025-2030, which is currently being reviewed by Ofwat, proposes our largest environmental investment of £7.8bn.’

Northumbrian Water commented, ‘We are very disappointed by Ofwat’s decision to impose a penalty in respect of its Flow to Full Treatment investigation and don’t recognise some of the standards of compliance that Ofwat is enforcing. These are a departure from its previous practice and appear inconsistent with those of the Environment Agency and the Government and with Ofwat’s own practice in the past. We’re working really hard to continue to deliver for customers and the environment and will continue to comply with and exceed Government regulations.’