PRESS RELEASE : Landmark legislation to crack down on bosses for polluting water [September 2024]

The press release issued by the Department for Environment, Food and Rural Affairs on 5 September 2024.

Major legislation to crack down on water bosses polluting Britain’s rivers, lakes and seas is being set out today and includes the most significant increase in enforcement powers in a decade.

The Water (Special Measures) Bill has been introduced to parliament and will give regulators new powers to take tougher and faster action to crack down on water companies damaging the environment and failing their customers.

The introduction of the Bill comes as Secretary of State Steve Reed is set to deliver a speech at Thames Rowing Club on Thursday 5th September to representatives from the water industry, investors, environmental groups and campaigners setting out his plans to transform the water sector.

The Bill delivers on the manifesto pledges to clean up the water sector, including significantly increasing the ability of the Environment Agency to bring forward criminal charges against law-breaking water executives. It will create new tougher penalties, including imprisonment, for water executives when companies fail to co-operate or obstruct investigations.

The new legislation will also ban the payment of bonuses to water bosses if they fail to meet high standards to protect the environment, their consumers and their company’s finances.

Other measures in the Bill include severe and automatic fines for a range of offences, including allowing regulators to issue penalties more quickly, without having to direct resources to lengthy investigations. It will also introduce independent monitoring of every sewage outlet, with water companies required to publish real-time data for all emergency overflows. Discharges will have to be reported within an hour of the initial spill.

Secretary of State for Environment, Food and Rural Affairs, Steve Reed, said:

“The public are furious that in 21st century Britain, record levels of sewage are being pumped into our rivers, lakes and seas. After years of neglect, our waterways are now in an unacceptable state.

“That is why today I am announcing immediate action to end the disgraceful behaviour of water companies and their bosses.

“Under this Government, water executives will no longer line their own pockets whilst pumping out this filth. If they refuse to comply, they could end up in the dock and face prison time.

“This Bill is a major step forward in our wider reform to fix the broken water system. We will outline further legislation to fundamentally transform how the water industry is run and speed up the delivery of upgrades to our sewage infrastructure to clean up our waterways for good.”

Measures in the Bill

Bring criminal charges against persistent lawbreakers, including imprisonment

Since privatisation, only 3 individuals have been criminally prosecuted by the Environment Agency without appeal despite widespread illegality.
The Bill will significantly increase the ability for the Environment Agency to bring forward criminal charges against law-breaking water executives.
The Bill creates new tougher penalties including imprisonment for water executives when companies fail to co-operate or obstruct Environment Agency and Drinking Water Inspectorate investigations. Previously, the maximum punishment for most cases of obstruction was merely a fine. We will increase sentencing powers to include imprisonment, with offences triable in both the Crown and Magistrates’ Court.
In addition, the cost recovery powers of regulators will be expanded to ensure that water companies bear the cost of enforcement action taken in response to their failings. The Environment Agency will undertake a consultation on the implementation of these new powers.

Ban the payment of bonuses to executives of water companies

Despite overseeing catastrophic failure, water chief executives have paid themselves over £41m in bonuses, benefits and incentives since 2020.
This Bill will give Ofwat powers to ban the payment of performance-related pay including bonuses to chief executives and senior leadership of water companies unless they meet high standards when it comes to protecting the environment, their consumers, financial resilience and criminal liability.
We will go further by requiring Ofwat to set rules requiring water companies to appoint directors and chief executives and allow them to remain in post only when they meet the highest standards of ‘fitness and propriety’, and to ensure customers are involved in company decision-making.

Introduce severe and automatic fines for offences

Currently, the regulators have to conduct lengthy investigations to the criminal standard of proof (“beyond reasonable doubt”) before they can impose financial penalties, even for minor to moderate offences. They cannot impose Fixed Monetary Penalties for most water sector offences and the current maximum penalty is just £300. This means it is not cost effective for regulators to impose financial penalties for frequent, more minor offences.
The Bill closes the gap in the Environment Agency’s enforcement powers by lowering the standard of proof to the civil standard (“on the balance of probabilities”) and enabling Fixed Monetary Penalties to be imposed as Automatic Penalties for specific offences – allowing regulators to issue penalties more quickly, without having to direct resources to lengthy investigations.
The list of water industry offences that will be subject to Automatic Penalties will include pollution offences, failure to comply with information requests and reporting requirements, and water resource offences.
These offences and the increase in the value of the penalties (from £300) will be set out in secondary legislation, following consultation.

Ensure independent monitoring of every outlet

Emergency sewage overflows are not currently fully monitored.
To make it easier and quicker for regulators to investigate and punish wrongdoing, water companies will be required to publish real-time data (within an hour) for all emergency overflows in England in a clear, accessible format. This will create an unprecedented level of transparency, enabling the public and regulators to see what is going on and hold water companies to account.
This data will be independently scrutinized by the regulators and used as evidence in their investigations.

Wider measures in the bill to strengthen regulation

To further increase transparency around water company operations, there will be a new statutory requirement for water companies to publish annual Pollution Incident Reduction Plans, setting out steps they are taking to address their pollution incidents to ensure that, wherever possible, they do not happen again.

Wider water sector reform

The introduction of this Bill is the next step in the Government’s three stage approach as the work begins to clean up our waterways.

Reset: Within a week into office, the Environment Secretary secured agreement with Ofwat to ringfence funding for vital infrastructure upgrades and to ensure this can only be spent on upgrades benefiting customers and the environment. Ofwat will also ensure that when money for investment is not spent, companies refund customers, with money never allowed to be diverted for bonuses, dividends or salary increases.
Special Measures: Now the Government is introducing its first piece of water legislation to strengthen the power of water industry regulators and to drive meaningful improvements in the performance and culture of the water industry, as a first important step in enabling wider, transformative change across the water sector.
Further legislation: The Government will outline further legislation to fundamentally transform how the nation’s water system operates to tackle pollution and deliver a resilient water supply, boost investment and speed up infrastructure upgrades to clean up the nation’s waterways.

Notes to editors:

The full set of measures will be published on Thursday morning. Measures are subject to consultation, with further information set out in the coming months.

Stakeholder quotes:

Alan Lovell, Chair of the Environment Agency, said:

We welcome the Water (Special Measures) Bill and the government’s ambition to drive through much needed reform.

The Bill will give us, as regulator, more power to protect our precious water quality and resources, hold water companies to account and ensure the polluter pays. The stronger penalties introduced by the Bill will deter illegal behaviour and allow us to close the justice gap and strengthen our ability to deliver swift enforcement action.

This builds on our ongoing work to deliver our biggest ever transformation in the way we regulate, including recruiting up to 500 additional staff for a specialised workforce and investing in new digital and monitoring systems to identify the root cause of issues.”

David Black, Chief Executive of Ofwat, said:

We fully support the introduction of the Water Bill and are working closely with the Government to ensure its smooth implementation once it has gained Royal Assent. This Bill strengthens our powers and will help us drive transformative change in the water industry so that it delivers better outcomes for customers and the environment.

We welcome the opportunity to establish new rules on water company remuneration, governance and strengthening customer involvement in water company decision-making.”

Tessa Wardley, Director of Communications and Advocacy, The Rivers Trust said:

We are delighted that Defra is prioritising healthier rivers, lakes and seas, and strengthening regulation and enforcement is a really important strand of that work.

We’re particularly encouraged to see that our calls to ensure that polluters pay for the environmental damage they cause are being heeded, and that progress is also being made to improve transparency around pollution incidents and monitoring of emergency overflows. Hopefully the new powers will give regulators the teeth they need to hold polluters to account so we see improved performance across the sector.

Despite this, we know these special measures are not the whole answer to returning our rivers to full health, and we look forward to further work in collaboration with the government, enabling action to restore resilience in our water environment for a healthier future – for us and our rivers.

Jamie Cook, CEO, Angling Trust said:

The angling community have been at the forefront of calling for tougher regulation, so we welcome the long overdue introduction of the principle of cost recovery from polluters in the new Bill along with the other measures to increase penalties, create transparency and improve corporate conduct in the broken water industry.

Wherever possible it should be the polluter that pays rather than the taxpayer.

However, this can only be regarded as a first step, and we look forward to seeing more transformational change and a root and branch upgrade of Britain’s creaking and leaking wastewater infrastructure.

Richard Benwell, Chief Executive, Countryside and Wildlife Link said:

The Water (Special Measures) Bill shows real steel from the Government. Ensuring that companies never profit from pollution is a strong foundation to restore UK rivers. We hope to see this no-nonsense, polluter pays approach applied across the economy, wherever companies are taking advantage of nature.

Restoring rivers is a massive challenge and there’s much more to do, but if DEFRA follows this positive work on pollution with action to support water-friendly farming, stricter chemicals regulation, and investment in habitats to help clean up river catchments, then we can hope for a better future for the UK’s water environment.

Richard Walker, Executive Chairman of Iceland Foods and former Chair of Trustees of Surfers Against Sewage said:

Finally, we have a government prepared to tackle the criminal neglect and abuse of Britain’s waters. This new legislation is long overdue and will strengthen enforcement and hold water companies and their bosses to account.

There remain systemic issues that need to be tackled to end pollution of our waters in the long-term – but this swift action gives me confidence that things can and will start to change.

Mike Keil, Chief Executive, Consumer Council for Water said:

Our research shows consumer trust in the water sector has been badly fractured by concerns over the environment, which is why we welcome the measures laid out by the UK Government to ensure there are more serious consequences for water companies if they harm our rivers and seas.

We’re also looking forward to working with ministers to give people and communities a more powerful platform to hold water companies to account when they fail to deliver on their promises. These changes will complement the work we’re already doing to help transform the culture of companies, so they are focused on providing the best possible service for their customers.