Regulators have accused water companies of “genuinely shocking” behaviour, gaming a self-monitoring system and demonstrating a “culture of complacency”.

Adam Vaughan www.thetimes.co.uk

The comments from the heads of the Environment Agency and Ofwat mark an escalation of rhetoric from the water sector’s regulators.

Philip Duffy, chief executive of the Environment Agency, singled out sewage pollution incidents by Southern Water and Severn Trent, which were recently fined £330,000 and £2 million, respectively.

He said they were “genuinely shocking, shocking cases of pollution of our rivers, that shouldn’t be happening in a well-regulated industry”.

In Southern Water’s case, more than 2,000 fish were killed after a pump failed and sewage was released into a stream that feeds into the River Hamble in Hampshire. Severn Trent, meanwhile, was responsible for a “reckless failure” in allowing 260 million litres of sewage to be spilled illegally into the River Trent, a judge concluded.

Duffy said that “time and time again” promises made by water firms to the Environment Agency and Ofwat hadn’t been kept. “Infrastructure that should have been maintained to a certain level hasn’t been maintained to that level,” he said.

Under Duffy’s leadership, the Environment Agency is preparing to increase the number of inspections of water companies from less than 1,000 in the current financial year to 4,000 next year and more than 10,000 the year after. He said the measures were needed because the system of companies monitoring themselves, introduced in 2009, “had been gamed a bit”.

“The times of day the samples were taken, the way the samples were taken, gave a misleading positive impression,” he said. Duffy also said he was “really worried” about chemical pollution in rivers, specifically the “forever chemicals” PFAS and PFOS which have been linked to serious health harms including increased risk of cancer.

David Black, the chief executive of Ofwat, said that water companies needed to restore public trust by implementing improvements and showing greater transparency.

“We need to see a change of culture,” he told a conference held by the Water Report on February 29. “I think the water sector has demonstrated a culture of complacency in the face of significant challenges, such as climate change, resource scarcity and population growth, and this has led to stagnating performance.”

However, Black said he was pleased the water industry was beginning to “respond in a meaningful way to the challenges it faces”. He cited the £96 billion water firms have proposed spending between 2025 and 2030. Ofwat has to decide this summer whether to approve the spending, despite it requiring a 31 per cent increase in household water bills over the period.

The Times’s Clean it Up campaign has been calling for stronger governance of the water sector and more resources for regulators to do their job.

In recent weeks the government has vowed to ban bonuses for bosses of water companies that commit criminal acts of pollution. Chief executives have received £26 million since 2019 and, while some voluntarily waived their bonuses last year amid public anger, five still took them.

However, it has emerged that the government has rowed back on a plan by the environment secretary, Steve Barclay, to block dividends at water firms with a poor environmental record. “The government has no plans to block water company dividends over illegal pollution events,” Gareth Davies, exchequer secretary to the Treasury, wrote in a message to industry last week. Labour is understood to have no appetite for such a dividend ban.

David Henderson, chief executive of Water UK, the industry body, said a dividend ban would have been disastrous. “If you want to break the system, and get terrible environmental performance, that’s the way to do it,” he said when asked if a ban would harm investment in the sector.

Henderson said there “still a lot to do” in improving the state of rivers but he was hopeful the sector would tackle the problem. “Performance has not been where it should have been,” he admitted. “We have failed, in some parts quite acutely, to keep up with public perceptions of what is needed.”