Ofwat investigating every water company in England and Wales, bills still rise

The regulator itself has been criticised for failing to enforce standards, while four more providers are now being scrutinised. 

As of Tuesday 16th July, investigations into United Utilities and Severn Trent Water were both confirmed, bringing the total number of English and Welsh water suppliers being audited and assessed on performance to nine. 

Action has already began relating to Anglian Water, Northumberland Water, Thames Water, Wessex Water, Yorkshire Water, Severn Trent Water. Southern Water remains under enforcement monitoring following its £126million fine for pollution from its sewage plants, and has been reprimanded for misreporting its performance. A criminal investigation is also underway. 

Last week, Labour’s Environment Secretary Steve Reed called for an urgent meeting with bosses from all 16 UK water companies to try and develop a robust strategy to end a complex crisis.  The Government has so far distanced itself from calls to nationalise the industry, while also stating temporary steps in this direction could be needed.

‘The last Conservative government weakened regulation allowing the sewage system to crumble and illegal sewage dumping to hit record levels, a source close to Mr Reed told Sky News. ‘The election of this Labour government is a reset moment for the water industry.

‘In the coming weeks and months, this Government will outline its first steps to reform the water sector to attract the investment we need to upgrade our infrastructure and restore our rivers, lakes and seas to good health,’ they continued. 

In March, a £10.2billion plan to upgrade the UK’s ailing water network was unveiled on behalf of the country’s water companies, laying bare the state of disrepair despite paying £1.4billion in dividends to shareholders in 2022 alone – up by more than £500million the previous year.

Since the 2019 general election, water bosses received more than £10million in bonuses, nearly £15 million in incentives and £621,580. It recently emerged that Thames Water may run out of money by next May as the company’s annual results were posted. 

In addition to steps being taken by Ofwat, the Environment Agency is also involved in the largest ever criminal investigation of water companies in England and Wales. However, the questions are being asked over the regulators themselves, and their ability to perform even basic duties due to lack of resources and financing.

In May, we reported on how the Office for Environmental Protection had concluded the UK’s public body for nature has a record of ‘deeply concerning failures’ to implement regulations on waterways and coastlines. Meanwhile, Ofwat has been criticised for allowing a ‘revolving door’ culture to develop between senior positions at the authority and c-suite roles with water companies. 

The National Audit Office has also published a ‘work in progress’ notice relating to water regulation. This confirms the organisation is developing a report which will examine: 

• government and regulators are clear what outcomes the water industry needs to achieve and the investment needed
• regulation is successfully incentivising investment and meeting desired outcomes and targets
• regulators can respond to the current investment challenges

‘It is good to see our new Environment Secretary directing his department to prioritise water and pushing Ofwat on tighter regulation. Our water environment desperately needs investment and we the public need stronger controls and regulation of polluters,’ read a statement from The Rivers Trust. ‘Measures announced today such as required changes in water companies’ articles of association and the formation of new customer panels could represent a really important step in ensuring they are delivering for both people and the environment.

‘At a time when lots of people are still feeling the financial pinch, The Rivers Trust is pushing for more transparency and collaboration around the whole system as we look into the details of what the rise in bills and investment announced this morning will actually mean for our environment,’ it continued. ‘We will also continue to push for more use of nature alongside chemicals and concrete to deliver solutions that don’t break the bank and respect the bills that we, as customers, are being asked to pay.’

More on the UK water crisis: 

‘Toxic cocktail’: Department for Transport receives recommendations on highway runoff

The Rivers Trust publishes data following landmark national water study

Environment Agency can’t afford to protect UK water bodies, OEP finds

Image: Cathie George