Blog

The announcements from the government come after it announced in July 2025 that it would be abolishing Ofwat and will reform the “fundamentally broken” sector.

Off the back of recommendations made in John Cunliffe’s independent review of the UK water industry (the Cunliffe Report), released today, the new regulator will take responsibility of all water functions in the UK.

This will mean all the water responsibilities currently under Ofwat, the Environment Agency, Natural England and Drinking Water Inspectorate will now be the work of the new regulator.

Water companies’ environmental performance ‘poor’ – regulator

The Environment Agency published its Water and sewerage companies in England: environmental performance report 2024 today, 23 October 2025, which found that the privatised water utility companies’ behaviour around pollution management had worsened.

The EPA report is an independent comparison of environmental performance across the sector. Since 2011, the Environment Agency has used the EPA to rate each company in England from 1 star to 4 stars, to highlight where improvement in water company performance is required.

“In 2024, the nine companies collectively achieved just 19 stars out of a possible 36, down from 25 in 2023,” the Environment Agency said. “Only Severn Trent Water received the top four-star rating for industry-leading EPA performance. This is the lowest number of stars overall since the EPA process began.”

It did, however, acknowledge that its criteria for performance “have been regularly tightened”, which it said reflected the “rising expectations for water company performance”.

Water companies have faced growing criticism because of the state of rivers and coastal waters, regularly blighted by sewage discharges. Campaigners say there has been a lack of investment in ageing water infrastructure, driven by the private companies’ desire to provide value to shareholders, rather than to consumers and nature.

Environment Agency chair Alan Lovell said: “This year’s results are poor and must serve as a clear and urgent signal for change.

“What is needed now from every water company is bold leadership, a shift in mindset, and a relentless focus on delivery.

“We will support them however we can, but will continue to robustly challenge them when they fall short.”

Water industry lobbyists blame regulator for lack of investment

Water UK works to promote the interests of the privatised water utility companies.

A Water UK spokesperson said: “While there are some areas of good performance, like the lowest leakage on record, the performance of some companies is not good enough.

“After over a decade of suppressing investment, Ofwat has finally allowed companies to invest £104bn over the next five years.

“It will take time, but we are confident this record investment will help to secure our water supplies, support economic growth and end sewage entering our rivers and seas.

“These results cover the final year of a failed system before record levels of investment began to flow.

“The Independent Water Commission has now made a series of recommendations to fundamentally reform the way the industry is regulated. Having agreed to abolish Ofwat the government now needs to set up its replacement as soon as possible.”

Water companies show some contrition and highlight areas of improvement

A Thames Water spokesperson said: “In 2024-25 Thames Water made a record capital investment of £2.2bn.

“We know we need to further improve for our customers, communities and the environment, and that is why we have embarked on the largest ever investment programme, delivering the biggest upgrade to our network in 150 years.

“Transforming Thames is a major programme of work that will take time; it will take at least a decade to achieve the scale of change required.”

An Anglian Water spokesperson said: “We know that customers have high expectations of us and over the past year we’ve been focused on accelerating action in key areas, particularly our environmental performance, whilst ensuring that we remain focused on the quality of the service we provide to customers.

“Whilst there is still some way to go, we have seen positive changes as a result of this work, and that’s reflected in improvements in key measures in the Environmental Performance Assessment and an improved rating in Ofwat’s water company performance report today.

“Getting to a position where water and wastewater infrastructure can support the Government’s growth ambitions, while also protecting the environment and delivering the performance that people expect, requires sustained investment in infrastructure.

“Sir Jon Cunliffe’s review of the water sector set a positive vision for how this could be achieved through regulatory reform, and it’s vital that the Government follows through by delivering on the key elements of that vision.”

Southern Water CEO Lawrence Gosden said: “The two reports from industry regulators published today – showcasing data from 2024 and earlier – will understandably attract attention, and they demonstrate that Southern Water is not yet meeting all its regulatory targets.

“That’s true, of course; but dig a little deeper and they also show signs of real progress, stability and action – the kind of things our communities have told us they’re desperate to see.

“By their very nature, regulatory targets are black and white, and we understand that. We’ve retained our 2-star EPA rating and have improved our individual scores in the majority of Ofwat metrics – but we also accept that we aren’t yet where we want to be.

“My team and I are determined to drive forward the continued improvement that customers and communities in our region rightly expect of us – and we’re committed to working closely with our regulators and other key partners across the industry to achieve this.”

Severn Trent CEO Liv Garfield said: “Being awarded the top-rated four-star status is a testament to the incredible teams at Severn Trent and the real, lasting change we’re delivering for the environment.

“It’s the result of hard work, major investment over many years and strong collaboration with our partners and communities.

“It’s the sixth consecutive year that we have achieved the top-rated award, with a backdrop of tightening environmental standards. One year is a milestone – six years is an industry record, and our teams are proud of it.

“And with our largest-ever investment programme underway, we’re fully focused on driving the environmental improvements our customers and communities expect.”

A South West Water spokesperson said: “We are determined to further improve our environmental performance. Our 2024 EPA maintains many of the important improvements we delivered.

“While there is more to do, our pollution reduction plans are delivering tangible benefits. Storm overflow spills have reduced by nearly 50% year-on-year, and pollution incidents have halved in the eight months to August 2025, reducing our impact on the environment.

“We will continue to accelerate investment in innovation, monitoring, and operational excellence to meet the government target of less than 10 spills per overflow, per year – a whole decade early. We are proud to have met our target for self-reporting pollution incidents with our highest ever performance, demonstrating our commitment to transparency.

“We are absolutely focused on what we need to do. With a rapidly changing climate and evolving weather patterns, our largest ever £3.2bn investment plan is essential to deliver long-term resilience, affordability, and environmental protection.”

Campaigners blame privatisation for the water sector’s problems

Surfers Against Sewage was founded by surfers in reaction to sewage dumping by water companies in the sea.

Surfers Against Sewage CEO Giles Bristow said: “They fail, fail, and fail again. Today’s revelations of more water company mismanagement lead to one simple question: why doesn’t the government throw the entire failing industry into special administration?

“As it tinkers with weak policies and throws token fines at polluters, let’s remember what this crisis is really about – people getting sick from the reckless pollution of their local beaches and rivers, all so overseas shareholders can grow richer from the bills we pay.

“Keir Starmer, don’t be fooled into thinking this ruthless, profit-hungry machine can be shamed or regulated into doing the right thing. It cannot.

“This system is broken and speaks only one language: money. Until that changes, and until public health and the environment come first, the sewage scandal will never end.

“Water companies are under more scrutiny than ever, yet their standards keep slipping. Imagine what they’ll try to get away with once the spotlight fades.”

The Rivers Trust chief executive Mark Lloyd said: “This assessment highlights the huge challenge that the water industry faces to transform its collective performance from poor to good.

“It is essential that all the water companies deliver in full the massive investment programme that has been set out for the next 5 years.

“However, returning our rivers to good health will take more than this, water companies represent just one piece of the jigsaw puzzle to restore our rivers  – we need to see a transformation in urban and rural landscapes to restore natural processes that store and filter water, prevent pollution and provide us all with protection from flood, drought and raising temperatures in a rapidly changing climate.”

River Action CEO James Wallace said: “Today’s report shows that water companies in England and Wales are still underperforming, especially on serious pollution incidents, exposing the bankruptcy of the privatised water model.

“We urgently need a complete overhaul of this failed system to ensure that bill payers receive a fair service and that our rivers are properly protected from pollution. For years we have been promised change, but nothing has changed.

“Serious incidents – those causing significant environmental harm – have increased by 60% compared with 2023. Thames Water, Southern Water and Yorkshire Water were responsible for 81% of these serious incidents, while Northumbrian Water and Wessex Water recorded none.” (EA Report, 2025)

“The worst offenders are Thames Water, followed by Southern Water and Yorkshire Water, which together caused over 81% of all serious pollution incidents. It is deeply concerning that total pollution events rose again to 2,801 in 2024, the highest level recorded since 2011.

“Despite a small improvement in star ratings, the overall picture remains one of systemic failure across much of the industry. Sewage continues to pour into rivers, seas and lakes, damaging ecosystems, threatening public health, and eroding public trust.

“It is time for the failed privatisation experiment to end, starting with putting Thames Water into Special Administration. England’s water companies must be owned and run for the public good, not private profit, and must deliver clean water, healthy rivers, and reliable service.

“We urgently need regulatory reform, as recommended by the Independent Water Commission, to ensure the government’s growth agenda does not prevent DEFRA and any successor to Ofwat from having the resources needed to enforce the law and deliver systemic change in the water industry.

“The government must also ensure that the polluter always pays through tougher enforcement, meaningful oversight, and substantial penalties for those who continue to pollute with impunity.

“Only when regulation is credible, enforcement is consistent, and profit is no longer prioritised over public health and the natural world will our rivers begin to recover.”

We Own It campaigns for the democratic ownership of public services, including the water sector.

We Own It lead campaigner on water Sophie Conquest told NCE: “The latest EPA rating is yet another item in the huge and damning list of evidence against the privatisation of water

“Serious pollution incidents have skyrocketed, along with our bills. Households are paying more and more for broken pipes, water outages and sewage-filled rivers

“Privatisation is not the norm – water is publicly owned in 90% of the world. The privatisation of water in England is a failed experiment which must come to an end.”

Government considering making it easier to discipline water firms more harshly

The day before the environmental performance report was published, the Environment Agency announced plans to make it easier for the government to issue larger fines to companies found in breach of the regulations.

A written ministerial statement from Department for Environment, Food & Rural Affairs secretary of state Emma Reynolds published on 22 October 2025 laid out the plans for enhanced penalties.

“Currently, the Environment Agency has to be satisfied ‘beyond reasonable doubt’ – the criminal standard of proof – that an offence has been committed to issue monetary penalties,” the statement said.

“We are proposing changes that would allow the Environment Agency to impose penalties to the civil standard of proof (‘on the balance of probabilities’). This will enable minor to moderate offences to be enforced more quickly, cost-effectively and proportionately.

“We are also consulting on the introduction of automatic penalties. These fixed penalties would be triggered in specific circumstances, including late reporting of significant pollution incidents, failure to report monitoring data for storm and emergency overflows monthly, and where there is not accurate and reliable monitoring in place to measure water abstraction.

“Automatic penalties are designed to streamline the penalty process for offences that can be identified and evidenced quickly.”

Reynolds added: “I share the public’s anger at the current state of our water system, and this government is taking decisive action.

“I want to give the Environment Agency the teeth it needs to tackle all rule breaking. With new, automatic and tougher penalties for water companies, there will be swift consequences for offences – including not treating sewage to the required standard and maintenance failures.

“We are delivering on our Plan for Change by pushing ahead with reforms to clean up our rivers, lakes and seas.”

Water industry says it is ‘right’ that companies are ‘held to account’

A Water UK spokesperson said: “It is right that water companies are held to account when things go wrong and the industry will comply with whatever rules are set by government.

“We are focused on investing a record £104bn over the next five-years to help support economic growth, build more homes, secure our water supplies, and end sewage entering our rivers and seas.”

Campaigners say new penalties don’t go far enough

Surfers Against Sewage senior policy and advocacy manager Henry Swithinbank said: “This rehashed announcement is nothing more than the sign of a desperate government cowering from the truth. Anything short of changing the ownership model of our broken water industry is a hollow gesture doomed to fail.

“Boosting resources for regulators is, of course, welcome, since polluters have dodged consequences for far too long. But this remains little more than a sticking plaster on a system that rewards pollution.

“Shareholders rake in billions, yet the Government talks about fines measured in the hundreds of thousands. It simply doesn’t add up, and Keir Starmer’s Government knows it.

“It is time for the Government to stand up to the polluters and big finance and deliver the transformational change needed to save our blue spaces and end pollution for profit.”

We Own It lead campaigner on water Sophie Conquest told NCE: “Regulation of our crumbling water sector has been a glaring failure and this is no different. Time and again, we have seen water companies dodge bonus bans and delay the payment of fines so that they’re essentially no longer a consequence

“Water companies profit from pollution. The less money they invest in our water infrastructure, the more they can pay out to shareholders

“Since privatisation, shareholders have taken over £85 billion out of the water sector. Penalties of £10,000 are a very small price to pay for them, as compared to the huge profits they make from destroying our rivers and seas.

“The only solution is public ownership of our water. That way, money that’s currently spent on shareholder payouts can be used – instead – to fix broken infrastructure and bring bills down.”

Common Wealth is a think tank which focuses on issues related to wealth inequality and ownership of resources.

Common Wealth deputy director Sarah Nankivell told NCE: “More penalties won’t fix a broken model. The water industry is in a vicious cycle of vast payouts, loading firms with huge debts and then asking customers to pay more.

“Only public ownership can end the rip-off.”

Common Wealth published analysis in June 2025, which found that the cost of renationalising would be “close to zero,” compared to the £99bn estimated by the government.

Like what you’ve read? To receive New Civil Engineer’s daily and weekly newsletters click here.