Water company bosses should be barred from working in the sector if their companies are responsible for serious pollution incidents, a House of Lords committee has recommended.
The Industry and Regulators Committee said it heard from CEOs, consumer groups, industry and investment experts, regulators and Environment Secretary Therese Coffey about the state of the UK’s water industry.
Peers said Ofwat, the regulator for England and Wales, has failed to ensure water companies have invested sufficiently in infrastructure and said it and the Environment Agency (EA) must do more to hold polluters to account through penalties and prosecution.
Water companies have been overly focused on maximising financial returns at the expense of the environment and their bosses should not receive substantial bonuses while their companies are polluting, the committee said.
The EA’s water and sewage review for 2021 found the environmental performance of water companies to be at its lowest level while most companies’ performance was declining.
Lord Hollick, chairman of the Industry and Regulators Committee, said: “During our inquiry, we have taken evidence from local communities and activist groups and received a considerable amount of written evidence.
“There is an overall feeling of dismay, anguish and anger from respondents about the state of our waterways and the apparent failure to get to grips with the problem.
“We are calling on regulators and the Government to consider our report’s findings and recommendations and act fast before we are all left up sewage creek.”
The committee gave the Government a host of recommendations which include giving adequate funding to Ofwat and the EA to chase polluters, accelerating the planning process for reservoirs and publishing a National Water Strategy to set out expectations of water quality and resilience of water supplies.
They also said Ofwat should be granted extra powers to prevent directors from working in the sector if their companies are responsible for serious pollution.
Ofwat said on Monday it wants to block payments to shareholders of water companies if “they would risk the company’s financial resilience”.
It said the changes will lower the risk to customers and the environment because of a company’s poor financial health.
?At Ofwat we know the public want water companies to provide good customer service, protect the environment and to have sound finances. That’s why we will use new powers to stop the payment of dividends if they would risk a company’s financial resiliencehttps://t.co/rr61d0xtf4 pic.twitter.com/iqkFq6BDKp
— Ofwat (@Ofwat) March 20, 2023
Clean river campaigner Feargal Sharkey said of the committee: “They’ve just now confirmed formally what any number of people have been trying to tell Government and the regulators – that the whole system has become completely dysfunctional.
“There has been a massive lack of political oversight and direction and steer in support to the regulators.
“The regulators themselves simply spend an awful lot of time going off at completely opposite tangents to one another and, in the meantime, the water industry games the whole system to themselves.”
Martin Salter, head of policy at the Angling Trust, said: “Ofwat have deliberately choked off much-needed investment in replacing leaking pipes and rising sewer mains and increasing capacity at sewage treatment works.
“They, in part, are responsible for the scandalous lack of any new reservoir building since privatisation in 1989 which is resulting in many of our precious chalk streams and other rivers literally being sucked dry.”
An Ofwat spokesman said it “fully intends” to go further in holding water companies to account and is working on its largest enforcement case, with six live investigations into six companies.
He added: “We agree that more spending is needed. At the same time we note that, over the last two years, 14 of the 17 water companies have not spent the funds they have been granted to invest in the network and some have spent less than half.
“We will continue to work with companies to ensure they deliver the change needed and meet their obligations to improve outcomes for customers and the environment.”
A spokesperson for the Department for Environment, Food and Rural Affairs said: “We’ve put the strictest targets ever on water companies to clean up our waters and worked closely with the regulator to drive tougher enforcement against underperforming and polluting companies, including clamping down on excessive cash payouts.
“That’s alongside the requirements we’ve set them to deliver the largest infrastructure programme in their history – worth £56 billion – to tackle sewage spills, but we know that more needs to be done, which is why we will go further and faster to hold companies to account in delivering for customers and our environment.”
