The Environment Secretary will today tell water companies that no-one should profit from illegal behaviour and calls on water company bosses to take responsibility for inexcusable breaches damaging the environment. Water bosses are therefore set to be banned from receiving bonuses if a company has committed serious criminal breaches.
Ofwat will be taking forward a consultation to define the criteria for a ban. That could include successful prosecution for a Category 1 or 2 pollution incident – such as causing significant pollution at a bathing site or conservation area – or where a company has been found guilty of serious management failings.
The ban would apply to all executive board members and Chief Executives and would be expected to come into effect later this year, subject to consultation. If taken forward, Ofwat would implement the measures by changing the conditions of water company licences. For water companies in England this would be done using the powers given to the regulator through the Environment Act 2021.
These measures form part of the Government's wider strategy to tackle water pollution, something I know my constituents in North Yorkshire care greatly about. I have previously met with the Environment Agency, Yorkshire Water and DEFRA as well as local environment groups to discuss the health and cleanliness of our local rivers and I'm pleased this Government is taking decisive action.
Environment Secretary Steve Barclay said:
“No-one should profit from illegal behaviour and it’s time that water company bosses took responsibility for that. Tougher action is needed to address poor performance by water companies, which is why I am pleased Ofwat is going further today on bonus payments. In cases where companies have committed criminal breaches there is no justification whatsoever for paying out bonuses. It needs to stop now.
“I will shortly be setting out more detail on further steps to clean up our waters, including reducing the reliance on water company self-monitoring in order to hold them to account and drive the improvements we all need to see.”
The change follows the Environment Secretary’s recent meeting with water company chief executives where he set out his expectations on performance – and also builds on Ofwat’s announcement last year to tighten restrictions on bonuses.
The policy would be expected to apply to FY24/25 bonuses from April onwards – but the government is clear that companies should follow these proposed new criteria for FY23/24 bonuses on a voluntary basis.
Storm Overflows Action
- The current volume of sewage being discharged into our water is unacceptable. The government is taking bold action to tackle the use of storm overflows and hold water companies to account.
- The government’s Storm Overflow Discharge Reduction Plan sets stringent targets to reduce discharges from every single storm overflow in the country. It will drive the largest infrastructure programme in water company history - £60bn over the next 25 years.
- Our Plan prioritises for early action bathing waters and areas of high ecological importance. It will eliminate ecological harm from all storm sewage discharges by 2050.
- On 25 April, Government announced a legally binding target to crackdown on sewage spills from storm overflows.
- Where water and sewerage companies have broken the law, the regulators will not hesitate to take robust action, including criminal prosecution.
Percentage change of success/Progress already achieved
- Government have increased the number of storm overflows monitored across the network from 7% in 2010 to 100% now monitored.
- Since 2015, the Environment Agency has concluded 59 prosecutions, securing record fines of over £150 million against water companies.
- The Government has legislated to introduce unlimited penalties on water companies who breach their environmental permits and expand the range of offences to which penalties can be applied.
- The Environment Agency and Ofwat have launched the largest criminal and civil investigations into water company sewage discharges ever, at over 2200 treatment works, following new data coming to light as a result of increased monitoring.
Pounds being spent/committed
- Water company investment in environmental improvements has been scaled up to £7.1 billion over the period 2020-25. This includes:
- £3.1 billion in storm overflow improvements - £1.9 billion on the Thames Tideway Tunnel as well as over 800 storm overflow improvements.
- Our strict targets will drive water companies to deliver their largest ever infrastructure programme - £60 billion capital investment over 25 years.
- We have boosted funding for the Environment Agency with £2.2 million per year specifically for water company enforcement activity.
- On 16 May, following the approval of an £11.3 million funding increase from government, Ofwat announced that its enforcement capacity would be trebled.
- As part of the Plan for Water, £1.7bn of accelerated funding is committed to tackle storm overflows.
