Water bosses could face up to two years in jail as Government launches crackdown

The Water (Special Measures) Bill will hand new powers to regulators to hold polluting water firms to account.

The Water (Special Measures) Bill, introduced to Parliament on Wednesday, will hand new powers to regulators to hold firms to account (Rui Vieira/PA) (PA Archive)

Water firm bosses could face up to two years in jail for obstructing regulators under sweeping new laws proposed by the Government to crack down on the pollution of England’s rivers, seas and lakes.

The Water (Special Measures) Bill, introduced to Parliament on Wednesday, will hand new powers to Ofwat and the Environment Agency to take action on companies damaging the environment and failing customers.

The Government said the current enforcement system is insufficient to hold firms accountable for widespread illegality in the sector, citing that only three individuals have been criminally prosecuted by the Environment Agency without appeal since privatisation.

Under the Bill, harsher penalties for law-breaking will be introduced, including jail sentences of up to two years for executives who fail to cooperate or obstruct Environment Agency and Drinking Water Inspectorate investigations.

The burden of proof in civil cases will be lowered so that the Environment Agency can bring forward criminal charges against bosses more easily.

Regulators will also be empowered to ban bonus payments to water bosses if they fail to meet high standards to protect the environment, their consumers and their company’s finances.

Years of under-investment by the privately-run firms combined with ageing water infrastructure, a growing population and more extreme weather caused by climate change have seen the quality of England’s rivers, lakes and oceans plummet in recent years.

Sewage spills have contributed to a situation in which no single river in England is considered to be in good overall health, and beauty spots including Windermere in the Lake District have been polluted.

Some water utilities are also creaking under high levels of debt or face criticism over dividends to shareholders and executive bonuses.

The new Labour Government has already announced initial measures to tackle pollution but this is its first major move to deliver on its manifesto pledges to reform the broken water system.

It comes as part of plans for a broader reset of the sector over this parliament, including legislation to speed up sewage infrastructure upgrades and to address how the water industry is run so that it can still attract investment and talent, officials indicated.

Environment Secretary Steve Reed said: “The public are furious that in 21st century Britain, record levels of sewage are being pumped into our rivers, lakes and seas.

“Under this Government, water executives will no longer line their own pockets whilst pumping out this filth.

“If they refuse to comply, they could end up in the dock and face prison time.”

Under the proposed laws, regulators will be able to issue severe and automatic fines without having to direct resources to lengthy investigations, the Government said.

Currently, the regulators cannot impose fixed financial penalties for most offences and the current maximum fine is just £300, meaning it is not cost effective for them to penalise frequent, more minor offences.

The legislation will also require independent monitoring of every sewage outlet and the reporting of discharges within the hour of the initial spill.

Currently, some 14,000 storm overflows across England are monitored so that any discharge of untreated sewage during periods of heavy rain can be reported.

However, water firms will now be required to fully monitor the 7,000 emergency overflows, which are only permitted to discharge raw sewage as a last resort from the network in the event of issues such as power outages or pump failures.

This Bill strengthens our powers and will help us drive transformative change in the water industry so that it delivers better outcomes for customers and the environment

David Black, Ofwat

The firms will then be required to publish real-time data for all emergency overflows to ensure transparency and alert the public.

To ensure regulators are properly funded, the Bill will expand powers for the watchdogs to recover costs from water companies for enforcement action taken in response to their failings.

Ofwat will also be required to set rules that ensure companies appoint directors and chief executives, and allow them to remain in post, only when they meet the highest standards of “fitness and propriety”.

Elsewhere, there will be a new statutory requirement for water companies to publish annual pollution incident reduction plans that outline the steps they are taking to address pollution incidents.

Alan Lovell, chair of the Environment Agency, said the regulator welcomed the Government’s ambition to drive through “much-needed” reform.

“The Bill will give us, as regulator, more power to protect our precious water quality and resources, hold water companies to account and ensure the polluter pays,” he said.

David Black, chief executive of Ofwat, said: “This Bill strengthens our powers and will help us drive transformative change in the water industry so that it delivers better outcomes for customers and the environment.”

This looks to be a job half done by the Government

Tim Farron, Liberal Democrat environment spokesman

A Water UK spokesman said: “We agree with the Government that the water system is broken. Fixing it requires the Government to deliver the two things which it has promised: fundamental regulatory reform and speeding up investment.

“Ofwat needs to back our £105 billion investment plan in full to secure our water supplies, enable economic growth and end sewage spilling into our rivers and seas.”

Mike Keil, chief executive of the Consumer Council for Water (CCW), said: “Our research shows consumer trust in the water sector has been badly fractured by concerns about the environment, which is why we welcome the measures laid out by the UK Government to ensure there are more serious consequences for water companies if they harm our rivers, lakes and seas.”

“These changes will complement the work we’re already doing to help transform the culture of water companies, so they are focused on providing the best possible service for their customers.”

Responding to the Bill, Charles Watson, chair of River Action, said: “It is obviously a relief to finally see the true horrors of years of incessant pollution and the accompanying abject failure of our regulators to do anything about it being candidly acknowledged by our government of the day.”

But he added that the “few one-off actions” announced are not alone going to fix the underlying causes of water pollution.

“It is imperative that this commitment to supplement today’s small steps with much more fundamental action is now brought forward with real vigour and urgency,” he said.

The Tories claimed Labour were “attempting to pass off measures implemented under the Conservatives” as their own, pointing to a ban on bonuses for water company bosses whose companies who commit serious breaches as an example.

Shadow environment minister Robbie Moore said: “It was the Conservatives that introduced 100% monitoring for storm overflows and set out a plan to transform our infrastructure to ensure safer, cleaner waters.”

Liberal Democrat environment spokesman Tim Farron meanwhile said the Government’s plan “simply doesn’t look up to scratch to tackling the sewage scandal”.

He added: “This looks to be a job half done by the Government, now Liberal Democrat MPs will push them to go much further and faster in ending this scandal once and for all.”