Tougher regulation as data shows water companies underperforming

The Environment Agency has today (23 July 2024) published its annual report on the environmental performance of England’s nine water and sewerage companies during 2023. 

The report shows an improvement in star ratings under the Environmental Performance Assessment (EPA), but the majority of companies continue to underperform.

The EPA is the only 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.

The aim of the report is to highlight where improvement in water company performance is required and push for continuous improvement across the sector. As the regulator the Environment Agency constantly tightens EPA targets. This has been fundamental in driving better performance, however current performance remains well below expectations. 

This year, five water companies are rated as requiring improvement (2 stars), one company is rated as good (3 stars) and three companies achieved 4 stars.

• Severn Trent Water – 4 stars, the same as the previous year
• United Utilities – 4 stars, up from 3 stars
• Wessex Water – 4 stars, up from 2 stars
• Northumbrian Water – 3 stars, the same as the previous year
• Anglian Water – 2 stars, the same as the previous year
• Southern Water – 2 stars, the same as the previous year
• South West Water – 2 stars, the same as the previous year
• Thames Water – 2 stars, the same as the previous year
• Yorkshire Water –2 stars, down from 3 stars

In response to the report findings, the Environment Agency has set out further plans to transform its regulation of the water industry.

Environment Agency Chair Alan Lovell said: 

“For the nation to have cleaner rivers and seas, water companies must take responsibility to understand the root cause of their problems.

“It is promising to see some companies starting to accept their responsibilities, but it is evident that the pace of improvement continues to fall short. 

“We frequently tighten standards to drive better performance and we have been clear that we expect all companies to achieve, and most critically sustain, better environmental performance. 

“As part of this we are taking forward our biggest ever transformation in the way we regulate, recruiting up to 500 additional staff, increasing compliance checks and quadrupling the number of water company inspections by March next year. Through additional resources, tightened EPA metrics and new legal powers, we will be playing our part to ensure the industry steps up on the environment.”

This year’s report also found that: 

• The number of serious pollution incidents increased from 44 in 2022 to 47 in 2023, remaining unacceptably high despite expectation to trend towards zero. Over 90% of these were caused by four companies (Anglian Water, Southern Water, Thames Water and Yorkshire Water), resulting in a polarised performance picture across the sector.
• Total pollution incidents from sewerage and water supply assets increased to 2,174 – the second consecutive annual increase and highest number recorded since 2019.
• Compliance with numeric permit conditions for discharging treated wastewater is not improving, with 45 sites found to be non-compliant.

The results make clear that companies need to go further and faster to improve their environmental performance. 

The Environment Agency is challenging how things have been done in the past to address water industry performance through increasing its capacity and improving capability. Having secured an additional £55m of funding from government and water company permits, the Environment Agency are investing in a bigger specialised enforcement workforce and setting aside £15 million for new digital and monitoring systems to identify the root cause of issues.

In addition, the number of water company inspections will be quadrupled by the end of March 2025 to 4,000 and increased to 10,000 inspections the following year. The evidence gathered through these inspections will inform future performance assessments, investment plans and proactive enforcement. 

Since 2015 the Environment Agency has secured 63 prosecutions against water companies, securing fines of over £151 million. In 2023 the Environment Agency concluded 4 prosecutions against 4 different water companies, with fines of more than £6.7 million. 

The full report is available to read on gov.uk

ENDS

Notes to editors

• Since 2011 the EPA and wider reporting have provided an independent and objective comparison of water and sewerage companies’ performance. The EA constantly tighten EPA targets to improve standards. If for example, we had applied 2023 targets since 2011, the number of stars would have risen from 11 to 25 over that period. Whilst this shows some improvement over that time, current performance is still a long way from meeting our expectations. Later this year, we will further review the EPA to strengthen and broaden the metrics from 2026.