When the general election was held in the summer, the issue of river pollution caused by sewage spills was a hot topic. Most of the parties had policy proposals for doing something about it.
In the event, Labour’s victory meant it would fall to a new government to bring its policies to bear on the issue, with a manifesto pledge to put failing water companies under special measures to ensure they are meeting pollution targets, giving water regulator Ofwat stronger enforcement powers and bringing criminal charges against persistent offenders.
Of course, doing that requires legislation to increase the powers and impose new penalties, so any new laws will take time to come into force. Nonetheless, a bill was promised in the King’s Speech, which means water companies will be on notice that they need to be ready.
Water users wondering whether to switch providers may judge companies on this very point. After all, it does not say much in favour of any firm if it waits until it is compelled by stiffer laws and the threat of more severe penalties to get its act in order.
Ofwat Flexes Its Existing Muscles
Of course, that is not to say that firms don’t face sanctions under the current rules. In August, Ofwat announced a total of £168 million in penalties for sewage dumping in rivers, which would be imposed on three companies: Thames, Yorkshire and Northumbrian Water.
Thames was by far the worst offender, collecting a £104 million fine compared with £47 million for Yorkshire and £17 million for Northumbrian.
This may come as no surprise, with Thames gaining one of the worst reputations for pollution at the very time when the company is deep in financial trouble. Notwithstanding that the river it takes its name from is now better protected in London thanks to the opening of the Thames Tideway Tunnel (the so-called super sewer), problems continue to mount.
The State Of Thames Water
Half-year results (up to 30th September) have just been published, showing that Thames is at least making some progress in improving its dire financial situation, although it still needs to confirm the investment needed to get it out of its deep debt, which was up again by seven per cent to £16 billion. The company is not yet sure of avoiding bankruptcy.
While leaks are at an all-time low, river pollution incidents soared by 40 per cent, something Thames attributed to record rainfall. The Thames Tideway tunnel should stop this from happening in London, providing more capacity to deal with the extra water volumes that occasionally prove beyond the Victorian sewers, built when the population was smaller.
However, that does not resolve the problem of spillages upstream from London and in the tributaries of the region, all of which will enrage those who face proposed higher water bills to pay for the necessary infrastructure improvements.
In the case of Thames, the fact that it could run out of money in 2025 and that any new investment requires approval from Ofwat means customers thinking of going elsewhere might have the decision taken out of their hands anyway.
Thames Not The Only Offender
Elsewhere, however, customers may have a more nuanced decision to make, faced by water companies that are neither performing so badly on pollution nor in such a poor financial state as Thames, but still doing badly nonetheless.
Indeed, the companies fined last summer were just the tip of the iceberg. A few weeks before that was announced, Ofwat served enforcement notices on Dŵr Cymru Welsh Water, Hafren Dyfrdwy, Severn Trent and United Utilities. All the other water companies in England and Wales had been served such notices in 2022.
As Ofwat chief executive David Black said at the time: “The fact that Ofwat now has enforcement cases with all 11 of the wastewater companies in England and Wales demonstrates how concerned we are about the sector’s environmental performance.”
He added that £10 billion of investment was due this year with a target of reducing overflow spills by 44 per cent.
The subsequent fines on three companies were a sign that firms would not get off scot-free for ongoing failures. The question commercial customers will ask is whether that is enough, or whether they should vote with their feet.
Once the tougher rules come in, it will become clear which water providers are up to the job of meeting the challenge of managing water infrastructure when it needs improvements to deal with wetter weather and changing populations. But in many cases, it will not be necessary for customers to wait until then to make a decision on changing suppliers.
