Environment Secretary commits to take further action against water bosses over pollution
Government’s first ever joint regulator report leaves nowhere to hide for water companies
The Environment Secretary is set to take further action against failing water companies, with tougher consequences for executives at persistently underperforming firms, and demanding action on the worst pollution incidents.
Intending to shine a harsh light on these serious incidents, Ministers will visit a number of sites to interrogate companies’ responses. Dame Angela Eagle will also be looking at options to strengthen the ban on executives’ bonuses.
It follows the first ever joint report from the Environment Agency, Natural Resources Wales, the Drinking Water Inspectorate and Ofwat, which leaves nowhere for underperforming companies to hide.
The watchdogs have pooled their data for the first time, closing loopholes that let failing firms point to a good score from one regulator while falling short with another. It marks another significant step towards a more integrated, joined-up approach to water regulation, ahead of the creation of a single new water regulator for England and Wales.
The joint report is published alongside the Environment Agency’s Environmental Performance Assessment Report, which starkly demonstrates that pollution incidents remain far too high, with only one company achieving the top four-star rating.
There were six Category 1 incidents during 2025, each representing an unacceptable failure by water companies to protect people and the environment. These sites will be prioritised for visits by the Environment Secretary.
In addition, the Environment Secretary will set out a clear set of improvement actions for each water company. These will include tackling leakage from pipes, delivering sustained reductions in pollution incidents, and improving customer satisfaction scores.
One-star ratings automatically mean that bonuses will be blocked for executives at Southern Water, Thames Water, South West Water and Yorkshire Water – thanks to new rules which took effect in 2025.
The same applies to any water company with a Category 1 pollution incident – these are incidents which have a major, serious, persistent and/or extensive impact or effect on the environment, people and/or property.
While these shocking failures will automatically trigger bonus bans for six Chief Executives under the existing rules, the Environment Secretary recognises that executives are continuing to be rewarded in spite of persistent underperformance. Further details on strengthening the bonus ban are expected to be set out in the coming weeks.
This comes after the Environment Secretary took the unprecedented step of clearly setting expectations for the next Price Review, warning companies they must deliver better value for money for struggling households.
Environment Secretary Dame Angela Eagle said:
"Water companies have let the public down time and time again, and today’s report is further proof that root-and-branch reform cannot wait.
"People are sick of excuses. They want clean rivers, lakes and seas, and the certainty that every pound they pay is being invested wisely, not wasted.
"I am demanding answers from the companies that are failing, and I’ll be shining a spotlight on the worst offences around the country. We are getting on with the job of building a water system that finally works for the people who pay for it."
By pooling their data, the regulators are closing the gaps between environmental and financial regulation, giving the public a fuller and more transparent picture of how water companies are performing than ever before, and making it harder for failing companies to point to a good score from one regulator while falling short with the other. The aim is simple – greater transparency, tougher collective scrutiny, and restored public trust in an industry that has tested it badly.
Ministers will meet the chief executives of underperforming companies to demand answers to both performance and updates the delivery of key infrastructure improvements.
The government has made clear that nothing is off the table when it comes to holding underperforming companies to account. Where companies fail to deliver, regulators will not hesitate to use the full range of enforcement powers available, including fines and prosecutions.
Government has already delivered the biggest increase in regulators’ powers in a decade through the Water (Special Measures) Act 2025, the introduction of rapid automatic penalties and is going further and faster to strengthen powers through the strengthened Water Bill to build on this to ensure persistent failure carries more consequences.
From: Department for Environment, Food & Rural Affairs and The Rt Hon Dame Angela Eagle DBE MP