Prison sentences should be handed out to chief executives and board members of water and sewage companies, and much higher fines should be imposed, for serious and deliberate pollution incidents in response to declining standards, the Environment Agency has said.
The call comes alongside a report from the regulator that shows that the performance of water and sewage companies last year fell to the lowest level the regulator has seen.
Measured against a four-star rating, most of the companies' performance declined under the Environmental Performance Assessment (EPA), which has been conducted annually since 2011. And despite continuing enforcement action against those breaching environmental laws, water companies remain undeterred by the penalties currently being issued by the courts, the regulator suggested.
Following a regular 5-yearly review of the EPA process, the Environment Agency has deliberately tightened its metrics to set stretching targets that will push companies to meet regulatory requirements and its expectations.
But the regulator said that not only did most companies fail to meet the new higher standards, most of them saw their performance deteriorate against the previous standards.
Southern Water and South West Water were handed a one-star rating, while four companies were rated two stars - meaning they require significant improvement.
According to the data, seven of England’s nine water companies had an increase in serious incidents compared to 2020. In total, there were 62 serious incidents for 2021 – the highest since 2013.
There has also been no overall improvement for several years in total incident numbers or compliance with conditions for discharging treated wastewater.
In response to its findings, the agency called for:
- Courts to impose much higher fines for serious and deliberate pollution incidents – although the amount a company can be fined for environmental crimes is unlimited, the fines currently handed down by the courts often amount to less than a chief executive's salary.
- Prison sentences for chief executives and board members whose companies are responsible for the most serious incidents.
- Company directors struck off so they cannot simply move on in their careers after illegal environmental damage.
Emma Howard Boyd, Chair of the Environment Agency, said: "It's appalling that water companies' performance on pollution has hit a new low."
She added: "Company directors let this happen. We plan to make it too painful for them to continue like this. The amount a company can be fined for environmental crimes is unlimited but fines currently handed down by the courts often amount to less than a chief executive's salary.
"We need courts to impose much higher fines. Investors should no longer see England's water monopolies as a one-way bet."
A Defra spokesperson said: "This report shows that water companies are ignoring their legal responsibilities. Water company chiefs cannot continue to make huge profits whilst polluting our waters."
The spokesperson added: "We will not tolerate this behaviour and we will take robust action if we don't see urgent improvements. We are the first government to set out our expectation that water companies must take steps to significantly reduce storm overflows and earlier this year we consulted on a comprehensive plan to tackle the adverse impact of discharges from storm overflows."
Since 2015 the Environment Agency's prosecutions against water companies have secured fines of over £138m. In 2021 the Environment Agency concluded seven prosecutions against water and sewerage companies with fines of £90m, two of £4m, £2.3m, £1.5m, £150,000 and £540,000. Five prosecutions have already concluded in 2022 with fines of £300,000, £240,000, £233,000, £50,000 and £18,000, and more prosecutions are progressing in court.
Responding to the report, the Director of Quality and Environment at Southern Water – one of the companies given a one-star rating – said: “Our performance last year was not good enough – we are committed to doing better for our customers.”
He added: “We know we have a long way to go, however new investment and new ways of working, including major upgrades to our control centre and pumping stations, and the introduction of tens of thousands of digital monitors across our network, are already making a difference and delivering positive change.
“We continue to be open and honest about our environmental performance, and continue to work extremely closely with the Environment Agency and other stakeholders to improve and protect our environment.”
South West Water has also been approached for a comment.