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The new Labour government is drawing up plans to put failing water companies into “special measures” to force them to clean up Britain’s waterways, a move that could see new legislation as early as next week.
Steve Reed, the new environment secretary, has drawn up measures including banning bonuses for executives of heavily polluting water companies and imposing criminal charges on the worst lawbreakers, while introducing tougher monitoring of sewage overflows.
The plans come as water regulator Ofwat prepares to announce a steep increase in household bills on Thursday. Water companies have asked for £100bn over the five years to 2030 to run their businesses, almost half of which would be used to deliver infrastructure improvements amid a public outcry over sewage pollution.
Allies of Reed refused to say whether new legislation for the “special measures” proposals would be in the King’s Speech next week.
But industry figures believe the legislation is likely to be included in next week’s package of new laws.
The most eye-catching proposal is giving Ofwat new powers to block the payment of bonuses to executives of heavily polluting water companies.
Under the new regime criminal charges could be brought against the most persistent offenders, as well as the introduction of “automatic and severe fines” for wrongdoing by water companies.
Meanwhile the government would introduce independent monitoring of every combined sewage overflows (CSO), which release untreated effluent and stormwater into rivers, lakes and coastal waters.
Although all the CSOs have monitors installed, they measure the frequency of overflows rather than the quantity, with water companies self-reporting the data to the Environment Agency.
Reed has summoned the heads of all 16 water companies to a meeting at the headquarters of Defra, the environment department, soon after the Ofwat announcement on Thursday morning to discuss the regulator’s decision on bills.
Although Ofwat is not expected to agree to all of the companies’ demands for bill increases, the regulator is still expected to allow a sharp jump in water prices, according to figures in Whitehall and the industry.
Thames Water, Britain’s biggest water company, has warned that without a generous settlement from Ofwat it will struggle to raise the financing it needs for its financial survival.
There was fresh anger this week as Thames’s chief executive Chris Weston, who joined in January, took a £195,000 bonus for the three months to the end of March.
It is not clear how Labour’s determination to crack down on the industry will tally with a separate Ofwat proposal for a new “recovery regime” for the most stressed water companies to avoid nationalisation.
This could include leniency on regulatory fines and performance targets such as reducing sewage and water leaks and outages, in exchange for more regulatory oversight for a period of up to five years, the Financial Times recently revealed.
