Today, the Environment Agency will publish its environmental performance assessment (EPA) for 2024 and Ofwat will publish their water company performance report (WCPR) for the 2024-25 financial year.
These assessments are being brought together for the first time, as a first step to join up economic and environmental regulation of the water industry ahead of the formation of the single water regulator.
Ofwat’s report shows a mixed picture, with improvement in some areas such as internal sewer flooding and increasing the number of vulnerable customers included on the priority services register. However, both reports show that pollution and customer experience performance remain concerning. Polluting our waterways is unacceptable and we are taking decisive action. The increased transparency and accountability in the sector is revealing the full picture. The sector must now step up to deliver improvements for the benefit of customers and the environment.
Since July last year, this Government have introduced the landmark Water (Special Measures) Act which provides the most significant increase in enforcement powers to the regulators in a decade, giving regulators the teeth they need to take tougher action against water companies. The Act has started to drive meaningful improvements in the performance and culture of the water industry. It has banned unfair bonuses, and Government have ensured money is ringfenced for investment.
A record 87 investigations into water companies have been launched in England since the election, as part of a crackdown on sewage dumping. The Environment Agency has increased its capacity for inspections of water company assets fourfold, with over 4,000 inspections completed from April 2024 to March 2025. As of April 2025, the Environment Agency has increased its target for inspections to 10,000 inspections per year as part of the Government wider focus on holding companies to account and improving our water environment.
To fund their tougher inspections and enforcement regime, the Environment Agency has increased its water quality charges to £149 million from 2025-26, ensuring water companies, not taxpayers, pay the cost of regulating the sector. These charges include permit charges on water companies for inspections and the new enforcement levy, which will enable Environment Agency to recover the costs of their enforcement activity.
Since the start of this year, water companies have been required to publish data related to discharges from all storm overflows within one hour of the discharge beginning. In addition to this, the Water (Special Measures) Act introduced a new duty for water companies to publish data related to discharges from all emergency overflows within one hour of the discharge beginning. This will create an unprecedented level of transparency, enabling the public and regulators to see where, and how often, overflows are discharging, and hold water companies to account.
The Government also updated the guaranteed standards scheme (GSS) regulations resulting in an up to tenfold increase for customer compensation when they have been failed by water companies. A key step in the Government mission to reform the water sector, the move marked the first uplift in compensation rates in 25 years, recognising the urgent need to bring payments in line with inflation and properly compensate households for poor service.
And yesterday we kick-started the process of introducing new automatic penalties, which will deliver swift action if water companies break the rules. These penalties will streamline the penalty process for offences that can be identified and evidenced quickly, delivering a transparent and robust enforcement regime that drives real change.
On 23 October 2024, the Government also asked Sir Jon Cunliffe to lead the biggest review of the water sector since privatisation in 1989. Following Sir Jon’s final report, the Government announced the intention to establish a single regulator for water, to improve regional planning, and to establish a new statutory water ombudsman. The Government also intend to end operator self-monitoring, transferring oversight to the new regulator and transitioning to open monitoring to increase transparency and help restore public trust. To support transition to this new regime, we announced our intention to update ministerial guidance and direction to Ofwat and the Environment Agency and will publish a White Paper, responding to the independent review.
The reports published today show the full extent of the problem, and we have already taken action to reform the water sector. While we cannot expect change to happen overnight, these measures, alongside a record £104 billion investment in water infrastructure, means together we will clean up our rivers, lakes and seas.
[HCWS985]