Bosses of water companies who obstruct watchdog investigations could face up to two years behind bars, as the government unveils tough new laws to ramp up enforcement.
The Water (Special Measures) Bill was introduced in Parliament on Wednesday and will grant sweeping new powers to the Environment Agency (EA), the Drinking Water Inspectorate and Ofwat to take action against rogue firms polluting waterways.
Tougher punishments for law-breaking will be established, including up to 24-month prison sentences for top executives who fail to cooperate with regulatory investigations.
Civil case burden of proof is set to be lowered, to empower the EA to bring charges more easily, and regulators will have stronger abilities to ban bonus payments if firms cannot meet stringent standards on consumer, financial and environmental protections.
It comes amid major public upset over sewage spills in rivers, lakes and seas, despite rising bills, and the risk of collapse for debt-laden Thames Water, which is in special measures.
The firm previously warned it could be set to run out of cash within a year, and was recently barred from billing customers for its pensions shortfall.
But the firm did today secure government backing for a new reservoir in Oxfordshire.
The current system, the government argued, is too weak to hold the sector to account for illegality, with only three individuals criminally prosecuted without appeal since privatisation.
Environment secretary Steve Reed said: “I am announcing immediate action to end the disgraceful behaviour of water companies and their bosses.
“The public are furious that record levels of sewage are being pumped into our rivers, lakes and seas. After years of neglect, our waterways are now in an unacceptable state.”
He added: “Water executives will no longer line their own pockets whilst pumping out this filth. If they refuse to comply, they could end up in the dock and face prison time.”
And he vowed to announce wider reforms to the sector, with further legislation to transform the running of the industry and the delivery of sewage infrastructure upgrades expected.
He will address industry representatives, investors, environmental groups and campaigners in a speech at Thames Rowing Club on Thursday to outline his plans.
Other measures in the bill, which the government says delivers on key Labour manifesto commitments, include severe and automatic fines for a range of offences and independent monitoring of every sewage outlet, with real-time data for all emergency overflows.
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Firms will also have to pay the costs of enforcement if they are found to be failing, and Ofwat will set rules around fitness and propriety in relation to appointing directors and CEOs.
It comes after the government previously announced new ring fencing of funding for vital infrastructure upgrades – which must be refunded to customers if not spent on investment.
EA chairman Alan Lovell said the move gave the watchdogs “more power to hold water companies to account and ensure the polluter pays”.
“Stronger penalties will deter illegal behaviour and allow us to close the justice gap.”
While Ofwat chief executive David Black said the bill could result in “transformative change in the water industry so that it delivers better outcomes for customers and the environment”.
He added: “We welcome the opportunity to establish new rules on water company remuneration, governance and strengthening customer involvement in decision-making.”
But shadow environment minister Robbie Moore criticised the government for “playing politics”, arguing Labour were “attempting to pass off” Conservative measures “like banning bonuses for bosses whose companies commit serious breaches – as their own”.
He added: “It was the Conservatives that introduced 100 per cent monitoring for storm overflows and set out a plan to transform our infrastructure to ensure safer, cleaner waters.”
A Water UK spokesman said: “We agree with the government that the water system is broken. Fixing it requires the government to deliver the two things which it has promised: fundamental regulatory reform and speeding up investment.
“Ofwat needs to back our £105bn investment plan in full to secure our water supplies, enable economic growth and end sewage spilling into our rivers and seas.”
Mike Keil, chief executive of the Consumer Council for Water (CCW), said: “Consumer trust in the water sector has been badly fractured by concerns about the environment.
“These changes will complement the work we’re doing to help transform the culture of water companies, so they are focused on providing the best possible service for their customers.”
And Charles Watson, chair of River Action, said the news was “obviously a relief” but stressed that a “few one-off actions” would not fix the underlying causes of water pollution.
Thames Water were contacted for comment but directed City A.M. to WaterUK’s statement.