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Water Companies May Face Unlimited Fines Under Government’s Plan For Water

April 2023
Michael Salau, Priya Thakrar and Rebecca D'Souza

The Department for Environment, Food & Rural Affairs (“DEFRA”) has recently announced the Government’s new Plan for Water which aims to deliver a healthy water environment and a sustainable supply of water for people, businesses and nature.

DEFRA have stated that pollution in rivers has significantly reduced from 1990 and there is now 80% less phosphorus and 85% less ammonia. However, in light of increased concerns regarding water pollution, and several high-profile water pollution events reported in the news recently, the Government have sought to address sources of pollution through tighter regulation.

In October 2022, the Environment Secretary announced proposals to raise penalties for water companies found to be polluting the environment from £250,000 to £250 million. We wrote about this announcement in our article here.

However, the Plan for Water proposes additional measures to hold water companies and other responsible parties to account. These measures include the following:

  1. Increase the Environmental Agency’s (“EA”) enforcement ability by increasing their budget by an extra £2.2 million a year.
  2. Changing the law to increase the maximum amount the EA can penalise water companies. The Government’s preferred proposal is to allow the EA to issue unlimited fines, however a consultation is currently ongoing.
  3. Expanding penalties to include a wider range of environmental offences.
  4. Review permit charges on water companies to fund more inspections and set new targets for the EA’s oversight of water companies.
  5. Work with the Water Services Regulation Authority (Ofwat), to change water company licence conditions without consent, and link water company dividend payments to environmental performance.
  6. Work with Ofwat to require improvements, where necessary, to the oversight of water company performance at executive and board level.

DEFRA has also announced a new Water Restoration Fund which would be made up of fines and penalties imposed on water companies. The money raised will fund a wide range of projects to improve the water environment, water management, and restore protected sites. Currently, the money collected from fines and penalties is returned to HM Treasury.


The Government’s Plan for Water demonstrates that it is taking the risk of water pollution seriously and wants to ensure that pollution prevention is of primary importance for water companies. Latest figures from the EA have shown a total of 301,081 sewage spills in 2022 and although this is a decrease of 19% from 2021, it remains clear that the level of water pollution continues to reduce biodiversity and poses a dangerous risk to human health.

It remains to be seen if the Plan for Water will be executed effectively to reduce water pollution further. The plan has been criticised for being insufficient, with Labour previously announcing it would make monitoring all sewage outlets mandatory and impose automatic fines for sewage spills, instead of relying on EA’s enforcement capabilities. Nonetheless, it is clear that the regulatory environment for water offences is set to change with increased enforcement and harsher penalties being placed at the forefront of the Government’s environmental agenda.

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