The government is preparing to take further action against underperforming water companies, introducing tougher consequences for executives at persistently failing firms and demanding immediate action on the worst pollution incidents. Ministers plan to visit a number of sites to scrutinise companies’ responses to serious incidents. Options to strengthen the ban on executives’ bonuses are also being explored.
This initiative follows the publication of the first-ever joint report by the Environment Agency, Natural Resources Wales, the Drinking Water Inspectorate, and Ofwat. By pooling their data, these regulators have closed loopholes that previously allowed underperforming companies to present a favourable score from one regulator while failing another. This marks a significant step towards a more integrated regulatory approach, ahead of the planned creation of a single water regulator for England and Wales.
The joint report, published alongside the Environment Agency’s Environmental Performance Assessment Report, highlights that pollution incidents remain unacceptably high, with only one company achieving the top four-star rating. Six Category 1 incidents occurred during 2025, each representing a significant failure by water companies to protect people and the environment. These sites will be prioritised for visits by the Environment Secretary.
In addition, the Environment Secretary will outline specific improvement actions for each water company. These will focus on tackling leakage, achieving sustained reductions in pollution, and enhancing customer satisfaction. Companies receiving a one-star rating will automatically face blocked bonuses for their executives, a rule that took effect in 2025. This also applies to any company with a Category 1 pollution incident, defined as having a major, serious, persistent, or extensive impact on the environment, people, or property.
Environment Secretary Dame Angela Eagle stated, "Water companies have let the public down time and time again, and today’s report is further proof that root-and-branch reform cannot wait. People are sick of excuses. They want clean rivers, lakes and seas, and the certainty that every pound they pay is being invested wisely, not wasted. I am demanding answers from the companies that are failing, and I’ll be shining a spotlight on the worst offences around the country. We are getting on with the job of building a water system that finally works for the people who pay for it."
The government has stressed that all options are on the table to hold underperforming companies accountable. Regulators are prepared to use the full range of enforcement powers, including fines and prosecutions, where companies fail to deliver. The government has already strengthened regulatory powers through the Water (Special Measures) Act 2025 and is further enhancing them with the strengthened Water Bill to ensure persistent failure carries more significant consequences.
