Thames, Yorkshire and Northumbrian Water will be fined a record £168m between them for a “catalogue of failure” over illegal sewage discharges into rivers and the sea after the industry regulator’s biggest investigation yet.
The water regulator for England and Wales, Ofwat, has proposed penalties of £104m for Thames, £47m for Yorkshire and £17m for Northumbrian for failing to manage their wastewater treatment works and networks, including their operation of storm overflows. It said it was the first of more crackdowns to come.
Ofwat found all three companies had “routinely” released sewage into rivers and seas, failing to ensure that discharges of sewage from storm overflows occur only in exceptional circumstances, which had “resulted in harm to the environment and their customers”.
The watchdog also found a strong correlation between high spill levels and operational issues at wastewater treatment sites; a failure to upgrade assets; and said companies had been “slow to understand the scope of their obligations relating to limiting pollution from storm overflows and failed to ensure that they had in place the necessary information, processes and oversight”.
High levels of illegal sewage discharges correlated with treatment works that had not been properly upgraded or maintained by the water companies. Nearly 70% of Thames’s treatment plants had operational problems, Ofwat said, and 16% of its storm overflows were operating in breach of their permits and therefore illegally. At Yorkshire, 16% of sewage works had operational problems and 45% of its storm overflows were were in breach of their permits.
The £104m fine for Thames, which equates to 9% of the annual turnover of its wastewater operation, comes as it grapples to secure its financial future after being put into special measures by Ofwat.
The UK’s biggest water company, which has 16 million customers in London and the Thames Valley, has a £15.2bn debt mountain and has said it has enough cash to continue trading until at least May 2025. If it fails to secure fresh investment it could be placed into a special, government-handled administration.
The investigation was prompted by a public outcry over water companies breaking legal rules on when they could release raw sewage and came after evidence was presented to MPs that suggested illegal dumping was 10 times higher than the regulators realised.
In 2023, sewage spills in England increased by 54% from the previous year, according to the Environment Agency, and some people are refusing to pay their water bills in response to the sewage crisis.
The Ofwat chief executive, David Black, said: “Our investigation has shown how [the three companies] routinely released sewage into our rivers and seas, rather than ensuring that this only happens in exceptional circumstances as the law intends.
“The level of penalties we intend to impose signals both the severity of the failings and our determination to take action to ensure water companies do more to deliver cleaner rivers and seas. These companies need to move at pace to put things right and meet their obligations to protect customers and the environment.”
Steve Reed, the environment secretary, welcomed Ofwat’s action. “The unacceptable destruction of our waterways should never have been allowed – and it is right that those responsible for illegally polluting our rivers, lakes and seas face the consequences,” he said.
He added that the government would fundamentally reform the water sector, announcing first steps to clean up the industry in its special measures bill, to cut sewage pollution, protect customers and attract investment to upgrade its crumbling infrastructure, as well as promising further legislation.
Last month, Ofwat proposed that all water companies could raise bills by an average of £94 over five years to an average of £535 a year, described as “a bitter pill” by the chancellor, Rachel Reeves, that reflected “14 years of failure from the Conservatives”.
Under the proposals, companies are required to reduce spills from sewage overflows by 44% by 2030 compared with 2021 levels. Campaigners have criticised the plans, arguing that they do not go far enough to tackle sewage spills, and make customers pay twice.
Thames’s latest financial report showed the number of incidents of pollution from treatment works and the pipe network increased to 350 last year, from 331 in 2022. The rise was attributed to delays in investment to create more capacity at many of the company’s 400 ageing sewage treatment works.
Doug Parr, the director of policy at Greenpeace UK, said: “It’s good to see this rogue industry finally paying the price for years of pollution. But it is our rivers, seas and everyone who enjoys them that pay the real penalty, with added interest for every year this abuse is allowed is allowed to continue.
“Our watercourses and the ecosystems that rely on them are in desperate need of protection and there is huge public support for this. It is now vital that Ofwat bring in a full ban on shareholder dividends and bonuses for these serial polluters.
“The government should give its full backing and additional resources to regulators like Ofwat and the Environment Agency, and recognise that the privatisation of this most vital of industries has failed.”
Thames said: “We take this matter very seriously and have cooperated at every stage of Ofwat’s investigation. We regard all untreated discharges as unacceptable, even when they are permitted, and are taking action to improve the health of our rivers as a key area of focus and investment.”
A Yorkshire spokesperson said: “We take our responsibility to protect the environment very seriously. Last year, we apologised for not acting quickly enough and announced our £180m programme to reduce discharges from our storm overflows before April 2025.
“We are disappointed with Ofwat’s response to their investigation into our wastewater treatment networks.” Yorkshire said it had more robust processes and procedures in place, and had finished work at 10 storm overflows with 44 on site, and 66 due to start soon.
Northumbrian also said it was disappointed by Ofwat’s decision, adding it does not “recognise some of the standards of compliance that Ofwat is enforcing. These are a departure from its previous practice and appear inconsistent with those of the Environment Agency and the government and with Ofwat’s own practice in the past. We’re working really hard to continue to deliver for customers and the environment and will continue to comply with and exceed government regulations.”
