Updated Oct 4, 2022

Civil penalties for water companies could increase ten-fold

The Environment Secretary has announced proposals for the potential civil penalty for water companies who pollute the environment to increase from a current upper limit of £250,000 to £250 million.

Water companies that cause environmental harm or breach regulations, can be prosecuted by the Environment Agency (EA) on both criminal and civil grounds. Criminal prosecutions can lead to courts handing out unlimited fines for pollution breaches, however pursuing a criminal case is timely and costly. A civil prosecution, allows the EA to issue Variable Monetary Penalties (VMPs), and is a quicker method of enforcement. VMPs can be issued for serious offences such as cases of negligence or mismanagement, or where harm has been caused to the environment.

Currently, the maximum VMP limit is £250,000. Due to this cap, the EA are often forced to pursue lengthier criminal claims against water companies in order to get a higher fine awarded. By increasing the VMP limit to £250 million, the then Environment Secretary, Ranil Jayawardena believes will simplify and quicken up the civil prosecution process, allowing the EA to hand out severe financial penalties directly to water companies in cases of severe failings.

There has been much public criticism in light of numerous prosecutions against water companies over the last few years for various failings and pollution incidents. In 2020 there were 44 serious pollution incidents by water companies, and in 2021 this figure was even higher with 62 serious incidents.

The government is seeking to require water companies to invest more in their infrastructure in order to minimise the number of pollution incidents as well as a secure water supply for the future. 

The Environment Secretary at the time, Ranil Jayawardena commented on their proposals:

"I have been clear that if water companies don’t do what is expected, there will be consequences. Bigger financial penalties will act as a greater deterrent and push water companies to do more, and faster, when it comes to investing in infrastructure and improving the quality of our water. This 1,000-fold increase sends a clear signal that we want clean rivers and coastlines, and that the duty falls to the water companies to deliver – the polluter must pay."

These proposals will be subject to consultation but Sir James Bevan, Chief Executive of the Environment Agency has welcomed the news:

"Since 2015 the Environment Agency's criminal prosecutions against water companies have secured fines of over £138 million – with a record £90 million fine handed out to Southern Water for corporate environmental crime. However, criminal prosecutions can be lengthy and costly, so we welcome today’s proposals which will make it easier for us to hold water companies to account for environmental crimes. We will now work closely with government to put this plan into action."