English water company bosses threatened with jail for sewage pollution

Chief executives and board members of England’s water companies responsible for the most serious sewage pollution should be jailed, the regulator said on Thursday as it revealed their environmental performance had further deteriorated.

In an excoriating annual report on the water companies’ performance in keeping water clean, the Environment Agency also said directors of guilty companies should be struck off and the businesses face higher fines.

The call for a crackdown came as the performance of the companies on sewage pollution fell to the lowest level recorded in a decade, proving that they were “undeterred” by the penalties being issued by the courts, the agency said.

There were 62 “serious” pollution incidents in 2021, up from 44 in 2020, and the highest since 2013, the Environment Agency said. More than half of the serious incidents were from three water companies: Anglian Water, Southern Water and Thames Water.

The agency did not say what the pollution threshold for imprisonment should be.

The Financial Times revealed that Anglian paid a £92mn dividend last month to its owners, a clutch of private equity, sovereign wealth and pension funds. Peter Simpson, Anglian’s chief executive, and Steve Buck, its chief financial officer, were together paid more than £2.2mn in bonuses, as well as their combined base pay of more than £900,000 in 2021.

Emma Howard Boyd, Environment Agency chair, said: “For years people have seen executives and investors handsomely rewarded while the environment pays the price.

“Company directors let this happen. We plan to make it too painful for them to continue like this. The amount a company can be fined for environmental crimes is unlimited but fines currently handed down by the courts often amount to less than a chief executive’s salary. We need courts to impose much higher fines. Investors should no longer see England’s water monopolies as a one-way bet.”

The poorest performers were Southern Water, which was taken over by the Australian bank Macquarie last August after teetering on the brink of bankruptcy last year. The company supplies water and sewage services for 4.2mn customers in Kent, Sussex, Hampshire and the Isle of Wight and was last year handed a record £90mn fine for deliberately dumping billions of litres of sewage into rivers and coastal waters.

South West Water, which is owned by the listed Pennon Group, performed equally poorly, while Anglian, Thames, Wessex Water and Yorkshire Water received only slightly better ratings, and were told they required significant improvement.

The proposed crackdown comes as the industry faces its biggest wave of protests since it was privatised more than 30 years ago, as campaigners, from the Windrush Against Sewage group in Oxfordshire to Ilkley Clean River in Yorkshire, try to force action from companies and policymakers.

Just 16 per cent of coastal waterways and rivers in England and Wales meet minimum EU standards because of frequent outflows of untreated effluent and storm water, the Environment Agency said.

Although privatisation was intended to stimulate investment, it has fallen by almost a fifth in the past 30 years, from £2.9bn a year in the 1990s to £2.4bn now, according to FT research. During the same time the companies, which were privatised with no debt, have borrowed £53bn, the equivalent of about £2,000 per household. Much of this has been used to help pay £72bn in dividends.

Mike Keil, senior director at the Consumer Council for Water, said it supported the proposals. “This report marks a new low for the environmental performance of the water industry and casts serious doubt over whether some water and sewerage companies can be trusted to look after the water environment.”

Water UK, which represents the industry, did not immediately respond to a request for comment.