Secretary of State, Steve Reed, has welcomed Ofwat’s proposal to fine Thames, Yorkshire and Northumbrian Water a total of £168m for failing to manage their wastewater treatment works and networks, as part of the first batch of outcomes from its biggest ever investigation.
Commenting on the news, Steve Reed said: “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.”
But some within the water industry have raised concerns about whether fines are the answer. Drainage manufacturer Wavin has reacted to the inefficiency of penalties and the issues it causes the industry. Anthony Kolanko, Wavin’s Commercial Manager of Urban Climate Resilience (UCR), has raised questions on the effectiveness of hefty fines which deplete resources from the sector and has instead suggested mandating ‘forced expenditure’ on network upgrades.
Anthony told Water Magazine: “Ofwat’s recommendation to hit three UK water companies with £168m in fines for historic sewage spills raises serious questions about the effectiveness of such penalties. While the fines themselves underscore the severity of the failures in maintaining and upgrading the water networks, how can we truly expect these water companies to improve infrastructure when the fines themselves remove much-needed funds from the water sector?
“Instead of potentially paying hefty penalties that deplete the resources – £47m for Yorkshire Water, £17m for Northumbrian Water, and a record £104m for Thames Water – these companies need to focus on making essential improvements. A more effective approach would involve mandating ‘forced expenditure’ on network upgrades. This strategy would ensure that the money stays within the industry and is directly invested in enhancing the infrastructure to prevent future issues. This ultimately, would address the root causes of the problems — poor maintenance and inadequate investment.
“Fines do reflect the need for accountability which is needed after the outrage over environmental damage and poor company performance, but rethinking their application as enforced investment offers a more sustainable path over time. Redirecting fines towards mandatory infrastructure projects would be a more constructive solution, ensuring that the funds contribute directly to the long-term health and reliability of our water systems.”
In response to Ofwat’s proposal, Alastair Chisholm, Policy Director at the Chartered Institution of Water and Environmental Management (CIWEM), is calling for an urgent and deep review of the industry, and the regulation of it.
Alastair said: “The findings by Ofwat come as no surprise given the events of recent months and years. It only strengthens our recommendation that the government should conduct an urgent and deep review into the operation of the water industry and water regulation more widely. Historic abuses by water companies and failures by regulators to keep them in check mean there is now a rearguard action to remedy the damage, billed as “record investment”. Whilst this is necessary, it cannot come without wide and deep, meaningful change.
“Government has announced a small package of immediate measures, which may make some change, but the challenges are systemic and run deep. This sector needs considerable investment over the long-term, allied with far stronger, yet outcomes-focused regulation that prioritises the necessary actions, catchment-by-catchment, to begin the process of recovering the health and resilience of our waters. That will need to be informed by a full, independently chaired review, a considerably strengthened environmental regulator, and major investment in an expanded water workforce with the right skills and competence to deliver the extensive work needed.
“Government must not fail to invest sufficiently in its regulators. We have seen the fallout of cuts to their budgets over recent years. That cannot be allowed to endure under any banner of fiscal responsibility. A healthy society and robust economy need healthy and resilient water supplies – they are not a luxury.”
