Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, what steps her Department is taking to help ensure that Ofwat effectively challenges water companies for breaches of their responsibilities.

The Government has established a robust system of independent economic regulation for the purpose of ensuring the public receive value for money from their water companies. The Government’s Strategic Policy Statement for Ofwat makes it clear that we expect Ofwat to work with other regulators and wider stakeholders to ensure security of supply and protect and enhance the environment.

Through the Environment Act 2021, the Government has given Ofwat improved powers to modify water company licenses without consent. On Monday 20 March 2023, Ofwat announced a new measure that will enable it to take enforcement action against water companies that do not link dividend payments to performance for both customers and the environment.

Where companies fail to meet their obligations, regulators have not hesitated to act. Ofwat’s annual performance assessment process, and the automatic penalties that apply to companies who underperform, represents an excellent example of strong economic and environmental regulation. In November 2022, Ofwat announced financial penalties of £132 million applying to 11 water companies, in response to underperformance in areas such as water supply interruptions, pollution incidents and internal sewer flooding. Money from Ofwat’s penalties will rightly be returned to customers through water bills in 2023-24.

Ofwat is currently undertaking the largest ever civil investigations into over two thousand wastewater treatment works.

The Government will continue to work with water sector regulators to hold water companies to account on poor performance and drive improvements which benefit customers and the environment.