England’s water companies have been ordered to refund over £260 million to their customers due to poor environmental and service performance, highlighting ongoing challenges in the country’s water sector. The economic regulator, Ofwat, announced that 40% of this amount has already been deducted from customers’ bills this year, with the remainder scheduled to be refunded through next year’s bills. Despite these refunds, water bills are still expected to rise significantly until 2030 to fund critical upgrades to England’s aging and often failing water infrastructure.
The latest assessments reveal a troubling picture for the water industry. The Environment Agency (EA) gave England’s water companies their worst-ever combined environmental performance ratings for 2024 amid a sharp increase in serious pollution incidents. This annual rating system evaluates water companies’ impact on the environment, particularly their record on pollution and sewage spills. In 2024, all but one of the nine English water and sewerage companies received ratings of two stars or less—categories that denote “requiring improvement” or worse. Thames Water, the UK’s largest water company, was singled out with the lowest possible one-star rating, indicating very poor environmental performance. Only Severn Trent, another major water firm, secured the highest rating of four stars.
Alan Lovell, chair of the Environment Agency, framed the results as a stark warning. In his foreword to the report, he noted that while many companies claim to be focused on environmental improvement, the data does not support these assertions. The EA’s collective rating for the nine companies dropped from 25 stars in 2023 to just 19 stars in 2024—the lowest total since the rating system began. Lovell emphasized that although the EA has tightened its assessment criteria over time—which means the ratings do not necessarily indicate a decline since 2011—the poor 2024 results should act as an urgent call for change.
Thames Water, by far the largest player in the sector, has been particularly impacted by regulatory penalties and financial distress. Ofwat fined Thames Water £75.2 million, the largest penalty among all companies, for its poor performance. The company is also grappling with significant financial challenges, reporting a loss of £1.65 billion for the year ending March 2024 and carrying a staggering debt load of £16.8 billion. Despite these struggles, Thames Water’s spokesperson stressed that the company is committed to a “Transforming Thames” program, described as the largest investment in the water network in 150 years. They acknowledged that the scale of change needed would take at least a decade to achieve.
The Environment Secretary, Emma Reynolds, acknowledged the severity of the situation, highlighting the systemic failures in England’s water infrastructure. She said, “We are facing a water system failure that has left our infrastructure crumbling and sewage spilling into our rivers.” Reynolds outlined government actions aimed at addressing these problems, including new powers to ban unfair bonuses for water company executives and the introduction of swift financial penalties for environmental offenses.
Ofwat’s report on the water sector’s performance in England and Wales echoed the mixed results highlighted by the EA. While some progress has been made in areas such as reducing internal sewer flooding, Ofwat noted ongoing shortcomings in other critical areas including pollution control and supply interruptions. The regulator stressed that water companies and the sector as a whole must do more to improve their performance and meet environmental and service standards.
The poor performance of the water companies has led to growing criticism from campaign groups and consumer advocates. James Wallace, CEO of River Action UK, called the report “a clear demonstration that water companies in England and Wales are still underperforming, especially on serious pollution incidents.” He argued that the findings expose “the bankruptcy of the privatised water model,” and called for a complete overhaul of the system to ensure fair service to customers and better protection of rivers and waterways.
The Environment Agency attributed the poor environmental results in part to three key factors: unusually wet and stormy weather in the past year, long-standing underinvestment in the water infrastructure, and increased scrutiny through enhanced monitoring and inspections, which have uncovered more failings. These challenges have compounded to create an environment where pollution incidents have surged.
In fact, the EA reported a 60% increase in “serious” pollution incidents in 2024 compared to the previous year, a statistic that has alarmed regulators, environmentalists, and the public alike. The increase in pollution incidents, especially sewage spills, has prompted widespread frustration among customers, particularly