Image description: Sewage pipes on the right flow out into an ocean on the left. Image by Tom Fisk / Pexels.
New levy proposed to cover enforcement costs
The Environment Agency (EA) has revealed details of how it intends to implement a levy on water companies to recoup the money it needs to carry out more pollution inspections and punish those found to be polluting.
Following the introduction of the Water (Special Measures) Act 2025, passed earlier this year, the EA was given the power to recover the costs related to tackling pollution caused by the water industry from water companies themselves. Previously, these costs had been covered by the Government, meaning they ultimately fell on taxpayers.
The EA issues permits for water discharge activities to manage the environmental risk of certain activities, which outline where and how the activities can take place, including strict operational standards and limits for polluting or harmful substances.
It suggests the new proposal is aimed at stopping illegal activity from occurring or continuing, putting right environmental harm or damage, bringing illegal activity under regulatory control and punishing offenders and deterring them from offending in the future.
The EA anticipates needing £21m for the 2025-26 period, to meet the Act’s requirements. The Act covers the prevention and continuation of illegal activities; remediation for environmental harms and punishing offenders. The charge is separate from penalties for bad behaviour.
Water Minister Emma Hardy said: “We promised that polluters would pay for the damage they cause to our waterways…Today’s consultation takes us closer to shaping a water sector that delivers real and lasting improvements for customers and the environment as part of our Plan for Change.”
Levy likely to be passed onto customers
However, the Daily Telegraph reported “water bills will rise to fund the cost of policing Labour’s anti-sewage plan, the Government has admitted”.
Despite ministers’ claims that water companies will be made to pay for cleaning up Britain’s rivers, the Environment Agency’s own documents say the cost of the “industry levy” is more likely to be passed on to customers.
The consultation said that “water companies are unlikely to absorb the cost of the levy and more likely to pass it on to customers [by] marginally raising their bills”.
These changes are due to take effect this summer. The EA will consult on the proposals until 26 May. The new levies will come on top of increased water quality permit charges, introduced by the EA last year.