Photo by Ivan Bandura
England’s water industry is facing renewed scrutiny after a sharp rise in serious pollution incidents last year, prompting the UK government to announce sweeping reforms, including the abolition of the industry regulator Ofwat.
60% rise in serious pollution events
New data from the Environment Agency reveals that serious pollution incidents—classified as Category 1 and 2 events that cause significant environmental damage—rose from 47 in 2023 to 75 in 2024, a jump of nearly 60%.
The most alarming increase came from Thames Water, which saw its serious pollution events jump from 14 to 33 in a single year. Southern Water and Yorkshire Water also reported 15 and 13 serious incidents, respectively.
The total number of pollution incidents, including minor ones, reached 2,801—up 29% year-on-year. Environment Agency chair Alan Lovell called the situation one of “continued systemic failure,” driven by underinvestment, decaying infrastructure, and increased strain from climate impacts like extreme rainfall.
Government scraps Ofwat, launches overhaul
In response, the government has accepted in full the recommendations of a sweeping review led by Sir Jon Cunliffe, which urged the creation of a new, unified regulator. This integrated body will replace Ofwat and combine oversight functions currently shared with the Environment Agency and the Drinking Water Inspectorate.
The 465-page review, described by ministers as a “Great Stink moment,” makes 88 recommendations, including a five-yearly National Water Plan, mandatory smart meters, independent environmental auditors, and tighter governance for corporate boards. The government will launch a formal consultation this summer ahead of introducing a new water bill in 2026.
Special powers and penalties for offenders
The reforms also invoke new powers granted under the Water (Special Measures) Act 2025, including:
- Jail terms for senior executives responsible for serious pollution breaches,
- Powers to block or claw back executive bonuses,
- The potential for banning directors from working in the water sector.
Environment Secretary Steve Reed emphasised that companies must now “put the environment ahead of shareholder dividends.”
Broader strategy to clean up waterways
Alongside the crackdown on sewage pollution, ministers are targeting agricultural runoff, which affects 45% of England’s water bodies, and road/urban runoff from legacy infrastructure and mining. Reed announced stricter regulation on fertiliser use, tighter controls on industrial waste discharge, and plans to hold farmers to pollution standards under new environmental land management schemes.
Campaigners welcomed these moves but remain skeptical. “Thames Water should be placed into special administration immediately,” said James Wallace, CEO of River Action, citing “decades of failure.”
Executive pay under fire
As public anger mounts, water company bosses are under growing pressure over compensation. Southern Water nearly doubled CEO Lawrence Gosden’s pay package to £1.4 million, sparking outrage given the company’s pollution record. Meanwhile, Thames Water’s chief executive has requested leniency on fines, citing operational pressures.
While the new reforms stop short of renationalisation, which some groups demand, they significantly tighten the state’s control over a sector widely viewed as dysfunctional. Speaking on the Committee Corridor podcast last month, environmental campaigner Feargal Sharkey said “regulation has failed” and that “the public has lost faith.”
Outlook
The coming months will see intense debate over the implementation of these reforms, expected to culminate in a new legislative framework by 2026. Water companies now face a watershed moment: either modernise their operations and infrastructure—or risk losing their licenses to operate.