Eight Out of Nine Water Companies Are Failing. Who Is Being Held Accountable?

Eight out of nine.

That is how many of England's major water and sewerage companies failed to achieve a good environmental performance rating in the Environment Agency's latest assessment.

Four received just one star, the lowest possible rating. Another four managed two. Only Severn Trent Water achieved the regulator's highest four-star rating.

The findings, published on 29 October, are another uncomfortable chapter in a story that has become depressingly familiar.

Water companies promise improvements. Regulators demand action. Investment programmes are announced. Meanwhile, pollution incidents continue, environmental projects fall behind schedule and public confidence remains stubbornly low.

But the latest figures raise a particularly awkward question.

If one company can consistently achieve the highest environmental rating, why can't the others?

And perhaps more importantly, what happens when they don't?

A report card nobody should be proud of

The Environment Agency's Environmental Performance Assessment (EPA) measures six aspects of company performance, including pollution incidents, compliance with environmental permits, self-reporting and delivery of environmental improvement programmes.

The latest assessment covers 2025.

The four companies rated poor were Southern Water, South West Water, Thames Water and Yorkshire Water.

Anglian Water, Northumbrian Water, United Utilities and Wessex Water were rated as requiring improvement.

Severn Trent stood alone with four stars, a distinction it has now maintained for five consecutive years.

Collectively, the nine companies achieved just 16 stars out of a possible 36, compared with 19 in 2024 and 25 in 2023.

The regulator has tightened some assessment thresholds over time, so historical comparisons need care. Nevertheless, its analysis indicates that the industry has continued to fall short of expected environmental standards.

And the underlying pollution figures make uncomfortable reading.

During 2025, there were 2,666 recorded pollution incidents involving water company sewerage and water supply assets in England.

That was slightly fewer than the 2,801 incidents recorded in 2024, but still approximately 40% higher than in 2016.

The Environment Agency had expected the industry to reduce incidents by at least 40% compared with that earlier baseline.

Instead, it has gone in the opposite direction.

Of the 2025 incidents, 74 were classified as serious, meaning they caused significant or major environmental harm.

Four companies accounted for 61 of them: Thames Water with 24, Yorkshire Water with 13, and Southern Water and Anglian Water with 12 each.

These are not simply unfortunate statistics.

They represent incidents in which the systems intended to protect our waterways have failed.

What is Severn Trent doing differently?

Severn Trent's performance deserves closer examination, not least because its results suggest that better environmental performance is achievable within the current industry structure.

In 2025, the company recorded 19 sewerage pollution incidents per 10,000 kilometres of sewer, compared with an industry figure of 41.

It was the only company to achieve the Environment Agency's green rating for this measure.

It also completed all 109 environmental improvement actions due within the assessment period, compared with significant delays at several other companies.

Its self-reporting performance was strong, and it achieved the required standard for compliance with discharge permits.

The joint regulators' performance report also shows that Severn Trent recorded lower leakage per property than the industry average.

These results suggest that the company has been more effective than many competitors in managing important aspects of its infrastructure and environmental obligations.

But there is a qualification.

Severn Trent recorded two serious pollution incidents in 2025. Both were Category 1 incidents, the most severe classification.

Indeed, those two incidents accounted for a third of the six Category 1 incidents recorded across the nine companies.

So while Severn Trent's overall record is considerably better than that of its competitors, four stars should not be confused with an absence of environmental harm.

Nor do the published results establish precisely why it performs better.

Is it investment strategy? Preventative maintenance? Operational management? The ability to identify problems before they become incidents?

Or are differences in geography and infrastructure partly responsible?

The data provides a compelling reason to investigate these questions, but not enough evidence to answer them conclusively.

What it does establish is that repeated poor performance should not simply be accepted as an unavoidable consequence of running a complicated water network.

Some companies are demonstrably performing better than others.

Understanding why should be a priority for the entire industry.

Thames Water: the cost of failing to deliver

If Severn Trent represents one end of the performance spectrum, Thames Water provides a troubling illustration of the other.

The Environment Agency's latest assessment reveals that Thames Water failed to complete 105 environmental improvement schemes within their planned deadlines.

These included 86 water quality schemes, 11 water resources schemes and eight projects relating to fisheries, biodiversity and river environments.

Just 34 of the 139 schemes due were completed on time.

That is a completion rate of 24.5%.

Across the nine companies, 502 of 626 environmental improvement actions were delivered within their planned deadlines, representing 80.2%.

It was the lowest industry completion rate recorded since this assessment measure began in 2011, with Thames Water accounting for most of the shortfall.

These projects are not optional gestures of environmental goodwill.

They are part of the programmes intended to address pollution, protect habitats, improve water quality and ensure companies meet their obligations.

When they are delayed, so are the expected benefits to the environment.

Of course, a missed deadline does not necessarily mean a project has been abandoned. Some schemes may subsequently be completed.

But customers and regulators are entitled to ask why so many commitments have not been delivered when promised.

And whether the financial and operational problems facing individual companies are now directly affecting the pace of environmental recovery.

Who pays when water companies fail?

For years, criticism of water companies has focused not only on pollution but also on the apparent disconnect between environmental performance and executive rewards.

The Water (Special Measures) Act 2025 was intended to address some of those concerns.

It strengthened regulatory powers and introduced restrictions on performance-related pay for water company directors where specified standards are breached.

Ofwat says the new rules blocked approximately £4 million in potential bonuses and other performance-related payments across six companies for 2024–25.

Following the latest environmental assessments, the Government has also confirmed that the one-star ratings will trigger restrictions on executive bonuses at Southern Water, South West Water, Thames Water and Yorkshire Water.

That is a significant change.

But there is an important distinction between penalising an executive and repairing environmental damage.

Preventing a bonus may provide a stronger incentive for management to improve performance. It does not, by itself, remove pollution from a river or repair a failing treatment works.

The Environment Agency has also increased its inspection and enforcement activity.

During the latest financial year, it carried out more than 10,000 on-site inspections and 3,000 further compliance assessments, identifying over 3,000 non-compliant sites.

It secured nearly £7 million through enforcement undertakings during 2025.

These can require companies to fund environmental improvements or remediation following breaches.

Yet the central question remains whether enforcement is producing sustained improvements.

Financial penalties, inspections and restrictions on executive pay are tools.

Cleaner rivers are the objective.

The effectiveness of regulation should ultimately be judged by the latter.

Billions more. But what are we actually buying?

Perhaps the most consequential aspect of the latest report is the scale of investment planned for the next five years.

The Environment Agency identifies £91.95 billion of planned expenditure by England's nine water and sewerage companies between 2025 and 2030, including more than £50 billion associated with wastewater.

That is a remarkable sum.

But it is important to understand what these investment announcements actually mean.

Ofwat's wider 2025–2030 price review, covering England and Wales, allows approximately £104 billion in total expenditure.

Of that, £60 billion is classified as base expenditure.

This covers the ongoing costs of providing services, operating and maintaining infrastructure, and sustaining existing levels of performance.

The remaining £44 billion is enhancement expenditure, intended to support improvements beyond existing service levels, new obligations and additional capacity.

In other words, the entire £104 billion is not a pot of money devoted exclusively to new environmental projects.

Much of it is needed simply to operate and maintain the system.

That distinction matters when customers are being asked to accept substantial bill increases in return for promises of improvement.

Ofwat has also established mechanisms intended to prevent customers paying for investment that companies fail to deliver.

But recent experience suggests that announcing funding and delivering environmental improvements are two very different things.

The £5 billion of environmental investment overseen during the previous five-year period helped deliver more than 11,000 actions.

Those included habitat improvements and measures to reduce phosphate pollution.

Progress has undoubtedly been made.

Yet the latest assessment also shows widespread underperformance and an unacceptable number of serious pollution incidents.

The lesson should be clear.

We cannot measure success simply by how much money companies are permitted to spend.

We must measure what that spending achieves.

Is the problem bigger than the companies themselves?

There is another question running beneath these results.

Is England experiencing the collective failure of individual water companies, or are we seeing the consequences of a system that has struggled for decades to reconcile commercial interests with environmental responsibilities?

It is a question that campaigners have been asking for years.

Last week, WaterMatters published the first instalment of Tim Smedley's two-part interview with Ash Smith, co-founder of Windrush Against Sewage Pollution (WASP), whose campaign helped expose the sewage scandal and inspired Channel 4's Dirty Business.

In that interview, Ash describes the deterioration of the River Windrush, the difficulties campaigners encountered in exposing pollution and his frustration with the regulatory system.

He also discusses his petition calling for a referendum on public ownership of the water industry, which attracted more than 213,000 signatures and secured a parliamentary debate.

Ash argues that the industry's ownership and financial structures are central to the problem, and that fundamental reform is necessary.

Read Tim Smedley's interview: Ash Smith, Part I, Where It All Began

It is a powerful argument, and one that deserves serious examination.

But the Environment Agency's latest assessment cannot, on its own, establish whether public ownership would deliver better environmental outcomes.

Nor does Severn Trent's performance prove that the existing ownership model is inherently effective.

What the figures do demonstrate is that the current arrangements are producing very different outcomes across companies operating within broadly the same regulatory framework.

That raises questions about management, incentives, investment decisions and the effectiveness of oversight.

Public ownership, private ownership and alternative governance models each require mechanisms to ensure transparency, adequate investment and accountability.

Changing who owns an organisation does not automatically repair its infrastructure.

But neither should the complexity of repairing infrastructure become an excuse for preserving arrangements that repeatedly fail to deliver.

The relevant test is whether the system produces the environmental outcomes the public has every right to expect.

A new regulator, but will anything really change?

The Government is moving towards a more integrated approach to water regulation, including plans for a single new regulator for England and Wales.

The publication of the first joint Water Industry Performance Insights report is intended to make company performance easier to understand by bringing together assessments from Ofwat, the Environment Agency, Natural Resources Wales and the Drinking Water Inspectorate.

That is a welcome development.

For too long, responsibility for different aspects of the water industry has been divided between organisations with separate powers and priorities.

But reorganising regulation is not the same as making it effective.

A new regulator will still need sufficient expertise, resources, independence and enforcement powers.

It will need reliable information from the companies it oversees.

And it must be prepared to intervene when performance falls short.

The latest Environment Agency figures show that 87% of pollution incidents were self-reported by companies in 2025, an improvement on previous years.

But only 69% of serious incidents were self-reported.

That gap should concern anyone relying on company reporting to identify environmental harm.

Transparency is essential, but independent scrutiny remains equally important.

Eight out of nine should be a turning point

The water industry has reached a point where further promises are unlikely to restore public confidence on their own.

The figures are too stark.

Eight companies below the expected environmental standard.

Seventy-four serious pollution incidents.

Environmental programmes delayed.

Billions more committed to infrastructure improvements.

And a public increasingly questioning whether the system is working in its interests.

There are reasons to recognise progress where it has occurred. Severn Trent's sustained performance shows that better results are possible. Environmental investment has delivered real benefits, and stronger regulatory powers are beginning to change the consequences of poor performance.

But none of that diminishes the scale of the challenge.

The next five years will test whether unprecedented investment, stronger enforcement and regulatory reform can reverse the industry's environmental decline.

For the companies, the question is whether they can deliver what they have promised.

For regulators, it is whether they can hold companies to account when they do not.

And for the Government, it is whether the reforms now being developed will change the outcomes experienced by rivers, wildlife and communities.

Because another report telling us that eight out of nine companies are failing would not simply be disappointing.

It would suggest that, despite all the money, legislation and promises, we still haven't learned how to make accountability work.

The real measure of success will not be the number of stars awarded, the size of the investment programme or the severity of the penalties. It will be whether our rivers are actually getting cleaner.

Coming next week on WaterMatters

In the second and concluding part of Tim Smedley's interview with Ash Smith, co-founder of Windrush Against Sewage Pollution, the conversation turns to what happens next for the campaign to reform Britain's water industry.

Following the parliamentary debate on Ash's petition for a referendum on public ownership, what does meaningful reform look like, and where does the campaign go from here?

Look out for Ash Smith, Part II, next week on WaterMatters.