Water firms instructed to refund £260m to clients. | EUROtoday

England’s water firms have been ordered to refund greater than £260m to their clients for poor efficiency.

The financial regulator Ofwat says 40% of that cash has already been taken off this yr’s payments, with the remaining to come back off subsequent yr’s. But payments are nonetheless because of rise steeply till 2030 to fund upgrades to the water system.

Earlier right this moment, the Environment Agency gave England’s water firms their worst ever mixed marks in its annual score system for his or her environmental efficiency in 2024, amid a spike in severe air pollution incidents.

Industry physique Water UK acknowledged that “the performance of some companies is not good enough” however pointed to funding since final yr.

Thames Water – the UK’s largest water firm – has been penalised essentially the most by Ofwat at £75.2m.

It was additionally given the bottom, one-star score by the EA.

A spokesperson for the corporate stated: “Transforming Thames is a major programme of work that will take time; it will take at least a decade to achieve the scale of change required.”

And Environment Secretary Emma Reynolds acknowledged: “We are facing a water system failure that has left our infrastructure crumbling and sewage spilling into our rivers.

“We are taking decisive motion to repair it, together with new powers to ban unfair bonuses, and swift monetary penalties for environmental offences,” she added.

England’s water companies got their worst ever combined score for environmental performance in 2024, the Environment Agency has said.

The EA gave all but one of the nine English water and sewerage companies two stars – “requiring enchancment” – or worse in the case of Thames.

Only Severn Trent got the top rating of four stars.

In a foreword to the report, the EA’s chair, Alan Lovell, wrote: “Many firms inform us how focussed they’re on environmental enchancment. But the outcomes are usually not seen within the knowledge.”

The EA’s collective rating of the nine companies for 2024 was 19 stars – down from 25 stars in 2023. No year had previously got fewer than 22 stars.

Thames Water – the UK’s largest water company – has become mired in financial trouble. It reported a loss of £1.65bn for the year to March, while its debt pile climbed to £16.8bn.

“We know we have to additional enhance for our clients, communities and the setting, and that’s the reason we’ve got launched into the most important ever funding programme, delivering the largest improve to our community in 150 years,” the Thames spokesperson added.

Every year since 2011 each of England’s nine water companies have been given a rating for their environmental performance. Only seven one-star ratings have ever been previously given.

The EA says its assessment criteria has been tightened over time, so its ratings do “not imply efficiency has declined since 2011” and it had seen “some enchancment” as much as 2023.

“This yr’s outcomes are poor and should function a transparent and pressing sign for change,” said Mr Lovell.

In its report on companies in England and Wales, Ofwat described performance across different measures as “combined”.

It acknowledged progress in some areas like internal sewer flooding, but said “there stay areas the place firms and the sector should do extra”, including pollution and supply interruptions for some.

In response, James Wallace, chief executive of campaign group River Action UK, said: “Today’s report reveals that water firms in England and Wales are nonetheless underperforming, particularly on severe air pollution incidents, exposing the chapter of the privatised water mannequin.

“We urgently need a complete overhaul of this failed system to ensure that bill payers receive a fair service and that our rivers are properly protected from pollution.”

The EA attributed final yr’s environmental efficiency to a few elements – moist and stormy climate, long-standing underinvestment in infrastructure, and elevated monitoring and inspection “bringing more failings to light”.

From 2027, the EA will substitute its present star rankings with a brand new system – a scale from one to 5, from “failing” to “excellent”.

The authorities argues this can give a extra correct reflection of efficiency, with firms not capable of obtain the highest score until they “achieve the highest standards across the board”.

The water trade has confronted mounting anger from clients and campaigners for rising payments and repeated sewage spills.

The Environment Agency reported in July that “serious” air pollution incidents had elevated by 60% in 2024 versus 2023.

And in April, payments rose by a mean of 26% in England and Wales, after the financial regulator Ofwat permitted water firm plans for billions of kilos of funding.

Bills will proceed to rise to 2030 to assist improve water provides and decreasing the quantity of sewage being spilled.

Earlier this yr the federal government stated that Ofwat can be scrapped and changed by a single regulator.

That adopted a landmark assessment of the “failing” water sector in England and Wales, which really helpful stronger regulation to carry water firms to account. It warned that there can be no fast fixes to enhance the state of our rivers or convey down payments.

In response to right this moment’s EA’s report, Mike Keil, chief government of the Consumer Council for Water, stated: “Customers are now paying more than ever before through water bills and they will expect to see companies delivering on their promises to cut pollution and help bring rivers, lakes and wildlife habitats back to life.

“If the trade fails to ship, the injury to public belief – which is already at an all-time low – could also be unrecoverable,” he added.