The Environment Agency (EA) and Ofwat have launched a major investigation into sewage treatment works, after new checks led to water companies admitting that they could be releasing unpermitted sewage discharges into rivers and watercourses.

Following reports about widespread unpermitted releases of sewage into the environment by water and wastewater companies, the investigation has been launched by Ofwat to establish whether companies are complying with their statutory and licence obligations.

This will see an investigation involving nearly 2,500 sewage treatment works. Any company caught breaching their legal permits could face enforcement action, including fines and prosecutions. Fines can be up to 10% of annual turnover for civil cases, or unlimited in criminal proceedings.

The EA has been checking that water companies comply with requirements and has asked them to fit new monitors at sewage treatment works. This is to make sure the right levels of wastewater are being treated before overflows are allowed to enter the environment.

Following the action by the EA, several water companies have now revealed that many of their sewage treatment works may not be compliant. This would mean that water companies are in breach of their permits and failing to meet their legal duties.

The Agency and Ofwat are now looking into all water and sewerage companies to assess the scale of the problem.

Any company caught breaching these minimum standards will face a range of possible enforcement action – up to and including prosecution.

New information, and analysis by the Environment Agency, suggests that water and wastewater companies may have released sewage into rivers and waterways when they were not legally allowed to do so. Ofwat’s interim Chief Executive has written to companies to investigate the extent of any non-compliance and why it has happened.

Emma Howard Boyd, chair of the Environment Agency, said:

“Any water companies in breach of their permits are acting illegally. This is a major issue of public trust. Water company boards must certify every year that they have adequate resources to fulfil their regulated activities. Only now, just before new monitors are installed, have companies reported concerns over potential problems. The EA has begun an immediate investigation of 2,480 sewage treatment works and will prosecute where necessary.

“The private sector is under increasing pressure to demonstrate tangible commitments on protecting the environment. This shows why we need robust and well-funded regulation to provide the public, investors and customers with assurances about what is being delivered on the ground. I would like to see the levels of penalties for corporate environmental crime in England go up significantly. More attention should also be paid to the directors of companies that are guilty of repeated, deliberate or reckless breaches of environmental law. Such directors should be struck off and in the most grievous cases given custodial sentences.”

Ofwat Chair Jonson Cox said the regulator had launched an investigation relating to companies’ management of their wastewater treatment works which will examine any instance of systemic management failure, or the misreporting of data.

“If we find reason to act, Ofwat will use our full range of powers to hold companies to account for their failures and to require them to put things right in very short order,” he added.

Describing the new information as “shocking and wholly unacceptable,” Environment Minister Rebecca Pow said she wanted to see water companies spending far more on better infrastructure, and far less on payouts to shareholders.

The Environment Act has introduced clear new duties to legally require water companies to make progressive reductions in the adverse impacts of storm overflows. Any water companies not abiding by their permits are expected to take immediate action to address any non-compliance while these investigations are ongoing.

Ofwat has also asked Boards of water companies to explain how environmental performance and compliance with obligations has been taken into account when deciding on paying out dividends and executive bonuses.

Interim Chief Executive, David Black, said:

“Back in the summer, I wrote to companies setting out the need to improve performance on the use of storm overflows. I haven’t seen enough to suggest that message was heard or heeded, and this new information suggests there may have been very serious failings by water companies in treating wastewater.

“We will find out what company Boards knew and when, and if there has been management failure or misreporting of data to us and to the public. If we find there has been, we will use all of our powers to hold companies to account.”

Ofwat has told companies to:

• Provide full disclosure on the scale of any illegal releases of sewage,
• Explain what caused them,
• Explain how they monitor compliance with their obligations including their system of management and internal controls,
• Set out what role the Board plays in scrutinising and monitoring these actions,
• Describe how Boards have approached dividends and remuneration decisions in the context of environmental performance, and
• Set out companies’ plans and timelines to address and remedy any problems uncovered.
• Ofwat’s enforcement powers can see the regulator fine companies up to 10% of their turnover.

Commenting on the announcement, a spokesperson from Water UK (the body which represents all UK water companies) said:

“The water industry is committed to the best possible environmental outcomes. Water companies have been investing heavily to modernise the monitoring of sewage treatment works, and in using better modelling and artificial intelligence techniques to understand and predict any issues that might occur. Where the data identifies any problems, then action must be taken to address them.”