Asked by: Lord Sikka (Labour - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask His Majesty's Government whether they plan to propose legislation under which organisations with criminal convictions would be prevented from owning and controlling water supply and wastewater services.
Answered by Baroness Hayman of Ullock - Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs)
This Government is committed to holding water companies to the highest standards of environmental and corporate responsibility. We are taking robust action to strengthen accountability and enforcement across the sector.
This includes the Water (Special Measures) Act, which delivers the most significant increase in enforcement powers for regulators in over a decade. Rules issued by Ofwat on fitness and propriety will require companies to test whether senior individuals meet specified standards and prevent the appointment of individuals to these roles where standards are not met.
In addition, the Environment Agency and Ofwat have also launched the largest criminal and civil investigations into water company discharges ever undertaken. These can lead to criminal prosecution and unlimited fines.
The Government is also conducting the largest review of the water sector since privatisation through the Independent Water Commission. This will examine how the sector can better deliver for customers and the environment, including the effectiveness of current ownership and governance arrangements. The Commission final report is due to be published this summer, and the Government will respond in due course.
Asked by: Lord Sikka (Labour - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask His Majesty's Government how many criminal convictions have been secured by regulators against Southern Water since privatisation.
Answered by Baroness Hayman of Ullock - Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs)
Since the privatisation of water and sewerage companies in 1989, all ten Water and Sewerage companies which discharge into English waters have been convicted of criminal offences including Southern Water. Details of the enforcement action taken against water companies by regulators are available on the relevant regulators’ websites.
We will not let companies get away with illegal activity and where breaches are found, the regulators will not hesitate to hold companies to account. The Water (Special Measures) Act 2025 provides the most significant increase in enforcement powers for the regulators in a decade and ensures that imprisonment is always available as a sentencing option to the courts where investigations by the environmental regulators have been obstructed.
Asked by: Lord Sikka (Labour - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask His Majesty's Government on what dates (1) Thames Water, (2) Yorkshire Water, and (3) Northumbrian Water, paid in full the respective fines of £104 million, £47 million and £17 million announced by Ofwat on 6 August 2024.
Answered by Baroness Hayman of Ullock - Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs)
The Water Industry Act 1991 requires Ofwat to publish a draft decision for consultation if it is going to impose an enforcement order or a penalty as a result of an enforcement case. Following the period of consultation, Ofwat considers all responses received and takes these into account when making its final decision.
On 20 March 2025 Ofwat announced the conclusion of its wastewater enforcement case into Yorkshire Water securing an enforcement package of £40 million to be paid by the company.
On 28 May 2025 Ofwat issued an enforcement order and financial penalty to Thames Water. This was the final decision in two investigations looking into the operations of Thames Water, which faces penalties totalling £122.7 million, including £104 million for the wastewater investigation. This penalty has not yet been paid. Ofwat set out that Thames Water should pay the fine by 20 August.
On 4 June 2025 Ofwat announced the conclusion of its wastewater enforcement case into Northumbrian Water securing an enforcement package of £15.7 million to be paid by the company.
Asked by: Lord Sikka (Labour - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask His Majesty's Government on what date Thames Water paid the £18.2 million fine announced by Ofwat on 19 December 2024 for violation of dividend payment rules.
Answered by Baroness Hayman of Ullock - Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs)
Ofwat's enforcement case against Thames Water for breach of Dividend rules was concluded on 28 May 2025. Thames Water now has until 20 August 2025 to pay the fine.
Asked by: Lord Sikka (Labour - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask His Majesty's Government which water companies have not been convicted of a criminal offence since privatisation.
Answered by Baroness Hayman of Ullock - Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs)
Since the privatisation of water and sewerage companies in 1989, all ten Water and Sewerage companies which discharge into English waters have been convicted of criminal offences. In addition, since 1997, two water only companies, Bristol Water Plc and Portsmouth Water Limited have been convicted of criminal offences. Details of the enforcement action taken against water companies by regulators are available on the relevant regulator’s websites.
We will not let companies get away with illegal activity and where breaches are found, the regulators will not hesitate to hold companies to account. The Water (Special Measures) Act 2025 provides the most significant increase in enforcement powers to the regulators in a decade, giving them the teeth they need to take tougher action against water companies. In addition, water company bosses could now face up to two years imprisonment where investigations by the regulators are obstructed.
Asked by: Lord Sikka (Labour - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask His Majesty's Government, further to remarks by Baroness Hayman of Ullock on 29 January (HL Deb col 251), what is the breakdown of the £150 million in fines issued to water companies since 2015.
Answered by Baroness Hayman of Ullock - Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs)
The Environment Agency prosecutes Water and Sewerage Companies (and the courts hand down fines) for environmental offences under the Environmental Permitting Regulations and other offences including polluting discharges to water and land, breaches of environmental permit conditions and obstruction of investigations.
Below is a breakdown of the 150 million in fines issued to water companies since 2015, as mentioned in Baroness Hayman of Ullock’s remarks on 29 January.
Water and Sewerage Company | Sum of Total Fine (£) |
Anglian Water | £5,475,000.00 |
Northumbrian Water | £807,000.00 |
Severn Trent Water | £4,056,000.00 |
South West Water | £3,406,834.00 |
Southern Water | £92,024,000.00 |
Thames Water | £37,721,000.00 |
United Utilities Water | £2,816,000.00 |
Yorkshire Water | £4,678,750.00 |
Grand Total | £150,984,584.00 |
Asked by: Lord Sikka (Labour - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask His Majesty's Government what estimate they have made of the cost of acquiring control of England’s water companies.
Answered by Baroness Hayman of Ullock - Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs)
The Government has no intention to nationalise water companies.
Nationalisation would put a huge burden on the public purse at a time when public finances are already stretched and would not fix the root of the problem.
If the whole industry was nationalised, shareholders and debt holders would need to be compensated, which could cost over an estimated £90 billion [this is based on Ofwat’s Regulatory Capital Value 2024 estimates]
Instead, this government is focused on tackling the public’s immediate concerns to clean up the nation’s polluted waterways and turn around the sector’s performance, focusing on improving the privatised regulated model.
Asked by: Lord Sikka (Labour - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask His Majesty's Government how Ofwat adjusted the regulatory capital value of each water company to take account of (1) capitalisation of interest payments, and repair and maintenance costs, and (2) intragroup debt and interest payments.
Answered by Baroness Hayman of Ullock - Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs)
The Regulatory Capital Value (RCV) of a water company represents the net stock of investment that has been contributed by debt and investors over time in delivering their investment activities. This is used by Ofwat for the purposes of setting its regulatory determinations.
Ofwat calculates an efficient totex (total expenditure) allowance for each company, covering operating, maintenance, and enhancement costs. Totex is funded in one of two ways; pay-as-you-go expenditure funded through revenue allowances, or long-term investment funded through the RCV and run-off from the RCV over time. Pay-as-you-go expenditure generally reflects forecast operational costs. Capital costs are generally added to the RCV, with the RCV run-off allowance providing companies with a funding allowance for carrying out activities such as maintenance.
As the RCV represents only the net stock of investment for delivering investment activities, it takes no account of intragroup debt and interest payments. Ofwat set the allowed return for companies on the basis of a notional capital structure which makes no assumption about the need for intragroup debt and interest payments. Where such arrangements exist, these arrangements are not funded in the determinations that are set by Ofwat and are matters for companies and their investors.
Asked by: Lord Sikka (Labour - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask His Majesty's Government why Ofwat did not use actual gearing levels of water companies in its calculation of weighted average cost of capital for the 2024 pricing review.
Answered by Baroness Hayman of Ullock - Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs)
In all of Ofwat's price determinations since privatisation, Ofwat has set the allowed return by reference to a notional capital structure. Ofwat uses a notional capital structure as it protects customers from bearing the risk of companies' actual financing decisions and it sets a signal to companies and investors on regulatory expectations about the allocation of risk within the capital structure. The use of the notional structure means it is companies and investors, rather than customers, that bear the risks of their capital and financing choices where the financing arrangements depart from the notional structure.
Asked by: Lord Sikka (Labour - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask His Majesty's Government what was the amount of fines paid by each of the water companies in each of the past five years.
Answered by Baroness Hayman of Ullock - Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs)
We will not let companies get away with illegal activity and where breaches are found, the regulators will not hesitate to hold companies to account.
The Water (Special Measures) Bill will provide the most significant increase in enforcement powers to the regulators in a decade, giving them the teeth they need to take tougher action against water companies in the next investment period, which is due to start in April this year.
Details of the enforcement action taken against water companies by regulators are available on the relevant regulator’s websites.
Enforcement action by Drinking Water Inspectorate can be found on the DWI website.
Enforcement action by Ofwat can be found on the Ofwat website.
Enforcement action by the Environment Agency can be found on the EA website.