Question to the Department for Environment, Food and Rural Affairs:

To ask His Majesty's Government what plans they have to review the performance of Ofwat as an effective regulator.

The Environment Act 2021 gave Ofwat new powers to strengthen existing licence conditions so that it can take enforcement action against water companies that do not make an explicit link between dividend payments and their performance for customers and the environment.

In May, Ofwat received an £11.3m funding budget increase from HM Treasury to treble its enforcement capacity. This additional funding, alongside commitments in our Plan for Water to bolster tougher enforcement action, will further increase Ofwat’s capacity to hold water companies to account and protect our waters.

Where companies fail to meet their obligations, regulators have not hesitated to act. Ofwat’s annual performance assessment process, and the automatic penalties that apply to companies who underperform, represents an excellent example of strong economic and environmental regulation. In November 2022, Ofwat announced financial penalties of £132 million applying to 11 water companies, in response to underperformance in areas such as water supply interruptions, pollution incidents and internal sewer flooding. Money from Ofwat’s penalties will rightly be returned to customers through water bills over the 2023-24 billing period.