The Government has today confirmed that money from fines handed out to water companies for polluting rivers and seas will be re-invested in schemes that benefit the natural environment.

At present, money from fines imposed by Ofwat and those arising from Environment Agency prosecutions is returned to the Treasury. Chancellor of the Exchequer, Jeremy Hunt commented:

“These fines hold rule-breaking companies to account and mean record investment in our waterways.

“It comes on top of our requirement for water companies to invest in the natural environment – raising the largest ever environmental infrastructure investment of £56 billion over 25 years.”

Under the new plans, ringfenced funds will go to the Department for Environment, Food & Rural Affairs and will be invested directly back into environmental and water quality improvement projects. This could include initiatives to restore water environments by creating wetlands, re-vegetating river banks and reconnecting meanders to the main channel of rivers.

Water companies were handed a record amount in fines for pollution incidents last year as part of ongoing action to hold them to account.

Since 2015, the Environment Agency has concluded 56 prosecutions against water and sewerage companies, securing fines of over £141 million.

Water Minister Rebecca Pow said:

“The volume of sewage being discharged into our waters is unacceptable, and can cause significant harm to our wildlife and sensitive habitats .

“It is right that water companies are made to pay when they break the rules, but it is also right that this money is then channelled back into improving water quality.

“Water company fines reached a record level last year, and moving forward these plans will significantly increase funding that will be used to recover, protect and enhance our natural environment.

“This is on top of the £56 billion investment we’re requiring water companies to invest in improving our water infrastructure, as well as holding them to account through tough new targets.”

A statement issued by Defra said the Government has boosted funding for the Environment Agency, with £2.2 million per year specifically for water company enforcement activity, including at least 4,000 farm visits per year and 500 sewerage inspections.

This can include the Environment Agency imposing civil sanctions or pursuing criminal prosecutions with the courts, for which there can be unlimited fines, and in some cases prosecution of CEOs and company directors where there is evidence against those individuals and where it is in the public interest to prosecute.

Earlier this year, government announced plans to expand the use of, and raise the cap on, the civil Variable Monetary Payments that the Environment Agency can issue, meaning sanctions can be imposed more often without lengthy and costly court cases.

Ofwat also has the power to issue fines up to 10% of a company’s turnover for the affected business and order companies to take the action necessary to return to compliance where they are in breach.

The EA and Ofwat are currently carrying out the largest criminal and civil investigations into water company sewage discharges ever, at over 2200 treatment works, as a result of increased monitoring.

Earlier this year the government published its Storm Overflows Discharge Reduction Plan, which brought in strict targets on sewage pollution and will require water companies to deliver the largest infrastructure programme in their history to tackle storm sewage discharges – a £56 billion capital investment over 25 years.

Further details on the plans will follow next year.

EAC - “For too long water companies and others have contributed to shocking levels of water pollution”

Commenting on the Government’s announcement that fines from water companies are to be channelled into environmental improvements, Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said:

"Our Committee has always been clear: there will be no quick fix for the poor state of our waterways. Our Committee found that no river in England meets good ecological status, with the scourge of pollution threatening the health of humans and nature alike.

“Today’s announcement by the Government to ringfence fines being paid by water companies will go a long way to developing nature based solutions. From wetlands storing water and putting less pressure on our Victorian era drainage system, to re-vegetating river banks, these solutions could improve water quality while allowing wildlife to thrive.

“For too long water companies and others have contributed to shocking levels of water pollution, but have largely got away with it. Refunnelling record levels of fines to improve nature – the ultimate victim of poor water quality – sends a clear signal that the polluter should pay to clean up the mess.”