The Department for Environment, Food & Rural Affairs says the first ever joint report from the Environment Agency, Natural Resources Wales, the Drinking Water Inspectorate and Ofwat “leaves nowhere for underperforming companies to hide.”
The Environment Secretary is set to take further action against failing water companies, with tougher consequences for executives at persistently underperforming firms, and demanding action on the worst pollution incidents.
Intending to shine a harsh light on these serious incidents, Ministers will visit a number of sites to interrogate companies’ responses. Dame Angela Eagle will also be looking at options to strengthen the ban on executives’ bonuses.
A statement issued by Defra says the Environment Agency’s Environmental Performance Assessment Report which accompanies the joint report “starkly demonstrates” that pollution incidents remain far too high, with only one company achieving the top four-star rating.
There were six Category 1 incidents during 2025, each representing “an unacceptable failure by water companies to protect people and the environment.” The sites will be prioritised for visits by the Environment Secretary.
In addition, the Environment Secretary will set out a clear set of improvement actions for each water company. These will include tackling leakage from pipes, delivering sustained reductions in pollution incidents, and improving customer satisfaction scores.
One-star ratings automatically mean that bonuses will be blocked for executives at Southern Water, Thames Water, South West Water and Yorkshire Water – thanks to new rules which took effect in 2025.
While the “shocking failures” will automatically trigger bonus bans for six Chief Executives under the existing rules, Defra says the Environment Secretary recognises that executives are continuing to be rewarded in spite of persistent underperformance. Further details on strengthening the bonus ban are expected to be set out in the coming weeks.
“People are sick of excuses. They want the certainty that every pound they pay is being invested wisely, not wasted"
Environment Secretary Dame Angela Eagle said:
“Water companies have let the public down time and time again, and today’s report is further proof that root-and-branch reform cannot wait.
“People are sick of excuses. They want clean rivers, lakes and seas, and the certainty that every pound they pay is being invested wisely, not wasted.
“I am demanding answers from the companies that are failing, and I’ll be shining a spotlight on the worst offences around the country. We are getting on with the job of building a water system that finally works for the people who pay for it.”
Defra said the government has made clear that "nothing is off the table" when it comes to holding underperforming companies to account.
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