New financial penalties for environmental offences
Source: gov.uk (2025-10-21)

Bolstered powers for Environment Agency to hold water companies to account

Water companies who commit environmental offences could face quicker penalties of up to £500,000, under changes being considered by the government.

A consultation has been launched (https://consult.defra.gov.uk/water-sector-civil-penalties/strengthening-penalty-powers/) to expand and strengthen the current range of financial penalties available to the Environment Agency in a bid to clamp down on more offences.

Currently, the Environment Agency struggles to impose financial penalties for frequent, minor and moderate offending – such as some breaches of a licence or a permit. [1]

This is because it needs to prove an offence to the same high legal standard used in criminal courts - making penalties too expensive and time-consuming to pursue for less serious offences.

The changes would lower the standard of proof needed, making it much easier and quicker to hold water companies to account.

The move builds on immediate action the Government has already taken across the water sector - including blocking unfair bonuses for polluting water bosses - and will form part of the longer-term reforms.

Secretary of State, Emma Reynolds, said: ”I share the public’s anger at the current state of our water system, and this government is taking decisive action.

“I want to give the Environment Agency the teeth it needs to tackle all rule breaking. With new, automatic and tougher penalties for water companies, there will be swift consequences for offences – including not treating sewage to the required standard and maintenance failures.

“We are delivering on our Plan for Change by pushing ahead with reforms to clean up our rivers, lakes and seas.

The government will now consult on:

Allowing the Environment Agency to use a lower civil standard of proof, instead of criminal, for minor to moderate environmental offences.[2]

Setting a cap at either £350,000 or £500,000 for penalties issued to the civil standard.

Introducing new automatic penalties – like a speeding ticket – for specific and obvious breaches without the need for lengthy investigations.[3]

Setting a value of either £10,000, £15,000 or £20,000 for the new automatic penalty.

Environment Agency Chair, Alan Lovell, said: “We are dedicated to making sure water companies take full responsibility for environmental harm.

“These changes would be a welcome boost to our current enforcement powers and allow us to deliver swifter and more appropriate penalties.

“Through a larger workforce and upgraded digital tools, we can deter poor performance and achieve a cleaner water environment for communities and nature.”

The bolstered powers were created in the Water (Special Measures) Act (https://www.gov.uk/government/news/new-law-to-ban-bonuses-for-polluting-water-bosses) but must be subject to consultation before implementation.

This delivers on the manifesto pledge to clean up the water sector and implements Sir Jon Cunliffe’s recommendation to “expand the regulator’s toolkit to enable swifter enforcement.”[4]

Modelling, based on water company performance in previous years, suggests the changes could cost the water sector between £50million and £67million annually. However, the actual cost is likely to be much lower as the policy is designed to drive effective and lasting behaviour change.

These changes would sit alongside existing enforcement tools, including unlimited financial penalties - known as Variable Monetary Penalties - where offending is proved to a criminal standard. There would remain the option of prosecution for the most serious offences.

The cost burden for water company penalties is borne by their shareholders and Ofwat prevents companies from passing these on to customer bills.

In the short-term, the Government has taken immediate action by blocking unfair bonuses for polluting water bosses and those who obstruct investigations now face up to two years in prison.

This comes alongside the start of a systemic reform of the water sector including securing £104 billion of private investment to fix crumbling infrastructure and build new reservoirs to ensure water security. It is also establishing a new, single regulator.

NOTES TO EDITORS:

[1] Permits and licences are used to regulate water company activities, including wastewater treatment, abstraction, storm and emergency overflows, and drought management. Last year, 98% of permit breaches were category 3 (minor). Examples of these breaches include minor failures to maintain equipment, not emptying storm tanks, a minor pollution incident, or failure to return data.

[2] Criminal standard is “beyond reasonable doubt” whereas civil standard is “on the balance of probabilities.”

[3] Automatic penalties would cover specific breaches such as failure to report a significant pollution incident within four hours, failure to report Event Duration Monitoring data monthly, failure to return abstraction data within 28 days of a request, or the use of an emergency overflow more than three times in one year.

[4] Recommendation 28 in Sir Jon Cunliffe’s final report for the Independent Water Commission (https://assets.publishing.service.gov.uk/media/687dfcc4312ee8a5f0806be6/Independent_Water_Commission_-_Final_Report_-_21_July.pdf)