Thames Water fined £123m over sewage

Ministers have refused to commit to using the record £123m fine handed to Thames Water to rid Britain’s rivers of sewage, sparking criticism from campaigners. 

Environmental groups fear the millions will be “lost to the black hole of the Treasury” and urged the Government to use the money on restoring and protecting waterways.

On Wednesday, the regulator Ofwat hit Thames Water with two fines worth £123m for sewage spills and breaking rules around shareholder payments.

Amounting to nine per cent of Thames Water’s annual turnover, it is the largest fine ever issued by Ofwat and will be payable to the Treasury.

Environment Secretary Steve Reed said the fine was part of the “toughest crackdown on water companies in history”.

However, he has so far resisted calls to use the funding for cleaning up rivers, despite a pledge from the previous Conservative Government to ring-fence fines for this purpose.

In 2022, the Tories committed to using fines levied against water companies for nature restoration work, but Labour has failed to match the promise.

A grant programme called the Water Restoration Fund was set up to use the fines for sewage clean-ups, but grants were repeatedly delayed under both Governments.

In January The i Paper revealed that not a single penny of the £11m fund set up by the Tories had been handed out to nature groups who had been forced to put restoration work on hold.

Labour finally released the funding in March, nine months after projects were initially due to commence.

However, ministers have repeatedly refused to commit to using any future fines, such as the one levied on Thames Water, for this purpose.

Campaigners pushed for an amendment to Labour’s recently passed Water Bill to ensure fines would be used for environmental purposes, but this was denied.

Environmental groups say such a commitment is particularly important as the fines levied on water companies are expected to increase due to the Government’s clampdown on pollution.

Mark Lloyd, chief executive of the Rivers Trust, said Ofwat’s record fine against Thames Water was “a welcome sign that the regulators are finally showing their teeth”, but that it was “imperative” the funding was used “to rectify the environmental harm our rivers have been suffering”.

Eleanor Ward, senior policy officer at Wildlife and Countryside Link, said: “Thames Water’s landmark penalty should not simply disappear into government coffers; it must directly fund the restoration, protection, and enhancement of our precious waterways.”

A Government source said any future decision on the use of water company fines will be taken at next month’s Spending Review.

James Wallace, chief executive of River Action, said: “The polluter must pay and this record-breaking fine should go to restoring nature and improving river health.

“We’ll be watching the Spending Review closely for signs the Chancellor will restore Department for Environment, Food and Rural Affairs funding and deliver on election promises to clean-up Britain’s waterways.”