Serious pollution by water industry remains high despite £5bn investment

The environmental performance of water companies fell again last year despite industry investment, according to the first joint report by the regulators into water companies.

Eight of the nine companies in England were rated as "poor" or "requiring improvement", with only Severn Trent receiving the highest rating.

Companies were praised for reducing service disruptions but serious pollution into the environment remained a "major concern".

The chair of the environmental regulator said the results showed the industry continued to "fall well short of the standards rightly demanded by both us and the public".

Four different regulators currently oversee water companies in England and Wales - the Environment Agency (EA), Natural Resources Wales, Ofwat and the Drinking Water Inspectorate - and this marks the first time they have come together to assess the industry.

It is a nod to the commitment which Sir Keir Starmer's government made to merge the organisations into a single body as part of efforts to streamline regulation.

But it is on environmental performance that the report is most critical - and damning.

Serious pollution incidents in 2025 were a "major concern", the Environment Agency said, and remained at similarly high levels to those seen in previous years.

Overall, England's water companies were awarded 16 out of a possible 36 stars for environmental performance - the worst total on record.

The EA said this was due to "declining performance in some areas but also due to our tighter performance standards".

And in Wales, Dŵr Cymru Welsh Water was given a two-star rating, out of four, by Natural Resources Wales.

Alan Lovell, chair of the EA, said the "results expose the scale of underperformance across the sector".

Water companies have committed record levels of investment up to 2030 to upgrade their networks and sewage treatment works. But customer bills are expected to rise 36% on average as a result.

There has already been £5bn invested over the last five years to try and tackle environmental pollution. But Lovell said "not all companies have delivered the environmental improvement schemes they have been funded for".

Moving forward, he said it was important that any further investment "delivers cleaner waters, healthier habitats and stronger public confidence".

In September, it was reported that the number of complaints made by households about water companies to the Consumer Council for Water rose by 84% in a year - the highest in 20 years.

Environment Secretary Dame Angela Eagle said she was "demanding answers from the companies that are failing".

"We are getting on with the job of building a water system that finally works for the people who pay for it," she added.

Industry body Water UK acknowledged that "the environmental performance of some water companies is not good enough" but pointed to "the lowest level of leakage in history, as well as other areas of good performance".

"It will take time, but record investment will help secure water supplies, support growth, and end sewage entering rivers and seas," a spokesperson said.