Outrage at Ofwat plans to chop sewage-dumping fines for water companies

Anger towards the water industry grew further as plans to slash fines for some sewage-dumpers were revealed.

Campaigners were furious with watchdog Ofwat, which is understood to want to axe fines for firms that are struggling.

Environmental groups dubbed the plans ‘disgusting’ as it would mean some utility companies face fewer or zero fines. They would instead be urged to invest to fend off nationalisation.

It means beleaguered Thames Water may be given a ‘recovery regime’ to help it with its high debts, despite sewage leaks.

The industry has been lobbying for such measures, saying fines are like ‘shooting the company in the leg’. Their argument is that the penalties make it harder to invest in remedies.

Sewage leaks: A discharge into the River Thames near Thames Water’s Longreach Sewage Treatment Works 

Britain’s biggest supplier is on the edge of collapse after shareholders claimed it had become ‘uninvestable’ after racking up more than £14billion of debt.

And there are fears the crisis could result in Thames being nationalised. But Ofwat’s latest idea has left many fuming as firms continue to pump sewage into treasured lakes.

Debt-fuelled suppliers including Southern Water, South East Water and Yorkshire Water could be eligible for the recovery scheme.

But green campaigners think the regulator is not tough enough. Doug Parr, at Greenpeace UK, said: ‘If the story is correct the regulator has decided to reward failure and punish companies for devaluing the water supply by giving them less stringent targets, a holiday on regulatory enforcement and more shareholder dividends.

‘Thames Water have got exactly what they wanted.’

Thames was privatised in 1989 with no debt. It has taken on more debt to help fund its infrastructure projects while paying large dividends, notably to Australian bank Macquarie.

Matt Staniek, founder of the group Save Windermere, which wants to protect the Lake District hotspot from sewage, dubbed the suggestion ‘absolutely disgusting’. 

He added: ‘The industry continues to prioritise dividend returns over environmental protection and regulators are failing to stop it.’

Shares in listed water stocks – United Utilities, Severn Trent and Pennon, which owns South West Water, rallied in early trading. But then they fell back with United Utilities closing up 0.9 per cent, Severn Trent down by 0.1 per cent and Pennon up 0.5 per cent.

United has been accused of pumping millions of litres of sewage into Lake Windermere and dishing out nearly £340million to shareholders. 

Severn Trent was docked £2million-plus for letting ten Olympic-sized swimming pools of sewage into the River Trent.