England’s water company ratings have fallen to the lowest level on record after sewage pollution last year hit a new peak, with eight of nine water companies rated as poor and needing improvement by the Environment Agency.
The cumulative score of only 19 stars out of a possible 36 is the lowest since the regulator began auditing the companies using the star rating system in 2011.
Only one company, Severn Trent, achieved full marks. It did so despite having been responsible for 62,085 sewage spills, averaging seven hours each, in 2024.
Struggling Thames Water was the only company to be awarded one star for its performance. In 2023-24, its serious sewage pollution incidents more than doubled from 14 to 33.
Thames is on the brink of collapse as the company struggles to secure a deal to write off its debt and secure its future. It has been battling huge debts built up over two decades by owners who have been criticised for paying out dividends without investing enough in its leaking pipes and malfunctioning treatment works.
The report blames the lower performance on wet and stormy weather in 2024; underinvestment in, and poor maintenance of, infrastructure; as well as increased monitoring and inspection.
Ofwat’s performance report was also published on Thursday and the regulator found pollution incidents remained at unacceptable levels, with only two companies having reported a reduction in incidents over the five-year period.
It found that so far during the 2020-25 period, water companies had increased the amount of sewage spilled despite having promised to cut it by 30%.
The report says: “Companies achieved a reduction of 15% in the first three years, but the increase in the final two years has led to an overall 27% increase in numbers across the 2020-25 period.”
The Environment Agency’s ratings have been criticised as not fit for purpose by pollution experts because they allow top marks to be awarded to companies that illegally spill sewage.
Bosses of companies found to “recklessly” discharge sewage have been able to justify their large pay packets because of being awarded the top rating, while companies responsible for sewage spills can call themselves “industry leaders”.
The Environment Agency will introduce new ratings in 2027, replacing the star system with descriptors and numbers.
At present, companies are given one to four stars. As part of the new methodology, they will instead be given a numeric rating from one to five, with only those that achieve the highest standards across the board rated “excellent” and the worst performers rated as “failing”.
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The Environment Agency chair, Alan Lovell, said: “This year’s results are poor and must serve as a clear and urgent signal for change. What is needed now from every water company is bold leadership, a shift in mindset and a relentless focus on delivery. We will support them however we can but will continue to robustly challenge them when they fall short.”
Companies are judged on seven metrics, including drought resilience and transparency over sewage spills. If they score highly on some of these, they can get top marks even if they have discharged large amounts of untreated waste into rivers and seas.
Severn Trent has used the company’s four-star rating to justify the pay packet and bonus of its chief executive. Last year, Liv Garfield was awarded a £3.2m pay deal, including a £584,000 bonus, despite the company being fined £2m for spilling 260m litres of sewage into the River Trent.
This week the chancellor, Rachel Reeves, told regulators to focus on helping businesses achieve economic growth rather than enforcing regulations.
She announced that the government would set growth targets and publish a league table. It also plans to overhaul regulation by abolishing Ofwat and creating a “super regulator” by merging the powers of the existing bodies.
Campaigners have questioned how effective this will be, as the privatised water system has allowed large bonuses and dividends to be paid by companies at the expense of investment in sewage infrastructure.
