Correspondence

Water industry: letter to water companies from Environment Agency CEO

Published 23 February 2024

I am writing to you following our joint announcement with Defra yesterday about the increase in water company inspections. See our press notice. I would like to provide you with further detail on what this means, together with what I expect from you and the opportunities this provides.

In June last year, we let you know about our plans to transform the way the water industry is regulated. These included the expansion of our workforce, investing in training and digital tools, and significantly increasing our inspection and compliance activities. Our announcement yesterday is part of this work.

As you are aware, we are currently consulting on proposed increases to our water quality permit charges, which pending feedback on the consultation, will enable the above.

Depending on the outcome of the water quality charges consultation, and securing the funding needed, we plan to more than quadruple the number of inspections that are carried out, with 4,000 water company inspections in total by the end of next financial year (March 25). This will rise to more than 10,000 inspections a year from April 2026. We are meeting with your Regulatory Directors at the Strategic Steering Group next week on 26 February, at that meeting we will set out in more detail the expectation to increase inspections. We will write to you following this meeting with an update on what was discussed.

As part of these plans, we will recruit up to 500 additional staff, including almost 300 frontline regulatory officers over the next 3 years. We plan for a total of 250 frontline regulatory officers to be in post by the end of 2024/25 and 370 by the end of 2025/26.

In addition to the increase in inspections, there will also be a significant increase in in-depth audits of your company assets. These allow us to get to the root cause of incidents and non-compliance more quickly and agree remedial plans with you. I expect all water companies to fully cooperate with this increased level of scrutiny and to take quick action to fix issues before they escalate. The Environment Agency intends to make public all findings of this work and is investing in the data systems necessary to enable this. We will also share our findings with Ofwat, as the sectoral regulator.

Initially, we plan to substantially increase our inspections and other compliance work to understand the scale of non-compliance and drive better performance, but enforcement will also step up, as we use new tools to enable a faster turnaround.

We’re improving our enforcement processes to enable faster, more efficient decision-making and comprehensive recording of activity and we will continue to use, where appropriate, the full range of enforcement sanctions available (notices, civil sanctions, Variable Monetary Penalties, Enforcement Undertakings and prosecutions).

We all know what a fundamental role you as the water industry have in securing clean and plentiful water for the future. This is a critical moment for water companies and a big opportunity for the industry to really demonstrate commitment and tangible progress. Alongside increased inspections we will work collaboratively with you to drive the investment required to address poor water quality.

I look forward to discussing the operation of this new approach over the coming months.

Yours sincerely,

Philip Duffy, Chief Executive, Environment Agency

Chief Executive’s Office, Environment Agency Seacole Block, 2 Marsham Street, London, SW1P 4DF

Chief.Executive@environment-agency.gov.uk