A damning Environment Agency report has found that South West Water has failed to meet pollution targets for the tenth year running.
The annual assessment placed South West Water and Southern Water at the bottom of an environmental performance league table of water and sewerage companies in England.
The Environment Agency uses measures such as the number of incidents of pollution caused by sewerage and the self-reporting of these incidents to gauge the environmental performance of each water company.
South West Water was responsible for both the highest number of pollution incidents and the highest number of serious pollution incidents per 10,000km2 during 2020, the period covered by the report. The company’s performance was poorer than the previous year on both measures.
It scored significantly worse than Southern Water, which was recently fined a record £90 million after pleading guilty in court to 6971 unpermitted pollution discharges over a period of five years.
Environment Agency chair Emma Howard Boyd said the performance of South West Water gave “serious cause for concern” and “drags down the whole sector’s reputation”.
She added: “When under pressure on the issue of pollution, there is still a tendency for some water companies to reach for excuses rather than taking action to reduce serious pollution incidents to zero.”
The privately-owned regional water companies, which were created in 1989 through the sale of the nine regional water authorities in England, have each been awarded a rating out of four stars based on an annual environmental performance assessments since 2011.
South West Water and Southern Water both received two star ratings for 2020, while six of the other companies were awarded the maximum four stars.
South West Water has failed to achieve a rating higher than two stars since 2011, and has been awarded the lowest rating of one star three times during that period.
The report said it had been significantly below target for the sewerage incidents metric for ten years in a row and described its performance as “consistently unacceptable”
David Black, Interim Chief Executive at industry regulator Ofwat, said: “It’s disappointing to see repeat poor performance from some companies who are failing to take their responsibilities seriously enough.
“A step-change in culture and commitment is required if the sector is to fundamentally change the way it delivers for customers and the environment.”
Environment Minister Rebecca Pow said that the report made for “extremely disappointing reading”. She is to discuss the report’s findings with South West Water.
Since privatisation the English regional water companies have assumed a total of £48 billion of debt, at an annual interest cost of £1.3 billion.
Researchers at Greenwich University found that the companies paid out £53 billion in dividends to shareholders between 1989 and 2017, which led to an aggregate £51.7bn cash shortfall.
A separate Guardian analysis concluded dividends paid between 1991 and 2019 amounted to £57 billion, nearly half the sum spent on maintaining and improving distribution systems and treatment plants during that period.
At the same time water bills increased by more than 40% above the rate of inflation, driven mainly by continuously growing interest payments on debt.
In the decade to 2020, South West Water paid £1.1 billion in dividends, while averaging £163 million per annum in pre-tax profits. Its parent company, Pennon Group, ended 2020-21 with a £3 billion cash surplus following the sale of waste management company Viridor, then paid out nearly £2 billion to shareholders.
As a result of South West Water’s consistently poor environmental performance it has agreed a bespoke performance commitment with Ofwat aimed at achieving 4 star status by 2023 then maintaining it for a minimum of two years.
South West Water acknowledged its failures in its 2021 annual report. It said: “Our performance in respect of wastewater pollution incidents did not achieve the improvements we had targeted.”
“We have intervened and restructured our operation, established a new wastewater leadership team and aligned our business to improving our environmental performance.”
Susan Davy, the company’s chief executive, said: “We are currently investing £150 million in our largest environmental programme for 15 years, which includes a commitment to reduce pollution by 80% and additional storage protection measures to enhance our bathing waters.
“We know we can do more and are committed to doing so.”
The Environment Agency report has highlighted wider concerns about the ongoing pollution of England’s waterways.
The target of the government’s 25 year environment plan is for at least 75% of England’s water bodies to be close to their natural state “as soon as is practicable”.
However, according to Environment Agency data, only 14% of English rivers were of a good ecological standard last year. None are of a good chemical standard, with discharges from sewage treatment works, agricultural run-off and industrial discharges largely to blame.
Mark Lloyd, CEO of The Rivers Trust, said: “We need to see stronger regulation in this and other sectors. Every company should know that they will not get away with cost-cutting that results in pollution.”
Westcountry Rivers Trust CEO Laurence Couldrick added: “Ordinarily, pollution would be countered through regulation, but the number of officers has reduced due to a halving of the government budget over the last decade.
“Recent increases in the Environment Agency budget should help but it doesn’t restore enforcement to pre-2008 levels, so both sewage and agricultural pollution will continue.”
The government claims to be tackling the problem of England’s polluted waterways through its new Environment Bill, which is intended to replace European environmental regulations and create a new watchdog, the Office for Environmental Protection.
The bill contains provisions intended to mitigate sewerage pollution incidents from storm overflows.
However, according to the Environment Agency, only about 7% of rivers are polluted because of raw sewage from storm overflows. Nearly a third (32%) of rivers are failing to meet tests for good ecological status because of effluent from sewage treatment works.
An alliance of cross-bench and opposition peers has tabled more than 100 amendments to the Environment Bill, which is in its final parliamentary stages in the House of Lords, in an attempt to enhance protections for nature, air quality and water standards and to give the new watchdog more powers.
The existing proposals do not give it independent power to issue binding judgments or force the government to take action.
Laurence Couldrick warned that the bill may allow a lowering of environmental standards. He said: “The bill’s been watered down”, adding that its impact will be revealed when it comes to decisions around delivery such as “do we have development in this area or do we protect water quality?”