Water bosses face being fined from their own pockets for leaks and sewage spills ...Middle East

Water company bosses could be fined from their own pockets for issues including sewage spills and leaks under a new industry regulator.

This week ministers will publish a white paper setting out plans to reform the regulation of water companies, which have come under intense scrutiny due to sewage pollution and water shortages.

The Environment Secretary Emma Reynolds said bosses will “have nowhere to hide” under the new regime that “will make senior leaders more accountable for their actions”.

As part of the proposals, companies would be forced to identify senior leaders who would be held personally responsible for failures in certain areas of performance

It’s likely this will be split into the different areas companies are regulated for, such as environmental performance, financial stability and customer service.

The Government would consult on how individuals could be held responsible for failures, but similar schemes in other sectors have included fines and prison time.

It marks the latest stage in Labour’s shake-up of the water sector following public outrage and campaigning, including The i Paper’s Save Britain’s Rivers campaign.

Backed by over 20 leading environmental charities, including the National Trust and Wildlife Trusts, the campaign has called on the Government to overhaul the regulation of water companies.

Last year, the Government commissioned an independent review into the water sector led by former deputy director of the Bank of England, Sir Jon Cunliffe.

The report made 88 recommendations, including the creation of a new single regulator for the water sector, merging together the powers of Ofwat, the Environment Agency, Natural England and the Drinking Water Inspectorate.

Immediately following publication of the report, the Government announced plans to abolish Ofwat and this week’s white paper is expected to set out further details of what the new regulator will look like.

The i Paper understands this will also include plans for the regulator to be involved in the interview process for water company CEOs and senior executives.

Ministers are believed to be taking inspiration from reforms to the financial services sector following the 2008 financial crash, which resulted in senior managers in banks becoming personally responsible for misconduct that fell within their level of responsibility.

Under these rules, bosses in the financial sector can face punishments including substantial fines, industry bans and even jail time.

“Our reforms offer a once-in-a-generation change to fix the water system and make it fit for the future,” Reynolds said.

“Customers deserve so much better, and I am determined to turn the water sector around. Culture is led from the top and our changes will make senior leaders more accountable for their actions. There will be nowhere to hide for poor performance.”

Thousands without water in fresh supply outages

It comes as water bosses face intense public criticism over their performance.

Last week the chief executive of South East Water, David Hinton, was grilled by MPs over water shortages that left 30,000 households in Kent and Sussex without tap water for days at a time.

This weekend, 4,500 homes in villages around Maidstone were hit with fresh water supply problems which South East Water said was caused by an electrical fault at a treatment works.

Sources told The i Paper Reynolds had been shocked by Hinton’s “staggering lack of self-awareness” after he refused to say whether he would forego his bonus, which is paid on top of an annual salary of £400,000.

The Government has previously strengthened the powers of Ofwat to block the payment of bonuses to underperforming executives and introduced powers to bring criminal charges against leaders who cover up major environmental incidents.

The white paper is expected to set out the Government’s response to other recommendations in the Cunliffe review, which cover areas including planning, agriculture and consumer protections.

James Wallace, CEO of River Action, said the Government “must commit to restructuring private water utilities that treat dividends, fines, sewage spills, and under-investment as business as usual, and tackle agricultural pollution, which continues to damage rivers with little regulatory oversight”.

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Jo Morley, head of campaigns and policy at Surfers Against Sewage (SAS) said the white paper “must be bold in standing up to polluters”.

SAS is calling for a number of reforms including democratic decision making within water companies, greater transparency and tougher regulation.

The Government will consult on the proposals within the white paper before bringing them into force.

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