English water companies have spent £16.6m fighting legal action against regulators and campaigners over environmental breaches such as illegal sewage spills.
Correspondence from the companies to the Commons environment, food and rural affairs (Efra) committee published on Tuesday reveals that millions of pounds of billpayers’ money has been spent over the past five years on expensive external lawyers enlisted to reduce liabilities for regulatory breaches.
Helena Dollimore, the Labour MP for Hastingsand Rye and a member of the committee, said: “As our water pipes have been left to crumble into disrepair with vital maintenance delayed, the water companies have wasted millions on expensive legal firms tasked with downplaying the extent of the sewage scandal.
“My constituents will be outraged by what our committee has uncovered. That money should be spent fixing our broken water infrastructure, not trying to deny the scale of the problem.”
Top of the list is Thames Water, which incurred £7,528,266.40 in such legal fees over the past five years – £5,002,664.26 on enforcement of regulatory breaches by Ofwat, £2,451,177.47 contesting Environment Agency investigations and £74,424.67 contesting fines from the Drinking Water Inspectorate.
The debt-ridden company is currently pleading with the government to be let off fines and costs to prevent it falling into special administration. It chief executive, Chris Weston, recently told the Efra committee that overall regulatory liabilities could reach £1bn over the current price review period.
Ofwat imposed a record £104m fine on Thames Water in May over environmental breaches involving sewage spills, after it failed to operate and manage its treatment works and wastewater networks effectively. A further £18.2m fine was levied for breaking dividend rules, the first penalty of its kind in the water industry. Ofwat said the company had paid out cash to investors despite having fallen short in its services to customers and its environmental record.
Water companies have also spent money contesting claims from local people and campaigners. South West Water, for example, spent £17,380 challenging five loss-of-amenity claims initiated by customers over the five-year period.
Southern Water spent £2.6m on external legal fees relating to seven regulatory actions. In all of them, the company said it had pleaded guilty as “early as possible”. “In accordance with our obligations under the sentencing guidelines [we] have engaged external legal counsel to act on our behalf to provide the courts with information on culpability, harm, aggravating factors, mitigation and other relevant matters,” it said.
It was announced in March that Yorkshire Water would pay a £40m fine after an Ofwat investigation found the company had discharged wastewater for an average of seven hours a day in 2023, with almost half of the sewage spills in breach of regulations that allow dumping only in exceptional circumstances such as extreme weather events.
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The documents disclose that the company spent £1.7m on solicitors’ fees during this investigation.
Thames Water declined to comment.
