Anger as Ofwat is told to prioritise ‘growth’ of water firms

The Conservatives have pushed through a duty on the water regulator to prioritise growth, which experts have said will incentivise water companies to value their bottom lines over reducing raw sewage discharges.

Campaigners fear the move will weaken Ofwat’s ability to crack down on water companies, as it may force the regulator to consider a company’s financial situation and the impact on growth if it is heavily fined for polluting. The measure requires Ofwat to “have regard to the desirability of promoting economic growth”.

The Liberal Democrats forced a vote in parliament yesterday against the new duty, but lost, with 395 MPs voting in favour of the measure and 50 against.

The growth duty specifically mentions fining companies as a measure that could hamper their growth: ‘‘Certain enforcement actions, and other activities of the regulator, can be particularly damaging to growth.

“These include enforcement actions that limit or prevent a business from operating; financial sanctions; and publicity, in relation to a compliance failure, that harms public confidence.’’ Last year, water companies were ordered to cut more than £100m from bills after repeated failures to stop sewage pollution.

Campaigners fear the growth duty could cause the regulator to be less stringent with penalties. The finances of some water companies are already in a precarious state; Thames Water is currently at risk of collapse.

Richard Benwell, the head of Wildlife and Countryside Link, said: “The growth duty privileges business bottom lines over nature. Public demand and environmental need are totally clear – Ofwat should be promoting investment in nature and ensuring polluters pay.” Labour MPs voted with the government; it is understood this is because they did not want to be accused of being anti-growth.

The Lib Dems’ environment spokesperson, Tim Farron, said Tory MPs had voted to help water firms get off the hook. “Ofwat will now be fighting water companies with one hand tied behind their back.”

A government spokesperson said: “This extension allows Ofwat to more effectively deliver economic growth alongside its regular duties and does not in any way restrict how regulators enforce the industry.”