Ofwat hits Southern Water and Wessex Water with more than £37 million in penalties

The latest penalties against water firms serving the New Forest and Christchurch have been slammed as a “drop in the ocean” by a local campaign group.

Regulator Ofwat has told Southern Water to pay back £31.9 million to users for missing key service targets, as customer satisfaction levels continue to plummet.

Wessex Water was given a £5.3 million penalty for similar reasons. Both firms provide wastewater services in the New Forest and Christchurch.

James Wallace, chief executive of River Action – which was founded by Forest-based Charles Watson – said: “This might sound like a lot of money but frankly it is a drop in the ocean for polluting water companies that have handed billions in dividends and interest payments to investors.

“Clean and abundant water and healthy ecosystems are fundamental to human life and our economy.

“Yet, water companies continue to pollute the nation’s waterways without facing the full force of the law or sufficient penalties.”

Southern Water’s penalty comes shortly after the firm arranged to borrow almost £4 billion from its investors over the next five years.

The company was in hot water with Milford residents in August after a sewage discharge from its Lower Ashley processing plant killed fish and invertebrates in the Danestream and led to a public health alert.

Ofwat’s penalties also come in the wake of a recent academic study that found pharmaceuticals such as antidepressants and antibiotics are polluting surface waters in England’s national parks, including the New Forest.

In its annual performance report on water companies, Ofwat said Southern Water and other companies had fallen into their lowest category of “lagging”.

Ofwat handed out a total of £157.6 million in penalties to water companies, adding that customer bills will be slashed in 2025-26 to reflect that.

The regulator said it judges the performance of water companies in England and Wales against “stretching” targets set in 2019. If they fail to meet these targets, Ofwat restricts the amount of money they can take from customers.

Ofwat said despite water companies committing to reducing pollution incidents by 30%, there has been only a 2% reduction, while also missing targets on reducing internal sewer flooding incidents. It also noted customer satisfaction levels continue to fall.

Ofwat chief executive David Black said: “This year’s performance report is stark evidence that money alone will not bring the sustained improvements that customers rightly expect.

“It is clear that companies need to change and that has to start with addressing issues of culture and leadership. Too often we hear that weather, third parties or external factors are blamed for shortcomings.

“Companies must implement actions now to improve performance, be more dynamic, agile and on the front foot of issues. And not wait until the government or regulators tell them to act.

“As we look towards the next price control, the challenge for water companies is to match the investment with the changes in company culture and performance that are essential to deliver lasting change.”

A spokesperson for Southern Water said the firm “takes its environmental role very seriously”, adding: “In the past 12 months, pollution incidents were slashed by 35% – and we will keep improving.

“The most recent EA report on Southern Water noted that our wastewater treatment works are at the very top of the industry for complying with the permits which govern them with 99.4% compliance. Improving river health will require partnership work.”

A Wessex Water spokesperson said: “While we’ve delivered improvements under almost every measure in this report, clearly more needs to be done and we’ve listened to our customers’ concerns in setting out plans to invest £3.65 billion in service improvements from 2025.

“We now need Ofwat to approve these plans.”