New law to ban bonuses for polluting water bosses

The Water (Special Measures) Act 2025 has been granted Royal Assent, marking a major advancement in the government’s efforts to combat water pollution in Britain. This new legislation introduces enhanced powers for regulators to hold water companies accountable for their environmental impact, with particular focus on ensuring water company executives are penalised for failures. A key feature of the Act is the ability for Ofwat to prevent the payment of bonuses to water bosses if their companies do not meet high standards for environmental protection and consumer service.

In a statement, Environment Secretary Steve Reed said, “We promised to put water companies under tough special measures to clean up our waterways. Today, the Government has delivered on that promise as we continue to deliver on our Plan for Change. Polluting water bosses will no longer be paid undeserved bonuses. And if they break the law over water pollution, they could end up in the dock and face prison time."

The Act also enables regulators to issue automatic penalties for environmental violations, reducing the need for lengthy investigations. Furthermore, water companies will be required to monitor sewage outlets independently, publishing real-time data on emergency overflows within an hour of discharge. Companies will also need to submit annual Pollution Incident Reduction Plans to show progress in tackling pollution.

The passing of the Act marks a pivotal point in the government’s broader plan to address systemic issues in the water industry. In his comments, Alan Lovell, Chair of the Environment Agency, stated, “The passing into law of the Water (Special Measures) Act is a crucial step in making sure water companies take full responsibility for their impact on the environment.”

While the legislation is seen as an essential first step, further reforms are expected. Richard Benwell, CEO of Wildlife and Countryside Link, emphasised, “The Act is just a first step. It must be followed promptly by further legislation and action to clamp down on pollution and ramp up environmental investment across whole catchments.”

The Act also lays the groundwork for the work of the Independent Water Commission, which will review the water sector and inform future reforms. As Jamie Cook, CEO of the Angling Trust, put it, “This bill is a first step toward cleaning up waterways and fixing the regulatory system. The Independent Water Commission must now drive systemic reform.”