Ofwat ‘acted unlawfully’—forcing customers to pay twice for failures, say campaigners

Environmental group River Action has accused Ofwat of acting unlawfully by using recent, significant bill hikes to cover past infrastructure failures—forcing customers, rather than investors, to foot the bill for decades of neglect. This is despite Ofwat having committed to put in steps to prevent customers paying twice.

Instead of funding essential new water and sewage projects, these price rises—approved in last year’s Ofwat price review—could be being misused to fix long-standing issues that should have been addressed years ago. This means there is nothing to stop customers from being charged twice to clean up an environmental disaster in the nation’s rivers, seas and lakes caused by chronic underinvestment in Britain’s water infrastructure.

River Action’s legal challenge against Ofwat

River Action has taken the first step in a legal challenge against Ofwat, on the basis it acted unlawfully in its Price Review 2024 (PR24) determination for United Utilities. The challenge focuses on funding allocated for wastewater treatment works and pumping stations in and around Lake Windermere.

River Action argues that Ofwat unlawfully approved ‘enhanced funding’ from customers without a mechanism to ensure the money will be used solely to improve sewerage services; rather than bring services into compliance when that should have already happened under past schemes. This means there is nothing to stop customers paying twice for services that have not yet been delivered.

This follows detailed investigations by campaign groups Save Windermere and Windrush Against Sewage Pollution, which exposed significant and systemic flaws in Ofwat’s approach.

River Action is taking legal action to compel Ofwat to reassess its PR24 determination for United Utilities in relation to Windermere and to encourage Ofwat to reassess other water company schemes wherever there are concerns that customers are unfairly covering the cost of past failures. However, River Action is not calling for PR24 to be overturned or for investment levels to be reduced, recognising the urgency and importance of increased investment in Windermere and elsewhere.

Windermere: A damning example of regulatory failure

United Utilities, currently under fire after evidence obtained by the campaign group Save Windermere, revealed 6,000 hours of raw sewage was discharged into Windermere last year, and is a case in point. River Action has commenced legal action claiming Ofwat has allowed the company to divert funds meant for future projects to deal with past failures—rather than investing in vital improvements to wastewater treatment and pumping stations around the lake.

Campaigners warn that millions of pounds intended for infrastructure upgrades may be used to patch up outdated and crumbling water and waste systems—exacerbating the pollution crisis in England’s largest and best-known lake.

A system rigged against the public

River Action believes this problem extends far beyond a single water company. Under PR24 (Price Review 2024), Ofwat has likely permitted other firms to operate in a similar way—leaving billpayers to pick up the tab for failings that should have been fixed with previous funding.

Emma Dearnaley, Head of Legal at River Action, said:

“We believe Ofwat has acted unlawfully by approving these funds without ensuring they are spent on genuine improvements to essential infrastructure. Instead, this so-called ‘enhanced funding’ is being allowed to be used to cover up years of failure.

“Effectively, Ofwat has signed off on a broken system where customers are being charged again for services they have already funded—while water companies continue to mark their own homework and pollute for profit.

“This scandal must be addressed. The cost of fixing the UK’s crumbling water infrastructure should fall on the companies and their investors—not on the British public.”

Leigh Day solicitor Ricardo Gama said:

“Ofwat has said again and again in public that it won’t let price rises be spent on fixing historic issues which are leading water companies to breach their permits. They’ve said in black and white terms that customers won’t be expected to pay twice. But in documents seen by River Action it looks like Ofwat hasn’t done its homework in checking whether the money it’s letting United Utilities take from customers will actually be used for that purpose. River Action believes that this is reflective of a broader lack of due diligence by Ofwat over the decades, which has led to money not being spent on infrastructure improvements and instead being diverted to investors’ pockets.”

River Action is calling for immediate regulatory action to ensure water companies stop passing the cost of failure onto customers—and start taking responsibility for the environmental damage they have caused.

ENDS