Thames Water is among the water companies ordered to pay a £157.6m penalty for missing key targets to reduce pollution, leaks and supply interruptions.

In an annual performance report on water firms, Ofwat said customer bills will be slashed in 2025-6 to reflect the penalties, with the total rebates calculated in December.

Not one company achieved the regulator’s top category of “leading” while Anglian Water, Welsh Water and Southern Water fell into the lowest category of “lagging” while the remaining 10 were rated “average”.

Ofwat judges the performance of water companies in England and Wales each year against the “stretching” targets they set in 2019 for a five-year period until 2025.

If they fail to meet these, Ofwat restricts the amount of money they can take from customers. Ofwat said the figures are provisional until it completes a review process.

Despite water companies committing to reduce pollution incidents by 30%, there has only been a 2% reduction.

And companies are falling further behind on key targets for pollution and internal sewer flooding, the regulator added.

David Black, chief executive of Ofwat, 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.”

(Image: PA Wire)

Thames Water moved up a category from “lagging” to “average” as it met some performance targets on leakage and supply interruptions.

Despite this, the heavily indebted London water provider will have to pay £56.8 million, the biggest fine for the fourth straight year.

Anglian Water’s fine is £38.1 million, Yorkshire Water’s is £36 million and United Utilities’ penalty is £33.2 million.

The penalties are separate from an ongoing Ofwat investigation into all 11 of England and Wales’s water firms, which ordered three companies to pay £168 million in fines in August, in the first results of the probe.

It comes against a backdrop of mounting public and political fury at the privatised water sector which is under fire over sewage spills, proposed bill rises and executive bonuses.

Years of under-investment by the privately run firms combined with ageing water infrastructure, a growing population and more extreme weather caused by climate change have seen the quality of England’s rivers, lakes and oceans plummet in recent years.

Some water utilities are also creaking under high levels of debt or face criticism over dividends to shareholders and executive bonuses.

On Monday, a report from the Environment Agency found that almost a fifth of water supplies are being lost through leaks before they reach customers’ taps.

James Wallace, CEO of campaign group River Action, 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.”