Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Accepted
Most water company fines go to Treasury, delaying restoration fund disbursement
Conclusion
Over the period 2019 to 2024 water companies paid over £430 million in penalties as a result of enforcement action from the EA and Ofwat. Of the fines imposed by the EA, 84% went to HM Treasury.56 Defra told us that it is looking at ways of channelling money into local water projects.57 In 2024 it set up a Water Restoration Fund, using £11 million from fines which it had agreed with HM Treasury could be used on water projects. This money has not yet been disbursed to the chosen recipients.58 In June, Defra announced that a further £100 million from fines and penalties levied against water companies since October 2023 would be spent on projects to clean up rivers, lakes and seas. It did not provide a timeline for when the projects would be announced, or when funding would be disbursed.59 50 Committee of Public Accounts, Antimicrobial resistance: addressing the risks, Thirtieth Report of Session 2024–25, HC 646, 13 June 2025 51 Q 43 52 Q 56 53 Q 75 54 Qq 76-77, 88 55 Qq 45-46, 89 56 C&AG’s Report, para 1.15 57 Q 46 58 Qq 46, 90; C&AG’s Report, para 1.18. 59 Defra, Government to invest over £100m in water company fines to local environmental projects, 19 June 2025 15 Financial resilience of the water sector
Government Response Summary
The government recognizes the importance of using penalties paid by water companies to benefit the environment and cites the Water Restoration Fund as an example.
Government Response
Accepted
HM Government
Accepted
The Government recognises the importance of ensuring that penalties paid by water companies are used to benefit the environment. Defra has set up a Water Restoration Fund, using £11 million from fines to fund local water projects. The Government is committed to working with water companies and local communities to ensure that these projects are delivered effectively.