Water companies might avoid swingeing fines for polluting rivers due to fears within the government that the move might be self-defeating.
Thérèse Coffey, the environment secretary, is understood to believe huge fines of up to £250mln are “disproportionate”, The Times reported.
Government ministers had promised to hike fines for persistent sewage discharges into rivers and the sea by 1,000%, but Coffey is said to be cautious due to the huge sums of capital investment that are needed to upgrade the UK’s waterways.
Alan Lovell, chair of the Environment Agency, which monitors the waterways, also described the possibility of such huge financial penalties as “crazy” and “way in excess of what’s needed”.
The Environment Agency has yet to penalise a company for discharges under powers it was granted in 2010.
The agency can impose fines under a second variable system, but this too would require legislation to raise fines above £250,000 for serious pollution incidents.
UK regulator Ofwat has been increasingly vocal in its criticism of sewage dumping by water companies.
In March last year, Ofwat said it was taking enforcement action against Thames Water, Anglian Water, Northumbrian Water, Wessex Water and Yorkshire Water over discharges, but so far financial penalties have been rare.
The Environment Agency, meanwhile, released data showing that 10 water companies in England released raw sewage into waterways 1,000 times a day on average last year.
City analysts also seem aware of the growing problem and the rising risk of some action being taken.
In a note today, Jefferies highlighted the Times’ campaign, adding the key points are more enforcement power for regulators, more ambitious environmental targets and better incentive alignment for stakeholders.
“The campaign is in the backdrop of recent press reports that the government may step back from a proposed large increase in civil sanctions enforceable by the EA.”
Shareholders welcomed the possible footdragging on fines, with shares in Severn Trent, United Utilities and Pennon all higher today.