Self-Regulation of Utilities in UK: United Utilities accused of corrupt behaviour

Self-Regulation of Utilities in UK: United Utilities accused of corrupt behaviour
Lake Windermere

A leak from the Environmental Agency (EA), reported by BBC’s investigative programme, Panorama, reveals possibly extensive abuse of British environmental standards and wilful dereliction of duty by water and wastewater services company, United Utilities. 


Concern for the health of British waterways, once again, mounts this week as whistleblowers indicate United Utilities consistently and wrongfully downgraded sewage spill categorisations in reports to the Environmental Agency, which were then not properly investigated. Though this issue certainly looks like an incidence of corporate malfeasance, impACT suggests that this is illustrative of a much wider, pervasive issue within utility regulation in Britain. Unless there is policy change, Britain will continue to see degrading environmental health. 


Whistleblowers from the EA have suggested that United Utilities wrongfully downgraded a number of sewage spills across North West England, some in critical environmental areas. Reports indicate that United Utilities consistently downgraded spills from Category 2, to Category 4. The former would indicate to the EA that a spill will have a significant impact on the surrounding environment, whilst Category 4 incidents are meant to have minimal environmental impact and are not counted in published figures. Panorama obtained 200 documents pertaining to pollution incidents at United Utilities sewage works, in more than 60, the “company appears to have wrongfully downgraded”. Talking to the BBC, two anonymous experienced water pollution experts from the EA suggested “none of the incidents should have been Category 4”. 


One such spill occurred in World Heritage site, Lake Windermere. Initially a Category 2 incident that United Utilities had downgraded to Category 4, the characteristics of the spill were downplayed too. The company suggested that tests taken on the shoreline indicated no impact from the spill, whilst denying claims that sewage had been pumped into the middle of the lake. Due to the downgrading of the spill, the Environmental Agency did not investigate. In files obtained by Panorama, it was revealed that sewage had been pumped into the middle of the lake, and environmental damage was more extensive than reported.


The Department for Environment, Food & Rural Affairs (DEFRA), though it has condemned the accusations of abuse by United Utilities, whilst being led by Conservative Party ministers has been an instrumental institutional vehicle for the reduction of the Environmental Agencies regulatory capacity. Budgets have been cut dramatically over the past decade. In 2009, the EA received £213.8m from DEFRA, in 2021, this figure stood at just £94.3m. Members of the Prospect trade union, representative of professionals in the public sector, have indicated that the government’s grants for ‘environmental protection’ is currently 56% lower than in 2009/10. Last year EA Head, James Bevan, referencing major cuts stated that they “have had an effect on our capacity to monitor, to enforce the rules and to help improve the environment where we think it needs doing”. 


Conservative Party environmental secretaries, running DEFRA, have consistently cited “efficiency” as the primary objective of such cuts. Caroline Spelman, environmental secretary in 2010 indicated that despite “efficiency savings” agencies would still be able to deal with environmental issues. Defending her time as the secretary in 2014-16, ex-Prime Minister Liz Truss explained such decisions in 2022; “I am a great believer in value for money for public services. There are plenty of things the EA were doing that they shouldn’t have been doing”. 


According to Vaughan Lewis, a senior consultant for the agency, interviewed by The Guardian in 2022, the ability of agency employees to take regular samples was severely limited, “they plummeted to the point it was impossible for the EA to know what’s going on. They had no control or monitoring capability that was meaningful. They ceded the control of monitoring to water companies”. Similarly, whistleblowers indicated that onus lies largely on utilities companies to regulate themselves. “If they [United Utilities] say attend - which is incredibly rare - we’ll attend. If they say don’t attend, we don’t attend. They’re effectively regulating themselves”. With only 126 recorded (category 3 and below), United Utilities was statistically the best performing company in 2022, though likely only due to consistent corruption, they were consequently awarded £5.1m in bill increases for seven million of its customers.


In a report by Ofwat, the water services regulation authority, released earlier this year in February, has indicated that public faith in water companies has fallen over recent years. Whether it is proper regulation, or they are acting in the best interest of their customers, or how they deal with sewage, the report indicates that “trust has fallen in water companies abilities to perform a range of responsibilities, including ensuring a good quality drinking water and providing a reliable service”. This latest revelation is only likely to worsen public faith, with some survey respondents already “convinced that water companies do not act in their interest”. Almost half of all respondents “agree that water companies put the interests of their shareholders/owners first”. As the environmental health of the nations waterways becomes increasingly damaged by malpractice, there is a danger that public faith in the workings of water companies in the UK will completely degrade. 


impACT has expressed serious concern this year regarding environmental regulatory practices under Conservative Party government. Revelations regarding widespread and un-regulated spills across the country earlier this year, and a lack of control of highly toxic pesticides, are indicative of a nation with concerning regulatory scope. Last weeks leak regarding United Utilities is extension of this issue. impACT would suggest that continued reduction of funding will continue to reduce the United Kingdom’s ability to regulate waterways will be severely limited, and continue to pose a threat to ecological and human health. Relying on de facto self-regulation by companies like United Utilities, as has been suggested by experienced insiders such as James Bevan and Vaughan Lewis, is a highly naive position considering the importance of clean water to the health of a nation. Creating budget efficiencies, whilst degrading the ability of an agency or institution to carry out its primary role is not good governance. 


There are a number of policies that must be adopted in order to regenerate the health of Britain’s ecology and the capacities of regulators. Firstly, the UK government must re-instate DEFRA and EA funding, relative to figures in 2009 and adjusted for inflation, in order to regain understanding of the health of our waterways. With EA agents able to build a clearer picture of the state of British waterways, the government must then allow for publication of such findings. As illustrated by Ofwat’s report, there is a dearth of trust in governing bodies and companies, a nationwide, comprehensive analysis of Britain’s water must be conducted to re-instate public trust. 


An important part of this process is a proper, judicial analysis of the extent of United Utilities malpractice. Considering the vital importance of water, actions to compromise the health of such a utility must be criminally investigated. United Utilities, like all water companies, face a serious task of regulating and dealing with a utility that is unconditionally vital to the health of a nation. Whether through negligence or corruption, the persistent actions of United Utilities must be investigated. Accountability is particular importance for regaining public faith. We at impACT International join UK parliamentary party, the Liberal Democrats in their demand for a criminal investigation


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