Six water companies face £800m lawsuit

Millions of households across the country could be in line for compensation under class action lawsuits being filed against half a dozen water companies.

Claims are being made against six water firms on behalf of 20 million customers for alleged under-reporting of pollution incidents. If successful, water companies face paying out as much as £800 million in compensation.

The first claim has been lodged against Severn Trent with the Competition Appeal Tribunal. Further action is planned against Anglian, Northumbrian, Thames, United Utilities and Yorkshire.

The claim against Severn Trent, which it strongly refutes as “highly speculative”, is valued at £330 million.

Environmental professor and consultant Carolyn Roberts is bringing the claims on behalf of household customers who she claims have been overcharged by water companies that abused their monopoly positions.

In particular, the claim submitted by Leigh Day solicitors on Roberts’ behalf argues that customers have been overcharged for sewage services.

Roberts added: “It appears that because of the serial and serious under-reporting [of pollution incidents] water companies have been avoiding being penalised by Ofwat. I believe this has resulted in consumers being unfairly overcharged for sewage services.

“Millions of consumers have been paying their water bills on the basis that water companies are meeting their targets, but instead every year water companies let raw or only partially treated sewage into the environment in breach of the rules.”

Claims against all six firms will relate to breaches of environmental rules relating to pollution incidents and reporting of them.

Leigh Day added that anyone who has paid for a water bill to these companies since April 2020 may be entitled to compensation if the case is successful.

A Severn Trent spokesperson said: “This is a highly speculative claim with no merit which we strongly refute. Should pollutions ever occur, they are always reported to the Environment Agency. Any claim to the contrary is wholly and completely wrong.

“Our regulators, the EA and Ofwat, set strict targets and performance measures that deliver for our customers and the environment. Severn Trent is recognised as a sector leader by both regulators across operational and environmental measures. We consistently deliver for our customers, and recently received the highest 4* status for environmental performance from the EA for the fourth year running.”

The six claims, if successful, are anticipated to bring compensation payments in excess of £800 million in total. This is being sought through competition opt-out collective proceedings in the Competition Appeal Tribunal. Leigh Day added that any compensation would be paid by water companies and their shareholders, not through customer bills.

Zoë Mernick-Levene, partner at law firm Leigh Day, described the claims as “hugely significant”.

She said: “Not only is compensation being sought for millions of customers who have, and continue to, pay higher water bills, but we hope that it will also send a message to water companies that they cannot unlawfully pollute waterways and mislead their regulators without consequence.”

In October a case brought by environmental advocates Wild Justice against Ofwat for failing its environmental duties was thrown out of the High Court.

An Ofwat spokesperson said: “We share the public’s frustration that, all too often, the performance of water companies isn’t where it needs to be. We are clear that the sector needs to change, and we are actively pushing for it.

“That is why we are currently carrying out the largest investigation we have ever undertaken into all wastewater companies, with six open enforcement cases.”