Largest ever budget for water regulation

• New analysis reveals largest budget for Environment Agency’s water regulation in history
• Massive cash injection comes through charges on water companies not from taxpayers, meaning polluters pay
• The Water (Special Measures) Act introduces new levies to pay for water company enforcement activities

The largest ever budget for tackling water pollution has been handed to the country’s water watchdog, as part of the government’s plan to deliver the most significant increase in enforcement powers in a decade.

The Environment Agency, who are in charge of water company inspections and prosecutions for environmental damage, will receive a cash injection of over £189m this financial year. This will fund more enforcement officers, improved equipment and the latest technology for the regulator.

This year alone it will carry out more than 10,000 inspections of water company assets and has already launched a record 81 criminal investigations into water company pollution incidents since July 2024.

Funding has increased by 64% since 2023/2024, with all of this increase coming from charges paid by water companies rather than from the public purse. This will mean it is the polluter that paying the cost of regulating the sector, not taxpayers.

Environment Secretary Steve Reed said

The public are furious about sewage pollution in our rivers, lakes and seas.

This government is cleaning them up, including the biggest boost to enforcement in a decade paid for by the water companies responsible for it.

Our changes give the water watchdog the resources they need to tackle pollution and clean up our rivers, lakes and seas for good – all part of the Government’s Plan for Change.

The Environment Agency has agreed to deliver tough efficiency targets over as part of the spending review, to ensure that this money is targeted on frontline delivery and enforcement. Already, the EA has driven efficiency savings of over £23 million during 2024/25. 

As a further boost, a new levy on the water sector, which is subject to consultation, will allow the EA to recover the cost of their enforcement activities in the sector – a power granted through the landmark Water (Special Measures) Act, making it easier for the regulator to take enforcement action when needed.

In addition, the EA’s programme of farm inspections has been boosted, with 6,000 a year by 2029 planned, to support the agricultural sector reduce pollution into waterways.

Notes to editors

• We inherited a broken water system with record levels of sewage being pumped into our waterways. The Government is committed to cleaning up our rivers, lakes and seas for good.

• Enforcement

• The Government has launched the largest crackdown on water companies in history. The era of profiting from pollution is over.
• Unfair bonuses have now been banned, a record 81 criminal investigations have been launched into sewage pollution and polluting water bosses who cover up their crimes now face prison sentences.

• This funding will boost the Environment Agency’s investigation and enforcement capabilities.

• Investment

• The Government has secured the largest investment into the water sector in history to clean up rivers, lakes and seas in communities across the country.

•  £104bn in private sector investment is being invested to upgrade crumbling sewage pipes and cut sewage by nearly half by 2030.

• Modernisation

• The recommendations of the Independent Water Commission, a once-in-a-generation opportunity to modernise the water industry, will form the basis of further legislation later this parliament to ensure the sector is fit for the decades to come and clean up our rivers, lakes and seas for good.

1. Table 1 sets out the key EA funding streams related to Water Quality, dating back to 2022/23.
2. EA funding comes from two main sources

a. Grant-in-Aid funding from Defra. This pays for the EA to carry out its statutory duties, from water quality monitoring to waste crime investigations. This funding decreased slightly in 2025/26 because it is being replaced by an increase in charge income, which now covers the cost of water company inspections and enforcement.

b. Charge income. This mostly consists of charges paid by water companies for their permits (initial application fee and annual subsistence charges). It also includes the EA’s proposed water levy and some income from other government departments.

Table 1 Summary of the separate funding streams relating to WQ, from 2022-2026.