Experts says that a class action legal claim on behalf of 20 million householders in England and Wales could top £800m in compensation if overcharging claims are proved.

The first claim has been issued against Severn Trent Water on behalf of eight million customers headed up by Professor Carolyn Roberts, an environmental and water consultant represented by law firm Leigh Day.

Further claims will be issued against Thames Water, United Utilities, Anglian Water, Yorkshire Water and Northumbrian Water in the coming months.

All six water companies are accused of under-reporting the number of times they cause pollution incidents by spilling or discharging sewage into waterways in breach of environmental rules.

The value of the claim against Severn Trent Water is estimated at more than £330m and the six claims are expected to lead to compensation payments of more than £800m in total, if successful.

Misleading claims from water companies?

The legal claims allege that the six water companies have been breaking competition law by misleading the Environment Agency and Ofwat as to the number of pollution incidents, discharges or spills of untreated sewage they made into rivers, lakes, coastal areas, and other waterways, causing damage to the environment.

Water companies are required to report such incidents as part of their legal duties and responsibilities, but it appears many pollution incidents have gone, and continue to go, unreported. The number of pollution incidents a company reports to their regulators is an important factor in determining the price water companies can ultimately charge for their services.

Professor Roberts argues in her legal claims that, if the water companies had correctly reported the number of pollution incidents, performance penalties would have been applied and this would have reduced how much customers were charged.

Who is entitled to compensation?

Anyone who has paid for a water bill to one or more of these water companies from April 2020 may be entitled to compensation if the case is successful; customers of Severn Trent Water may be entitled to compensation if they paid for a water bill from April 2017.

Compensation is being sought through competition opt-out collective proceedings, which allow legal claims to be brought by a single class representative on behalf of a group, or groups, of affected individuals in the Competition Appeal Tribunal.

Opt-out claims mean that individuals do not need to sign up to the claim. Instead, customers who have suffered loss are included unless they specifically choose not to be. Customers will only have to come forward at the compensation stage if the claims are successful.

‘England’s waterways are suffering’

Professor Carolyn Roberts said: “Like many others across the country, I have viewed with horror the escalating number of stories in the media regarding the volume of sewage discharged into our waterways and onto our beaches. The population of the UK has a right to expect that our rivers, lakes and seas will generally be clean, except under exceptional circumstances.

“It appears that because of the serial and serious under-reporting at the heart of these claims, water companies have been avoiding being penalised by Ofwat. I believe this has resulted in consumers being unfairly overcharged for sewage services.”

Zoë Mernick-Levene, partner at law firm Leigh Day said: “Customers put their trust in water companies, believing that they are correctly reporting these spillages and appropriately treating the sewage so it can safely be returned to the environment. Instead, our client believes they are misleading their regulators and customers are overpaying while England’s waterways are suffering as a result.”