Water company bosses could face up to two years in prison and be banned from taking bonuses under the new government’s first major proposals to crack down on England’s sewage, chemical and manure infested waterways.

The new Water (Special Measures) Bill is designed to beef up feeble regulators so they can take on water companies releasing sewage into rivers, lakes and seas and appease public fury.

Although many topline measures had already been announced, the new details have been cautiously welcomed by green groups as an “important first step” towards cleaning up the country’s filthy rivers, lakes and seas.

But they say there is a long way to go given many other problems with the waterways, and the government acknowledged the need for “wider reform”.

What would the new water bill do?

The bill, which could come into effect in the new year, would increase fines and could see water executives who fail to cooperate or obstruct investigations, such as being slow to provide data, thrown in jail for up to two years.

Existing legislation does already allow bosses to face prison for other offences, but none have been successfully prosecuted despite “widespread illegality”, according to the government.

The Environment Secretary Steve Reed said: “The public are furious that in 21st century Britain, record levels of sewage are being pumped into our rivers, lakes and seas. After years of neglect, our waterways are now in an unacceptable state.”

He added: “Under this government, water executives will no longer line their own pockets whilst pumping out this filth.”

Ofwat will also be allowed to ban water bosses’ bonuses if they breach standards on the environment, their consumers and company finances – although the system is yet to be designed.

Severn Trent chief Liz Garfield this year won a £584,000 bonus, despite the company being fined £2m for “reckless” sewage spills in the River Trent.

The bill will also see monitoring of every sewage overflow and the reporting of discharges in real time, with data made available to the public who might want to swim or surf in that water.

Although virtually all of England’s 14,000 storm overflows are monitored for discharges of sewage into waterways often due to heavy rain, most of the additional 7,000 emergency overflows, which release sewage due to system failures like power outages, are currently not checked.

The Environment Agency will be allowed to recover the costs of investigations from water firms, in a bid to restore the resourcing and expertise to the regulator that has been hollowed out in the last decade.

As funding was cut by half between 2009-2019, enforcement actions plummeted and thousands of staff left, along with their expertise tackling water problems, though the previous prime minister, Rishi Sunak, did restore some resources in February.

Decades of underinvestment and water companies are only part of the problem.

A growing population, more extreme weather caused by climate change, farming pollution and cuts to the watchdogs have combined to leave waterways in a dire state.

Just 14% of England’s rivers and lakes are in good ecological health.

How have green groups and industry reacted?

Shaun Spiers, executive director of thintank Green Alliance, said: “This is a useful first step and will address the public’s concerns about inadequate regulation of polluting water companies.”

But working out how to pay for all the upgrades, changes, and climate and nature measures is a “more profound challenge”, he said.

Ofwat recently blocked water companies from hiking bills by any more than £94 over the next five years, a third less than they had proposed.

This is money they say they need to fix the problems, and which Labour could really do with, given the limited public finances to pay for infrastructure and nature and climate commitments.

James Wallace, chief executive of River Action UK, said he is pleased the new government is “taking seriously this dreadful blight on our rivers caused by pollution, and this is an important first step”.

But he called for an “urgent review” of the regulators.

“Talking about CEO bonuses is not going to sort things out. What we really need to see is a regulator, the Environment Agency, with its teeth given back and its funding given back,” he said.

“You can’t enforce these laws without effective regulators.”

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The environment department hinted at further action on the regulators – but would not commit to timeframes.

The government is aiming for a “wider reform to fix the broken water system” over this parliament, Steve Reed said, including boosting infrastructure upgrades and ensuring the water industry is still attractive to investors.

A Water UK spokesperson said: “We agree with the government that the water system is not working. Fixing it requires the government to deliver the two things which it has promised: fundamental regulatory reform and speeding up investment.

“Ofwat needs to back our £105bn investment plan in full to secure our water supplies, enable economic growth and end sewage spilling into our rivers and seas.”