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Water firms in England and Wales have been ordered to return £157.6m to customers due to their poor performance.

Ofwat said the money would come off bills for households and businesses in 2025-26, with the total rebates set to be calculated in December.

Last year, the water regulator ordered firms to repay £114m as part of a similar move.

Ofwat said the results of its annual report on water company performance showed “disappointing results” and that money alone was not enough to address the problems facing the industry.

The regulator also warned that firms were “falling further behind on key targets”, with nine out of 11 suppliers experiencing an increase in “pollution incidents” in 2023.

It comes as water bills in England and Wales are set to rise by an average of 21% over the next five years.

Ofwat’s chief executive David Black said: “This year’s performance report is stark evidence that money alone will not bring the sustained improvements that customers rightly expect.

“It is clear that companies need to change and that has to start with addressing issues of culture and leadership. Too often we hear that weather, third parties or external factors are blamed for shortcomings.”

He added: “Companies must implement actions now to improve performance, be more dynamic, agile and on the front foot of issues. And not wait until the government or regulators tell them to act.”

Ofwat’s report also found that while there had been progress made on leaks, firms had only managed a 6% annual reduction – against a target of 16% by 2025.

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However, four water companies – South East Water, South West Water, Thames Water and Yorkshire Water – were upgraded by the regulator from “lagging behind” to “average”, but it said performance improvements were inconsistent across the sector.

Anglian Water, Welsh Water and Southern Water were all categorised as “lagging behind”.

No firm managed to achieve the regulator’s top rating of “leading”.

Matthew Topham from We Own It, which is campaigning for the nationalisation of the water industry, said: “Today’s action, while a welcome respite from skyrocketing bills, exposes the Catch-22 at the heart of water privatisation.

“Water firms, which desperately need cash to stay afloat, let alone invest to end sewage pollution, will rightly hand back millions they’ve unfairly taken from the public.

“[But] rather than punishing the shareholders behind these failures, our rivers and seas will suffer from even greater underfunding, and the public from future bill hikes in following years, to cover these costs.”

Earlier this summer, the regulator announced it was investigating all wastewater companies due to concerns that some may not be meeting their obligation to minimise pollution.

In August, Ofwat announced that three firms – Northumbrian Water, Thames Water and Yorkshire Water – were facing a combined fine of £168m for a series of failings, including over sewage treatment.

Last year, industry body Water UK apologised on behalf of firms for “not acting quickly enough” on spills.

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From August: Water firms ‘need to change’

Years of under-investment by privately-run firms combined with ageing water infrastructure, a growing population and more extreme weather caused by climate change have seen the quality of England’s rivers, lakes and oceans plummet in recent years.

Some water utilities are also creaking under high levels of debt or face criticism over dividends to shareholders and executive bonuses.

Environment Secretary Steve Reed said: “Our waterways should be a source of national pride, but years of pollution and underinvestment have left them in a perilous state.

“The public deserves better. That’s why we are placing water companies under special measures through the Water Bill, which will strengthen regulation including new powers to ban the payment of bonuses for polluting water bosses and bring criminal charges against persistent law breakers.

“We will be carrying out a full review of the water sector to shape further legislation that will fundamentally transform how our entire water system works and clean up our rivers, lakes and seas for good.”

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Lola’s Cupcakes bakes £30m takeover by Finsbury Food

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Lola’s Cupcakes bakes £30m takeover by Finsbury Food

Lola’s Cupcakes, the bakery chain which has become a familiar presence at commuter rail stations and in major shopping centres, is in advanced talks about a sale valuing it at more than £25m.

Sky News has learnt that Finsbury Food, the speciality bakery business which was listed on the London Stock Exchange until being taken over in 2023, is within days of signing a deal to buy Lola’s.

City sources said on Thursday that Finsbury Food was expected to acquire a 70% stake in the cupcake chain, which trades from scores of outlets and vending machines.

Lola’s Cupcakes was founded in 2006 by Victoria Jossel and Romy Lewis, who opened concessions in Selfridges and Topshop as well as flagship store in London’s Mayfair.

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The brand has grown significantly in recent years, and now has a presence in rail stations such as Waterloo and Kings Cross.

The company employs more than 400 people and has a franchise operation in Japan.

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Lola’s is part-owned by Sir Harry Solomon, the Premier Foods founder, and Asher Budwig, who is now the cupcake chain’s managing director.

The deal will be the most prominent acquisition made by Finsbury Food since it delisted from the London market nearly two years ago.

Finsbury is now owned by DBAY Advisors, an investment firm.

A spokesperson for Finsbury Food declined to comment.

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UK growth slows as economy feels effect of higher business costs

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UK growth slows as economy feels effect of higher business costs

UK economic growth slowed as US President Donald Trump’s tariffs hit and businesses grappled with higher costs, official figures show.

A measure of everything produced in the economy, gross domestic product (GDP), expanded just 0.3% in the three months to June, according to the Office for National Statistics (ONS).

It’s a slowdown from the first three months of the year when businesses rushed to prepare for Mr Trump’s taxes on imports, and GDP rose 0.7%.

Caution from customers and higher costs for employers led to the latest lower growth reading.

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Claire’s to appoint administrators for UK and Ireland business – putting thousands of jobs at risk

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Claire's to appoint administrators for UK and Ireland business - putting thousands of jobs at risk

Fashion accessories chain Claire’s is set to appoint administrators for its UK and Ireland business – putting around 2,150 jobs at risk.

The move will raise fears over the future of 306 stores, with 278 of those in the UK and 28 in Ireland.

Sky News’ City editor Mark Kleinman reported last week that the US-based Claire’s group had been struggling to find a buyer for its British high street operations.

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Prospective bidders for Claire’s British arm, including the Lakeland owner Hilco Capital, backed away from making offers in recent weeks as the scale of the chain’s challenges became clear, a senior insolvency practitioner said.

Claire’s has now filed a formal notice to administrators from advisory firm Interpath.

Administrators are set to seek a potential rescue deal for the chain, which has seen sales tumble in the face of recent weak consumer demand.

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Claire’s UK branches will remain open as usual and store staff will stay in their positions once administrators are appointed, the company said.

Will Wright, UK chief executive at Interpath, said: “Claire’s has long been a popular brand across the UK, known not only for its trend-led accessories but also as the go-to destination for ear piercing.

“Over the coming weeks, we will endeavour to continue to operate all stores as a going concern for as long as we can, while we assess options for the company.

“This includes exploring the possibility of a sale which would secure a future for this well-loved brand.”

The development comes after the Claire’s group filed for Chapter 11 bankruptcy in a court in Delaware last week.

It is the second time the group has declared bankruptcy, after first filing for the process in 2018.

Chris Cramer, chief executive of Claire’s, said: “This decision, while difficult, is part of our broader effort to protect the long-term value of Claire’s across all markets.

“In the UK, taking this step will allow us to continue to trade the business while we explore the best possible path forward. We are deeply grateful to our employees, partners and our customers during this challenging period.”

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Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Claire’s attraction has waned, with its high street stores failing to pull in the business they used to.

“While they may still be a beacon for younger girls, families aren’t heading out on so many shopping trips, with footfall in retail centres falling.

“The chain is now faced with stiff competition from TikTok and Insta shops, and by cheap accessories sold by fast fashion giants like Shein and Temu.”

Claire’s has been a fixture in British shopping centres and on high streets for decades, and is particularly popular among teenage shoppers.

Founded in 1961, it is reported to trade from 2,750 stores globally.

The company is owned by former creditors Elliott Management and Monarch Alternative Capital following a previous financial restructuring.

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