Water Sector Week in Review
26 October 2026

National Drought Group hears from water company chiefs as severe drought persists

19 and 20 October 2026. Water company chief executives were called before the National Drought Group on 19 October to update on how they are protecting customer supplies, according to the Defra and Environment Agency release of 20 October. The release says severe drought was declared the previous week in parts of Cornwall, Devon, Dorset, Somerset, East Sussex and West Sussex, and that the South East and South West have had their driest April to September in over a century, particularly affecting Ardingly reservoir in West Sussex and Wimbleball in Somerset.

The measures the companies set out include sending less water from reservoirs into local rivers, reducing water pressure overnight where appropriate, speeding up leak detection and transferring water from elsewhere in the network to support the lowest reservoirs. The Environment Agency has granted drought permits to South West Water (Wimbleball into the River Exe) and South East Water (Ardingly into the River Ouse). Temporary pumps have been put in place to move water around the area supplied by South West Water's Stithians reservoir in Cornwall, and Wessex Water is preparing applications for seven further drought permits.

Applications for non-essential use bans by South East Water, South West Water and Southern Water are under consideration by the Environment Secretary. The release records them as applications, not bans, and we have not seen a decision on any of them. The Environment Agency says at least 120% of average rainfall is needed over the next six months for the country to be considered out of drought by the start of spring. Its weekly summary series, "Dry weather and drought in England 2026", was updated on 23 October with the report for 16 to 22 October; we did not read the contents of that report for this article.

Ministerial direction to the Environment Agency on protecting public water supplies

19 October 2026. The Secretary of State has issued a direction to the Environment Agency under section 40 of the Environment Act 1995 about protecting public water supplies in water resource zones affected by severe drought. GOV.UK lists it as applying to England. The 20 October release describes the government as having told water companies and the Environment Agency to put public supplies first, and as having instructed water companies to carry out daily monitoring of reservoir and river levels while improving water quality checks. We have not summarised the direction document itself beyond what the GOV.UK page states.

Anglian Water fined £1.6m for River Brain pollution

14 October 2026 (Environment Agency release, 16 October). Anglian Water was fined £1.6m at Cambridge magistrates' court on 14 October, with costs of £27,334 and a £190 surcharge, after repeated sewage pollution of the River Brain between 13 April and 2 June 2022. The Environment Agency says the pollution stretched nearly 14km between Braintree and Witham, that a faulty valve at Braintree water recycling centre had been broken for a week before the first incident, and that the company ignored alarms about the discharge.

The Environment Agency's regulatory manager called the incidents "organisational failure by Anglian Water to recognise risk and act on the warning signs". Separately, Anglian Water pleaded guilty the previous week to discharging sewage and other harmful material off Southend in 2021 and 2022, and will be sentenced next April.

Ofwat financial resilience report: average gearing reported at 66%

Reported in the week to 25 October 2026. Trade press coverage of Ofwat's Monitoring Financial Resilience Report for 2025-26 says average regulatory gearing, net debt as a proportion of regulatory capital value, fell from 68% to 66% in the year to 31 March 2026, with eleven companies reporting a decrease. It also reports about £1.8bn of new shareholder equity coming into the sector since the 2025-2030 period began, and an average return on regulated equity of 3.32% in 2025-26 against an average base return of 5.60%.

These figures are as reported by Smart Water Magazine; Water Magazine also covered the report on 22 October. We could not open Ofwat's own report, so check the figures against Ofwat's publication before relying on them. For suppliers, gearing is one input to counterparty risk, alongside each company's own financial reporting.

Sources: Defra and Environment Agency, GOV.UK, "Water company bosses update National Drought Group on resilience" (20 October 2026); Defra and Environment Agency, GOV.UK, "Ministerial direction to protect public water supplies in areas affected by severe drought" (19 October 2026); Environment Agency, GOV.UK, "£1.6m fine for Anglian Water's pollution of Essex river" (16 October 2026); Environment Agency, GOV.UK, "Dry weather and drought in England 2026: summary reports" (page updated 23 October 2026); Smart Water Magazine, report on Ofwat's Monitoring Financial Resilience Report 2025-26 (date not confirmed; Water Magazine coverage dated 22 October 2026).