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Water company bosses have admitted their firms’ environmental performance has been “unacceptable” amid concern over sewage pollution.

The water industry has seen its reputation battered by rising public anger over sewage spills from overflow drains into rivers and seas during heavy rain.

There has also been criticism over pollution from water treatment works, assessments of poor environmental performance by some companies, and this summer’s imposition of hosepipe bans amid high levels of water leaks.

Our performance has not been good enough, and that’s without any doubt at all and that’s an unacceptable position

Lawrence Gosden

Lawrence Gosden, the new chief executive of Southern Water, and Sarah Bentley, who has been in charge of Thames Water for two years, acknowledged to peers on the Lords Industry and Regulators Committee that their environmental performance had been unacceptable.

Both companies scored badly in this year’s Environment Agency environmental performance report, and last year Southern Water was handed a record £90 million fine for thousands of illegal discharges of sewage.

Mr Gosden said: “Our performance has not been good enough, and that’s without any doubt at all and that’s an unacceptable position.”

Ms Bentley told peers: “Thames’ performance is unacceptable, particularly as it relates to sewage discharges.”

The Southern Water boss said historically his company had focused on improving the proportion of waste water that was fully treated in treatment plants from less than 50% to 95% now.

Addressing the final 5% involves tackling waste water released through storm overflow pipes after heavy rain to prevent sewers overflowing.

The company was concluding five pilots separating the storm water from sewage and recycling it in the environment and providing local storage at customer properties, which had shown what was needed to improve the situation sustainably, he said.

Challenged on where he thought it was safe to swim on the south coast, Mr Gosden said the region’s beaches had become much cleaner over the past 30 years, and Southern Water published storm overflow monitoring information on its website which was also linked to the Surfers Against Sewage app.

He said it was “very much an interim measure” but added: “We’re doing everything we can, whilst we work out how to fix the problem, to ensure we’re being fully transparent about it.”

Based on the pilots, the company estimated cutting pollution by 80% would cost around £2 billion, he said, while Ms Bentley said reducing sewage pollution in London and the Thames Valley would cost a similar amount.

She said that in the capital, the issue was a Victorian-era combined surface water and sewerage system, and the city “is losing two and a half Hyde Parks a year of permeable surface area where rainwater can go”.

The Tideway tunnel – a super sewer transferring waste wate away from the River Thames – would reduce sewage discharge by 95%, while in the Thames Valley work was under way to prevent heavy rain from overwhelming water treatment works, she said.

Welsh Water’s chief executive Peter Perry said that in Wales, while there was more to do on storm outflows, the main issue was nutrient pollution in rivers.

The firms said there was a need for infrastructure for water transfers, more reservoirs and increased efforts to cut leaks, as well as helping customers reduce demand, particularly in the face of climate change exacerbating dry conditions in places such as the South East.

The two English company bosses also said they were not paying dividends to shareholders and their pay packages were linked to performance including on the environment.

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