Yorkshire Water has agreed a £40m ‘enforcement package’ with the industry regulator after an investigation found sewage outflow and wastewater deficiencies at the company.

Ofwat identified “serious failures” over how the firm operated and maintained its sewage network, resulting in excessive spills from storm overflows.

The bulk of the penalty – £36.6m – will be spent on infrastructure upgrades over the next five years, the regulator said.

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The balance of £3.4m would support the work of the Great Yorkshire Rivers Partnership to help clear artificial barriers and improve water quality across the regional river network.

The enforcement agreement was announced as Yorkshire Water prepares to raise bills for its five million customers by 29% from 1 April.

Ofwat’s bill settlements with suppliers across England and Wales – some of which are the subject of appeal – will see the vast majority of homes and businesses face inflation-busting increases.

Average bills will soar by £10 a month for 2025/26 and rise further between 2026 and 2030 in return for a step up in water company investment, particularly in the area of storm outflows which have drawn widespread anger across the UK due to rising instances of sewage releases.

Ofwat said the enforcement agreement meant that customers, rather than the Treasury, received the proceeds of the redress package.

Its senior director for enforcement, Lynn Parker, said: “Our investigation has found serious failures in how Yorkshire Water has operated and maintained its sewage works and networks, which has resulted in excessive spills from storm overflows.

“This is a significant breach and is unacceptable.

“We are pleased that Yorkshire Water has recognised this failure and is taking steps to put it right for the benefit of customers and the environment.

“We now expect them to move at pace to correct the remaining issues our investigation has identified.”

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The company’s chief executive, Nicola Shaw, responded: “We know our storm overflows operate more frequently than we, or our customers, would like them to.

“Since 2021, we’ve been actively taking steps to improve our performance.

“We know there’s still more for us to do.

“We’re at the forefront of the industry to get this resolved and we’re looking forward to delivering our ambitious plans to improve river health in Yorkshire.

“We apologise for our past mistakes and hope this redress package goes some way to show our commitment to improving the environment.”