Britain’s Environment Agency and water regulator Ofwat said it had launched a major investigation into sewage treatment after water companies admitted that they could be releasing unpermitted sewage discharges into rivers and watercourses.

Companies that breached legal permits would face enforcement action, including prosecution or fines of up to 10% of annual turnover for civil cases or unlimited in criminal proceedings, they said.

Water companies have been releasing wastewater directly into rivers, watercourses and the sea during heavy rain or storms to stop pipes becoming overloaded.

The government last month performed a U-turn by deciding to put legal controls on the amount of wastewater companies could dump, after an earlier vote against such a move triggered a backlash from some voters.

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The Environment Agency said several water companies had admitted that many of their sewage treatment works may not be compliant with their permits.

Environment Minister Rebecca Pow said the industry needed to raise standards across the board when it came to protecting rivers.

“I want to see water companies spending far more on better infrastructure, and far less on payouts to shareholders,” she said. “Water companies must take urgent and immediate steps to abide by their legal duties.”