Water companies were handed a record amount in fines for pollution incidents last year and since 2015, the Environment Agency has concluded 56 prosecutions against water and sewerage companies, securing fines of over £141m.
At present, money from these fines is returned to the Treasury. Under the new plans, ringfenced funds will go to Defra and will be invested directly back into environmental and water quality improvement projects.
This could include initiatives to restore our water environments by creating wetlands, re-vegetating river banks and reconnecting meanders to the main channel of rivers.
Water Minister Rebecca Pow said:
The volume of sewage being discharged into our waters is unacceptable, and can cause significant harm to our wildlife and sensitive habitats.
It is right that water companies are made to pay when they break the rules, but it is also right that this money is then channelled back into improving water quality.
Water company fines reached a record level last year, and moving forward these plans will significantly increase funding that will be used to recover, protect and enhance our natural environment.
This is on top of the £56 billion investment we're requiring water companies to invest in improving our water infrastructure, as well as holding them to account through tough new targets.
Chancellor of the Exchequer, Jeremy Hunt said:
These fines hold rule-breaking companies to account and mean record investment in our waterways.
It comes on top of our requirement for water companies to invest in the natural environment - raising the largest ever environmental infrastructure investment of £56 billion over 25 years.
To crack down on water pollution, government has boosted funding for the Environment Agency, with £2.2 million per year specifically for water company enforcement activity, including at least 4,000 farm visits per year and 500 sewerage inspections.
Earlier this year the Government's Storm Overflows Discharge Reduction Plan also brought in strict targets on sewage pollution and will require water companies to deliver the largest infrastructure programme in their history to tackle storm sewage discharges - a £56 billion capital investment over 25 years.
Further details on the plans will follow next year.