Water bosses in England and Wales could be jailed for up to two years if they cover up sewage dumping, under legislation proposed by the Labour government. At the moment, CEOs of water companies face fines for failing to comply with investigations by the Environment Agency (EA) and the Drinking Water Inspectorate (DWI), but there have been just three such fines since privatisation three decades ago. Civil servants at the Department for Environment, Food and Rural Affairs (Defra) told journalists on Wednesday that they planned to tighten compliance rules to force companies to hand over sewage data quickly, and that the maximum sentence for covering up this information or failing to release it would be two years. Ministers also plan to pass legislation that would force water companies to pay the EA and DWI’s enforcement costs if they are under investigation. The EA has found it hard to inspect polluters owing to funding cuts, so ministers hope this would provide the money to increase the number of prosecutions. Defra has been looking for savings after the chancellor, Rachel Reeves, asked it for £1bn in spending reductions. The new legislation being introduced to parliament on Thursday will also give the regulators powers to ban bonuses for water company CEOs who fail to meet environmental and consumer standards, and if their company is not financially resilient. Journalists were briefed that these environmental standards had not yet been decided by the regulator, Ofwat. Last year, Liv Garfield of Severn Trent took a £584,000 bonus despite her company having been fined £2m for dumping sewage, and the firm scored highly on the EA’s environment rankings despite taking this human waste spillage into account. The environment secretary, Steve Reed, said: “Under this government, water executives will no longer line their own pockets whilst pumping out this filth. If they refuse to comply, they could end up in the dock and face prison time. “This bill is a major step forward in our wider reform to fix the broken water system. We will outline further legislation to fundamentally transform how the water industry is run and speed up the delivery of upgrades to our sewage infrastructure to clean up our waterways for good.” Campaigners and experts said the announcement did not go far enough, and that the whole system needed to change as it had “failed”. The sewage campaigner and former Undertones frontman Feargal Sharkey said he was still planning to march on parliament next month because he viewed the measures as inadequate. He said: “I have called for a mass protest for a coalition of the concerned to ensure clean, healthy rivers. We need transformational information and action. I see none of that before me. We will still be marching on 26 October to demand clean rivers and strong action.” Guy Linley-Adams, a solicitor for the WildFish charity, said the government was not using existing powers to force the regulators to crack down on polluting water companies. For example, he said that without any new legislation, ministers could remove the “growth duty” from regulators, which prioritises economic growth over the environment. He said: “If the new government really means what it says, that it will not tolerate poor performance across the water sector, then it can start now by issuing new and unambiguous policy steers to Ofwat and the EA right now that force a much tougher financial and environmental regulatory approach, one that prioritises investment in the environment. “The government should also disapply the regulators’ code and the statutory growth duty that currently shackle both the EA and Ofwat’s regulation of the water companies. “And they should direct the EA to stop using soft-touch enforcement undertakings for water company offending and always prosecute water companies aggressively for causing pollution. None of the above requires new law. It can all be done right now.” Charles Watson, the chair and founder of the campaign group River Action, said: “If the secretary of state believes that the few one-off actions announced today, such as curtailing bosses’ bonuses – however appealing they may sound – are going to fix the underlying causes of our poisoned waterways, then he needs to think again. “Only a comprehensive and holistic review focusing on all sources of pollution and that delivers a transformational action plan, with tangible targets and milestones, can reform our failed regulatory system and end the daily polluting of our rivers, lakes and seas.” The Tories claimed that Labour were “attempting to pass off measures implemented under the Conservatives” as their own, pointing to a ban on bonuses for water company bosses whose companies commit serious breaches as an example. The shadow environment minister, Robbie Moore, said: “It was the Conservatives that introduced 100% monitoring for storm overflows and set out a plan to transform our infrastructure to ensure safer, cleaner waters.”