Yorkshire Water is set to be downgraded to a one-star rating by the Environment Agency after its annual financial report, covering April 2025 to March 2026, revealed a series of major failures including rising pollution, missed environmental projects and falling customer satisfaction. The downgrade matters because it comes despite the company raising customer bills by 30% last April, and amid public anger that investors rather than customers are not bearing the cost of the failings — a point stressed by West Yorkshire mayor Tracy Brabin, who called the situation "outrageous" and said the system was "broken".

Pollution incidents rose by more than 70% over the year, climbing from 151 to 260, while the company was hit with an £88.8m performance penalty from regulator Ofwat for under-delivering and failed to complete five legally required environmental schemes in west Leeds. Chief executive Nicola Shaw also received a £660,000 additional payment from parent company Kelda Holdings, which the firm said came from shareholders and was separate from its own performance-related pay. Yorkshire Water blamed "extreme weather", including drought followed by record rainfall, and pointed to progress on leakage, storm overflow spills and £70m of support for 246,000 households, pledging to reduce pollution and improve river health by 2030 as part of an £8.3bn programme.