The water industry in England is failing to cut pollution from spills of raw sewage into rivers and coastal waters, the Environment Agency has said.

Southern Water, which was fined a record GBP90m last week for dumping billions of litres of raw sewage into the sea, was one of the worst-performing companies in 2020, according to the EA report on Tuesday.

In its annual performance assessment of the industry, the regulator said Southern Water was significantly failing to cut pollution for the second year in a row. South West Water was equally poor at reducing pollution into the environment, according to the report, which found that more than half of the serious pollution incidents in 2020 were caused by Anglian and Thames Water.

David Black, the acting chair of the financial regulator, Ofwat, said: “It’s disappointing to see repeat poor performance from some companies who are failing to take their responsibilities seriously enough. Addressing environmental challenges remains a top priority for water companies and the performance of some companies falls well short of what customers expect.”

He called for a wholesale change of approach from the privatised industry. “A step-change in culture and commitment is required if the sector is to fundamentally change the way it delivers for customers and the environment,” he said. “Our work with government, the Environment Agency and other stakeholders will continue to ensure we hold companies to account so that the environment is left in a better condition for generations to come.”

Rebecca Pow, a junior environment minister, said the report made for “disappointing reading”.

It was published five days after Southern Water was fined a record amount by a judge for dumping billions of litres of raw sewage into protected seas off the north Kent and Hampshire coasts over more than five years. Instead of treating sewage at water treatment works, as required by law, the company collected enormous volumes in storm tanks before releasing it to the environment. It also manipulated its pollution reports to avoid financial penalties.

Five companies – Northumbrian Water, Severn Trent Water, United Utilities, Wessex Water and Yorkshire Water – were given the highest rating on their environmental performance in the quality assessment on Tuesday, something the Environment Agency said was welcome news. But overall the industry failed to meet targets to reduce serious pollution incidents by 50% compared with 2012.

“The sector still needs to make substantial improvements to meet environmental performance assessment targets and our expectations for both serious and total pollution incidents,” the report said.

“Pollution incidents from water company assets can cause environmental harm to surface waters or groundwater. Water companies need to reduce the number of incidents so that they reduce their impact on the environment.

“When under pressure on the issue of pollution, there is still a tendency for some water companies to reach for excuses rather than taking action to reduce serious pollution incidents to zero.”

In 2020 there were 1,919 pollution incidents, a decrease from 2,204 in 2019, but the second highest total since 2015.

“Southern Water and South West Water both performed significantly below target for pollution … Southern Water for the second year in a row and South West Water for the 10th year in a row,” the Environment Agency said. “Both companies’ performances have been consistently unacceptable.”

The impact of pollution from water companies can be seen in the poor quality of water in English rivers. Last year every river failed pollution tests. Pollution from raw sewage discharges by water companies directly into rivers, chemical discharges from industry and agricultural runoff are significant sources of pollution, according to the data.

Emma Howard Boyd, the chair of the Environment Agency, said on Tuesday: “The bottom line is, England’s rivers are too polluted.”

Nearly a third (32%) of rivers were failing to meet tests for good ecological status because of discharges from sewage treatment works. About 7% of rivers are polluted because of raw effluent flowing from storm overflows, the EA said.

Last week the judge sentencing Southern Water said the company had a history of criminal activity for its “previous and persistent pollution of the environment”.

The prosecution followed the biggest ever investigation by the Environment Agency, which uncovered “very serious widespread criminality” by the company over a period of nearly six years, which was known about at the highest level.

The court heard how Southern exploited the rules that came into force in 2010 allowing water companies to self-report pollution incidents. The company manipulated pollution data in order to avoid fines for poor performance.

Pow said: “Water companies have environmental responsibilities and they must realise them. They have a legal duty to avoid pollution to our rivers and other waterways.

“This report, which spans the last 12 months, makes for extremely disappointing reading. Even the industry-leading water companies have more work to do, especially on the use of storm overflows.”

Alison Hoyle, Southern Water’s director of risk and compliance, said the company was injecting GBP1bn of investment into the environment over the next four years. She said: “We recognise there is a lot more to do. We now lead the industry in self-reporting pollution, thanks to continuing investment in IT, telemetry, people and processes and underlining the commitments to openness and transparency we have made.

“Such openness is key to the wider national debate so urgently needed to ensure the water industry plays its part in protecting the environment and securing a clean, safe water future for the UK in the context of climate change and population growth. Southern Water is committed to being part of this debate and showing how we can and have learned from the historic events of 2010-15.”

Susan Davy, the chief executive of South West Water, said: “We are currently investing GBP150m in our largest environmental programme for 15 years, which includes a commitment to reduce pollution by 80% and additional storage protection measures to enhance our bathing waters. We know we can do more and are committed to doing so.”