In an outspoken attack on the environmental record of the ten biggest water firms, which he said was "appalling, and getting even worse," he criticised the small fines imposed on them for pollution offences,which this year average pounds 4,300.
To companies with massive profits - this year likely to total pounds 2bn - such sums were "small change", he said, adding: "Fines should run into six figures, with half a million pounds for the worst offenders."
Under the Water Resources Act, 1991, Crown Courts have powers to impose unlimited fines on polluters.
Mr Gallagher's broadside, in which he revealed that the companies have been found guilty of polluting rivers, streams and bathing waters on average once a week so far this year, came as they began unveiling their annual financial results, which are expected to show record profits and record dividend payments to shareholders.
So far this week Anglian Water has reported profits up from pounds 249m to pounds 274m and a dividend increase of 13 per cent; United Utilities, which includes North-West Water, has reported profits up from pounds 444m to pounds 461m and a 9.5-per-cent dividend increase; and South-West Water reported profits up from pounds 119m to pounds 122m, and a dividend increase of 11.5 per cent.
The companies as a whole are expected to show a dividend increase averaging 11 per cent.
Last year the average household's annual water bill increased by nearly 6 per cent to pounds 245.
But as profits, dividends and bills go up, so do the pollution incidents.
The Environment Agency, the principal pollution watchdog in England and Wales, has successfully prosecuted eight out of the ten water and sewerage companies in England and Wales for a total of 22 water pollution offences since January 1, and all ten companies have been found guilty by the courts in the past year.
"The rate of one prosecution a week is absolutely unacceptable," Mr Gallagher said. "The largest fine we have had so far was on the Severn Trent company in 1996, and that was pounds 175,000.
"Yet it was the equivalent of a person earning pounds 30,000 a year being fined pounds 15. It was for the company's 42nd offence, and I really believe it should have been pounds 500,000, based on persistent pollution and the level of environmental damage done in that case."
Nearly all the incidents prosecuted this year related to illegal discharges of raw or partly treated sewage or sewage effluent into rivers, streams and bathing waters.
Poor operational management and maintenance were behind many of the incidents, the agency said, with pumping failures, sewer bursts and blockages of sewer overflows the cause in a number of cases. In a case heard on 7 May this year, Wessex Water was found guilty of discharging over 1 million gallons of raw sewage into a Weymouth, Dorset, marina on August Bank Holiday Monday 1997, the busiest day of the year. The company - profits last year pounds 130m - was fined pounds 5,000 with pounds 500 costs.
"That's pretty serious pollution and it should be punished with a fine of a lot more than pounds 5,000," Mr Gallagher said. "That's peanuts."
Brian Duckworth, managing director of Severn Trent and chairman of Water UK, the trade association for the 10 large water companies, hit back at Mr Gallagher's charges last night. "All pollution incidents are to be regretted whatever the reason," he said. "But no one is actively doing more to improve the quality of our rivers and coastal waters than the water companies." More than half the pounds 21bn invested by the industry since privatisation in 1989 has been focused on improving sewage treatment and the sewerage system itself, Water UK said.Reuse content