No bonuses to senior bosses at Water Companies

Six water companies banned from paying bonuses to senior bosses

Six water companies have been banned from paying bonuses to senior bosses, under new rules that come into force on Friday.

Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities and Southern Water have been told that they cannot issue bonuses for the financial year 2024/25, which concluded in April.

They have all been banned under new rules which prevent bonuses from being paid if a water company does not meet environmental or consumer standards, does not meet financial resilience requirements, or is convicted of a criminal offence.

The six companies are not under an indefinite ban, and those firms may be able to offer rewards for the 2025/26 year, provided they stick within the Ofwat rules, under the Water (Special Measures) Act which comes into force on Friday.

If a company pays a bonus while it is under a ban, the water regulator Ofwat has the power to get the money back.

According to the Department for Environment, Food and Rural Affairs, more than £112 million in bonuses and incentives have been handed out by water firms in the last ten years.

Water companies set their own salary and reward packages, and it is understood that if firms that are banned from offering bonuses increase salaries to try to compensate, then officials may look into it.

Environment Secretary Steve Reed said: “Water company bosses, like anyone else, should only get bonuses if they’ve performed well, certainly not if they’ve failed to tackle water pollution.

“Undeserved bonuses will now be banned as part of the Government’s plan to clean up our rivers, lakes and seas for good.

“Promise made, promise delivered.”

Under the new rules, Yorkshire Water, United Utilities, Thames Water, and Southern Water will all be unable to pay bonuses to the chief executive or chief financial officer, for the 24/25 financial year.

Anglian Water will be banned from paying their chief executive a bonus, but their chief financial officer will not be banned.

Wessex Water will be banned from paying their chief financial officer any extra, but their chief executive will be exempt.

The exemptions are because people were not in post when the incident that broke Ofwat’s rules happened.

Campaign group River Action have called the move a “welcome step” but said that increased salaries should be prevented.

Chief executive James Wallace said: “We won’t end pollution for profit until water companies are refinanced and governed for public benefit.

“Any attempt to inflate base pay as a workaround must be stamped out.

“The era of rewarding criminal leadership must end. No more cream for the fat cats.”

Wessex Water have said that under their own rules, “which require the achievement of specific customer and environmental performance targets”, neither the chief executive nor chief financial officer would receive any bonus.

A spokesperson added: “Looking ahead, we are planning a step change in the maintenance of our sewerage infrastructure, with a proposed investment of approximately £300 million by 2030.”

A Southern Water spokesperson said: “We note the Government’s announcement and await full details of how this will impact our existing approach to performance-related reward.

“This is already closely tied to the delivery of improvements in customer satisfaction and environmental performance.

“Any bonuses are paid by shareholders, not customers, and are overseen by an independent committee.”

A Yorkshire Water spokesperson said: “Our chief executive, Nicola Shaw, had already made the decision that it would not be appropriate for her to receive an annual bonus this year, due to the company’s performance on pollution, and a recognition that we need to do better for the communities we serve and earn trust.

“She has also taken the decision to waive her entitlement to an additional bonus that would have vested under our longer-term incentive scheme.

“We are determined to make improvements to our performance so we can deliver our part in creating a thriving Yorkshire, doing right for our customers and the environment.”

It comes after Thames Water were fined £122.7 million, the largest penalty the water watchdog has ever issued, after two investigations into wastewater and dividend payments.

The utility giant will pay £104.5 million for breaches of rules relating to its wastewater operations, and an extra £18.2 million for breaking rules related to dividend payments.

Published: 05/06/2025 by Radio NewsHub