Finally, water boss bonuses are banned over sewage pollution

Six water companies will be banned from paying out bonuses to the most senior executives this year as punishment for sewage pollution and inadequate customer service.

Announcing the crackdown, the Environment Secretary Steve Reed praised The i Paper‘s Save Britain’s Rivers campaign for “championing the issue”.

In a five-point manifesto published ahead of last year’s general election, this newspaper called for tougher powers to restrict bonuses for underperforming water firms.

The new rules, which come into force on Friday, are part of Labour’s recently passed Water (Special Measures) Act.

The act forbids water company CEOs and CFOs from receiving bonuses if their firm is responsible for a serious pollution incident or is convicted of a criminal offence.

Bonuses are also banned if a company fails to meet minimum credit rating requirements or does not meet core consumer standards around operating their sewerage network.

Campaigners broadly welcomed the step, but argued more must be done to clean up Britain’s polluted waterways.

Others described the move as “performative politics” and warned companies must not be allowed to inflate wages to make up for the reductions in bonuses.

Six of the nine wastewater companies in England will be affected by the ban this year: Anglian Water, Southern Water, Thames Water, United Utilities, Wessex Water and Yorkshire Water.

Among those who will have their bonuses banned are Thames Water’s CEO Chris Weston, who received a £195,000 bonus last year after three months of work at the company, and United Utilities CEO Louise Beardmore, who received a £420,000 bonus last year.

Some water firms had already decided that bonuses would not be handed out this year, regardless of the Government’s new ban.

Northumbrian Water, Severn Trent and South West Water will still be allowed to pay bonuses for the 2024-25 financial year.

Water companies have awarded over £112m in bonuses and incentives over the last decade. The six banned companies have paid out a total of £79m.

The rules only apply to firms in England. Water companies have a different ownership structure in Scotland, Wales and Northern Ireland, however their executives still receive bonuses.

Whose bonuses are being banned?

The ban only applies to CEOs and CFOs, meaning other senior executives at the sanctioned firms will still be allowed to receive their bonuses.

If a CEO or CFO is not on the list, it is because they were not in post at the time of the incident that led to the firm being sanctioned.

Anglian Water

• CEO Mark Thurston will not receive a bonus

Southern Water

• CEO Lawrence Gosden and CFO Stuart Ledger will not receive a bonus

Thames Water

• CEO Chris Weston will not receive a bonus

United Utilities

• CEO Louise Beardmore and CFO Phil Aspin will not receive a bonus

Wessex Water

• Wessex Water CFO Andy Pymer will not receive a bonus

Yorkshire Water

• CEO Nicola Shaw and CFO Paul Inman will not receive a bonus

“The i Paper’s Save Britain’s Rivers campaign has rightfully called for tighter regulation to stop the practice of undeserved bonuses… today we deliver on that promise to the nation,” Reed said on Thursday.

The manifesto was backed by over 20 leading environmental groups, many of whom have welcomed today’s announcement. However, they warn that more action is needed.

River Action CEO, James Wallace, said “banning bonuses is a welcome step” but “we won’t end pollution for profit until water companies are refinanced and governed for public benefit”.

Mark Lloyd, Rivers Trust CEO, said it was a “really significant moment” in the push to clean up the UK’s waterways.

“We’d still like to see these measures taken further, expanding the focus beyond the most serious pollution incidents to the smaller, more frequent ones which build up over time and can cause even greater harm to our rivers,” he added.

Giles Bristow, CEO at Surfers Against Sewage, said: “It’s right that the Government is finally acting on public outrage, but this is just the start. Water company bosses can still pocket bonuses even when sewage is pouring into our seas, lakes and rivers.”

Save Britain’s Rivers manifesto, one year on

It’s been exactly one year since The i Paper published its manifesto calling on the next Government to Save Britain’s Rivers.

Here’s how the Labour Government’s policy compares.

#1. RIVER HEALTH: 77% rivers in good health by 2027

We called on the Government to publish a roadmap outlining how it would meet its legal target of 77 per cent of rivers being in good health by 2027. It has not yet done this and just 14 per cent of rivers in England are currently in good ecological health

#2. SEWAGE: Sewage spills will not damage high-priority areas – including bathing spots and nature sites – by 2030

We called on the Government to bring forward targets to ensure high-priority sites are not damaged by sewage spills by 2030. Current targets introduced by the Tories say this won’t be done until 2045. Labour has yet not changed this.

#3. WATCHDOG: Regulators will stop water companies destroying the environment in pursuit of profit

We said the Government must overhaul the regulators, including tougher powers to prosecute bosses and restrict dividends and bonuses for underperforming water companies. Labour has introduced some of these changes through its Water (Special Measures) Bill and is currently undertaking a wider review of the regulators.

#4. BATHING: Create 100 clean bathing spots in rivers by 2030

We asked the Government to set a target of 100 bathing spots in rivers by 2030 and to change the rules so testing happens all-year-round. Labour has overhauled the bathing water regulations to include year-round testing at some sites, but has refused to set a target for the number of bathing spots

#5. FARMING: Farmers must be funded to improve water quality, and face enforcement action if they damage the environment

We urged the Government to boost funding for nature-friendly farming. The Budget will be announced at next week’s Spending Review, but there are reports of cuts.

Greenpeace UK’s head of politics, Ami McCarthy, said the bans “couldn’t come a moment too soon”.

They added: “We’re all going to pay a price for the colossal mismanagement of our water sector by these private monopolies – whether it’s sewage in rivers, leaky pipes or water shortages. Seeing bosses pocketing fat bonuses as a reward for this spectacular failure is an outrage, and the Government is right to put an end to it.”

Ali Plummer, director of policy and advocacy at Wildlife and Countryside Link, said restricting bonuses was “a welcome first step”, which “must be backed up with strong resources for environmental regulators”.

Some campaigners are concerned that water companies will inflate wages to make up for the restrictions on bonuses, as happened in the financial sector following the caps on bonuses introduced as a result of the 2008 crash.

“People know from the banking crisis that blocking bonuses can be supplemented by increasing salaries,” said Matt Staniek, founder of the Save Windermere campaign.

He described the move as “performative politics” and argued blocking dividend payments to shareholders would be more effective.

A Southern Water spokesperson said it already has a “performance-related” approach to bonuses “closely tied to the delivery of improvements in customer satisfaction”.

A United Utilities spokesperson said: “We have a long track record of ensuring performance related pay for executives is closely linked to the outcomes that matter most to our customers. In addition, our performance related pay is funded by shareholders, not by customers.”

A Yorkshire Water spokesperson said: “Our CEO, 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.”

A Wessex Water spokesperson said: “This year, and irrespective of the Government’s new rules, our independent remuneration committee has already confirmed that neither our new CEO or CFO will receive any bonus. This decision reflects our own rules which require the achievement of specific customer and environmental performance targets.”