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Nine water firms blocked for paying £6.8m in ‘justifiable’ bonuses

NINE water companies have been blocked from paying £6.8 million in “unjustifiable” bonuses using customer money under new powers handed to the regulator Ofwat.

Troubled Thames Water was among three firms — also including Yorkshire Water and Dwr Cymru Welsh Water — that were directly blocked from paying £1.5m of bonuses.

The other six companies voluntarily decided not to push the cost of executive bonuses onto customers.

Owners and shareholders will cover the costs for the bonuses, which Ofwat found were not linked closely enough to company performance.

Thames Water is more than £16 billion in debt and in the throes of trying to secure £3bn in emergency funding.

Yet Ofwat found that it was planning to use customer cash to pay £770,000 in bonuses for its chief executive and chief financial officer.

New CEO Chris Weston was awarded a £195,000 bonus for his first three months at the firm, according to its annual report.

It comes at a time of growing public and political pressure on the sector to address a dire recent performance on sewage pollution and leaks while customer bills soar.

Ofwat chief executive David Black said: “In stopping customers from paying for undeserved bonuses that do not properly reflect performance, we are looking to sharpen executive mindsets and push companies to improve their performance and culture of accountability.”

Environment Secretary Steve Reed, who recently commissioned a review of the sector by former Bank of England deputy governor Sir John Cunliffe, said: “It is disgraceful that half of water companies have given out unjustifiable and unmerited bonuses.”

Ofwat’s latest financial resilience report was also published today and named Thames Water, South East Water and Southern Water as being in need of action to address big holes in their finances.

This means that the three firms are subject to high priority monitoring and must seek approval before paying out dividends.

GMB national officer Gary Carter said: “Water companies have been paying massive bonuses to senior executives for years whilst leaks and sewage spills have been increasing. 

“Customers shouldn't be paying for failure and GMB welcomes Ofwat's actions.”

River Action chief executive James Wallace said moves to block the bonus payouts were “long overdue.”

He said: “It is about time Ofwat put an end to water company chief executives enriching themselves at the expense of hard-pressed bill payers.”

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