Ofwat publishes new “guidance”: “Water firms will be expected to take full account of their record on customer service and waterways pollution, as well as company performance overall, when deciding whether to award bonuses to senior executives.“
Another example of light touch government.
What about Susan Davey’s bonus, £1.6m last year?
Susan Davy, who is chief executive of South West Water’s parent company Pennon, is paid a base salary of £456,000, but with her bonus, incentives and benefits the company’s latest set of accounts show her total pay was bumped up to £1.6m. See: South West Water boss trebles pay with huge bonus as beaches are shut due to raw sewage in sea.
She should fogo any bonus for 2023 right now. – Owl
Water firms set for tougher rules on bonuses for top bosses
Water companies are facing tougher rules on bonuses for top bosses under plans outlined by the industry watchdog to ensure payouts are only made when environmental and customer service targets are met.
Ofwat said its new plans “ensure customers do not fund executive bonus payments” for poor performance.
As part of new guidance published on Thursday, water firms will be expected to take full account of their record on customer service and waterways pollution, as well as company performance overall, when deciding whether to award bonuses to senior executives.
The regulator’s review of company decisions on pay awards will be based on a wide range of criteria, including environmental performance, delivery for customers, overall financial health, and compliance issues.
It comes after figures recently revealed that pay and bonus packages for water firm bosses soared by a fifth in 2021-22, despite significantly sewage spills in Britain’s waterways.
Analysis of data by the Liberal Democrats – which is calling for a ban on bonuses for water bosses – showed the average pay for executives at 10 firms across England and Wales jumped to £1.1 million in 2021-22, up by £193,000 on average.
This comes in spite of more than 370,000 sewage spills from storm overflows in England in 2021, according to Environment Agency data.
David Black, chief executive at Ofwat, said: “In too many cases, bonuses paid do not reflect the reality of company performance.
“Customer trust is damaged when executive bonuses are not aligned to water company performance for customers and the environment.
“We said that if companies did not address this we would take action, and that is exactly what we are doing.”
Ofwat is getting tough on water firms after a raft of high-profile sewage spills and environmental performance failures in recent years.
It also announced earlier this month new powers to be able to stop suppliers paying out shareholder dividends if they fail to meet performance standards.
On the new bonus plans, Ofwat said: “Water companies are monopolies established to provide an essential service.
“They have a range of obligations to customers, communities and the environment and, through their appointments, a privileged status.
“Remuneration, whether that be for investors through their returns or executives through their performance-related executive pay, should closely reflect and take account of these responsibilities, reward excellence and, importantly, should not reward poor performance or failure.
“In a context where the performance of the sector continues to be called into question, particularly with regard to environmental performance, we do not consider that all companies are applying performance-related pay in a way that lives up to the standards that we all expect.”
The new proposals are now open for consultation until May 1.
The Consumer Council for Water (CCW) said it would be “examining the detail”.
Emma Clancy, chief executive of the CCW, said: “Customers will want to see this making a clear difference.
“Our research shows that people want to see evidence bonuses have been earned by companies delivering on commitments to their customers and the environment.
“People also want far greater transparency on pay. We want chief executives to explain to their customers – who are not able to switch supplier – why their salaries are justified.”
Trouble is, people like Susan Davy, who stuff shareholders pockets with the public’s money that she should have used for the public good developing water management infrastructure, will inevitably be popular among those whose pockets are stuffed. So, even though no-one in my view is worth that sort of income level (they really are not … no-one is), Susan Davy will get the shareholders support for a massive bump in her income. Shareholder dividends will always trump investment in a privatised water company.
Water simply should not be in the private sector – it’s badly managed and overpriced. How disappointing that the Labour Party is so timid about planning to bring it back into public ownership, where it should be.
I have had an ongoing run-in with Castle Water for several years now and I very much doubt that there is any other water company who could beat it for incompetence, nastiness, non-existent customer service, and breaking a fundamental term of their water-company license which is to treat customers fairly.
Most notably, Castle Water has a Customer Complaints policy that details how a customer complaint should be followed, but they don’t follow it at all, not even paying any real lip-service to it – their modus operandi seems to be to delay and obfuscate and deny and refuse to deal fairly with any complaint by a customer.
I have also been through the full gamut of the regulatory complaints process, which is completely unfit for purpose.
The first step is to CCWater (“the independent voice for water consumers” – https://www.ccw.org.uk/) who are mediators who try to resolve complaints by consumers, but they can only resolve them if the water company is willing to engage with them – and Castle Water wasn’t. CCWater told me that they are NOT regulators – they have no powers whatsoever to force water companies to do anything, and the water companies know it.
The next stage is arbitration, which is nothing more than focused mediation, and still relies on the water company to be willing to negotiate. The arbitrator told me that they are also not regulators and have no powers to enforce a judgement. In my case, the water company refused to go to arbitration by lying to the arbitrator about my account number and claiming that I had not made a formal complaint.
So I then went to OfWat, who told me explicitly that they were NOT the regulator for customer service which was handled by CCWater and the arbitrators!!! But they did contact Castle Water and seem to have told them that they ad to go to arbitration, and this eventually happened, but they were unwilling to negotiate and nothing came of this.
However, whilst CCWater is often ineffective as a mediator, they don’t hold their punches when it comes to summarising the state of the privatised water industry, and their summary is a reflection of my own experiences…
“Our review paints a very clear picture of a market that is not delivering benefits for the vast majority … with many [water companies] showing little interest in engaging” – https://www.ccw.org.uk/app/uploads/2023/03/5-years-of-the-water-retail-open-market-report.pdf
Water regulation is effectively non-existent. In practice, water companies are NOT regulated in any meaningful way, either for sewerage discharge or for customer service, and this appears to me to be deliberate Tory Government policy (rather than just gross incompetence), and water companies appear to be taking full advantage of this in spades.