Water company bosses’ bonuses will no longer be funded by household bills when a firm has failed on environmental and customer performance, the regulator has confirmed.

Shutting the stable door after the horse has bolted. – Owl

Adam Vaughan www.thetimes.co.uk

The move by Ofwat comes after half the chief executives at wastewater firms in England waived their bonuses over sewage pollution, including Sarah Bentley, the boss of crisis-hit Thames Water until her unexpected resignation this week.

The body responsible for the economic regulation of the privatised water and sewerage industry first mooted in March the idea of ensuring leaders of poorly performing companies are only paid bonuses by eating into water sector profits and dividends.

After receiving more than 25,000 to its consultation, the biggest engagement yet, it has confirmed the new rules will be enacted.

“Customer trust is damaged when executive bonuses are not aligned to water company performance,” said David Black, Ofwat’s chief executive. “We are pleased that a number of companies and chief executives have already responded to our concerns with respect to last year.”

Black said that in future executive directors’ bonuses would be reviewed and, where expectations were not met, the new powers would be used to protect customers. Remuneration committees that award bonuses to water bosses will now have to take full account of performance for customers and the environment.

The scorecard on water firms’ environmental performance last year will not be published until the middle of next month. However, Alan Lovell, chairman of the Environment Agency, has told The Times it will show that their 2022 record was “simply not good enough”.

Among the water bosses yet to have given up their bonuses is Louise Beardmore, who received a £727,000 bonus as chief executive of United Utilities, the worst company in England for sewage spills last year. Others include Severn Trent’s Liv Garfield, whose previous bonus was £597,000; Anglian Water’s Peter Simpson (£337,651); Wessex Water’s Colin Skellett (£189,500); and Northumbrian Water’s Heidi Mottram (£130,000).

The move by Ofwat comes as campaigners protested outside a water sector awards event in Birmingham on Thursday. The government has this week been preparing for a potential temporary nationalisation of Thames Water, which is struggling under £14 billion of debt.

Surfers Against Sewage campaigners put on sewer rat costumes and held a cheque showing the £1.4 billion in dividends paid out by water companies last year, as they protested outside the Water Industry Awards 2023.

“The greed of water company executives comes at a terrible cost to the health of both the environment and people. They swim in cash while we’re swimming in sewage,” said Izzy Ross, campaigns manager at the group.