Bonus ban for water company bosses
Failing water company bosses have had their 'undeserved' bonuses blocked under new laws designed to crack down on sewage spills.
For the first time in history, six firms have been banned from handing the extra payments to their top executives after falling short of strict new standards set by Ofwat, the regulator.
The new measures, underpinned by the Water (Special Measures) Act, are intended to hold the sector to account following mounting anger over sewage spills blighting Britain's waterways.
It means that any firm convicted of a criminal offence or failing to meet basic environmental, financial or consumer standards will now be forbidden from handing out bonuses to senior bosses.
The change, which comes into force on Friday, is backdated, meaning it will apply to payments for the 2024-25 financial year.
The six firms immediately stripped of their right to pay bonuses are Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities and Southern Water.
If a failing company pays a bonus while it is subject to a ban, Ofwat has the power to claw the money back.
The Government has also been urged to come down hard on any firm that appears to be inflating its basic pay packets as a workaround.
Steve Reed, the Environment Secretary, 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.'
The companies banned from paying bonuses on Friday may still be able to offer rewards for the current financial year, provided they bring their practices in line with the new rules.
According to the Department for Environment, Food and Rural Affairs (Defra), more than £112 million in bonuses and incentives has been handed out by water firms in the last 10 years.
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 2024-25 financial year.
Anglian Water will be forbidden from paying its chief executive a bonus, but its chief financial officer will not be subject to the ban.
Wessex Water will be barred from paying its chief financial officer any extra, but its chief executive will be exempt.
This is because certain people were not in post at the time of the incidents that broke the new rules.
Campaign group River Action called the move a 'welcome step' but warned that inflated salaries should be prevented.
James Wallace, its chief executive, 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. No more cream for the fat cats.'
Thames Water was recently fined £122.7 million, the largest penalty Ofwat has ever issued.
It came after the watchdog discovered widespread sewage failures at the struggling utility giant, which was subject to the sector's 'biggest and most complex investigation'.The debt-laden company was also punished for breaking dividend rules, as Ofwat found that Thames handed its investors more than £130 million in 'undeserved' payments in 2023 and 2024.
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