Pennon water boss lands nearly £200,000 in share bonuses despite losses
She had already faced criticism from MPs when she revealed in February that her pay had risen to £511,000 in 2024-25, from £492,000 the previous year in the wake of a parasite outbreak in Devon and rising cases of sewage spills.
Pennon, which also owns supplier SES Water, recently reported losses widening to £72.7 million for the year to the end of March from £9.1 million losses the previous year.
Last year's incident in Brixham, south Devon, cost it about £21 million and pushed it deeper into an annual loss.
An outbreak of cryptosporidium – a parasite that causes infection – in the water supply left some people in hospital, while more than 100 others reported symptoms including diarrhoea.
Pennon also hit customers with eye-watering bill hikes in April as part of sector-wide increases.
Bills for South West Water customers surged by 28% on average from April, while bills for Bristol Water and Sutton and East Surrey (SES) customers rose by 5% and 3% respectively.
In its annual report, Pennon said the share bonus was paid in relation to the 2022 long-term scheme and insisted it was 'not paid for by customers'.
The shares will also be subject to a two-year holding period and therefore not released until 2027.
'Overall, the committee concluded that the outcomes represented a fair reflection of performance over the period,' it said.
Pennon added in the report that the share award was 'deemed to be proportionate', adding that issues such as the Brixham water incident 'had already been recognised in the forgoing of annual bonuses in 2023/24'.
Ms Davy's saw her overall pay edge down from £812,000 in 2023-24 as her long-term share bonus was lower than the £250,000 awarded in the previous year.
The group also said it had decided not to give Ms Davy an annual bonus for 2024-25 until there was further clarity following the Water (Special Measures) Act and 'the additional performance criteria that need to be achieved before a bonus can be paid'.
Pennon said it was currently looking into overhauling pay for top bosses and consulting on the matter.
The group said: 'Despite being amongst the largest FTSE 250 companies when ranked by market capitalisation… pay for the chief executive is around the bottom 10% of the group.
'This is not a credible or sustainable position.
'The misalignment of CEO pay became very apparent when we were recruiting the chief financial officer, as many credible external candidates had pay expectations that exceeded the pay levels for our chief executive.'
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The Guardian
2 hours ago
- The Guardian
How can England possibly be running out of water?
During the drought of 2022, London came perilously close to running out of water. Water companies and the government prayed desperately for rain as reservoirs ran low and the groundwater was slowly drained off. Contingency plans were drafted to ban businesses from using water; hotel swimming pools would have been drained, ponds allowed to dry up, offices to go uncleaned. If the lack of rainfall had continued for another year, it was possible that taps could have run dry. That, however, was just a taster of what could come down the line. On Tuesday, the government announced a 'nationally significant' water shortage in England, which means the whole country is at risk of running out if the dry weather continues. People across England are already banned from using hosepipes, with more restrictions probable over coming months. The UK Centre for Ecology and Hydrology (UKCEH), an independent research institute, has warned of exceptionally low river flows. Reservoirs are also at extremely low levels and groundwater is dwindling. Droughts are generally two-year events. A year of dry weather means water supplies are running out – that is what is happening now. Things really come to a head if the following year does not bring above average rainfall. That is when the shortages start to bite, with farmers unable to irrigate and households and businesses hit with sweeping restrictions. With reservoirs at record lows and stream flows exceptionally low, England is desperate for rain. Forecasts indicate that by 2055 England's public water supply could be short by 5bn litres a day without urgent action to future-proof resources, the equivalent to more than a third of the supplies available today. The effect on the economy will be profoundly negative. The thinktank Public First has estimated that the economic cost of water scarcity could be £8.5bn over this parliament. So how on earth did famously rainswept England, notorious the world over for being green and wet with our national symbol pretty much a furled umbrella, come to this? Britain's geology and climate means there should be plenty of water. Underground in the south of England the rock is made of chalk, which is very soft and porous. These layers of rock filter rainwater into some of the cleanest water in the world, collecting in huge aquifers that have been tapped by local residents for centuries. Water companies now use those aquifers to provide the majority of the drinking water in some parts of the south. Further north, the rock underfoot is harder; sandstone and limestone, so lacking the benefits of the chalk aquifer. But it tends to receive more rainfall than the south, so there has generally been plentiful water from the skies to fill the reservoirs on which the northern water companies rely. There are also the rivers that crisscross the country, which (when clean) include gin-clear chalk streams buzzing with mayflies and thronging with salmon and other fish. The UK is one of the rainier places in Europe. Some areas are wetter than others. In England, the Lake District generally receives an average of 2,000mm of rainfall a year, while in parts of the south-east it is as low as 700mm. Perhaps it is because the country has always had such rich resources, that they have been taken for granted. Running out of water has never really been in question. But with population growth and climate breakdown, this is starting to look like folly. It was in the 17th century that the New River Company began piping water into London's homes from the springs in nearby Hertfordshire for the very rich. Slowly the technology began to spread and grow in popularity. Over the next decades, England's population would rise dramatically and the water systems of its rapidly growing cities would come under increasing stress. When the Great Stink hit London in 1858 during a heatwave, the civil engineer Joseph Bazalgette had already been commissioned to draw up plans to urgently update the city's sewage system. Known for his tirelessness, Bazalgette checked every connection himself, making thousands upon thousands of notes, and saved many lives as the system diverted sewage away from the city and into the Thames estuary. Later, treatment centres were added to purify the water. Today, consumers are used to having water coming out of a tap and they want to use a lot of it. Future generations, who will be dealing with long, dry summers, would probably be shocked at the profligate way clean tap water was used to flush toilets, water gardens and run washing machines. UK households use more water, mostly on showering and bathing, than other comparable European countries, at about 150 litres a day per capita. For France the average is 128, Germany 122 and Spain 120 (although in Italy its 243 litres a day). And the waste starts long before it gets to people's taps. Water companies in England and Wales lose about 1tn litres of water through leaky pipes each year. The industry has said that about 20% of all treated water is lost to leaks. The water firms have pledged to halve leakages by 2050. Meanwhile, the annual pipe replacement rate is 0.05% a year across all water companies: much of the sewage system in London, for example, has not been significantly updated since Bazalgette and his colleagues installed it in the 19th century. No new reservoir has been built in 30 years despite significant population growth and climate breakdown meaning longer, drier summers during which the country desperately needs to store water. The reservoirs England does have are at their lowest levels in at least a decade, just 67.7% full on average. According to Dr Wilson Chan, a hydroclimatologist at UKCEH, 'above average rainfall over several months is needed to ease pressures on water resources'. Was it the privatisation of the water and sewerage industry in 1989 that has led to this situation? England's water system has been widely criticised, and privatisation has been blamed for a lack of investment in infrastructure. Some say this is owing to the water companies paying out dividends rather than using the money raised by customer bills solely for investment in infrastructure; others blame a privatised regulated monopoly system that has prioritised low customer bills over investment. Experts have also pointed to the regulatory system. Water company drought plans compel firms to follow a series of steps before they can increase abstraction, taking more water from reservoirs, rivers and the ground to supply customers, beginning with reducing consumption (a hosepipe ban). 'Water companies must now take action to follow their drought plans – I will hold them to account if they delay,' says the water minister, Emma Hardy. 'We face a growing water shortage in the next decade.' But water companies believe that people hate being told to reduce their water consumption, so avoid hosepipe bans as much as possible. It does not help that bans may also lead to customers giving low satisfaction marks for their company, which are then taken into account by the regulator. The end result of these incentives; unsustainably high levels of abstraction from the natural environment, most of which will not be replaced by rain on the same timescale. Stores of water such as fossil aquifers and chalk streams recharge over centuries. The Environment Agency (EA) assess that 15% of surface water bodies and 27% of groundwater bodies in England have unsustainable levels of abstraction. 'We are calling on everyone to play their part and help reduce the pressure on our water environment,' says Helen Wakeham, the EA's director of water and chair of the National Drought Group. 'Water companies must continue to quickly fix leaks and lead the way in saving water.' This is not just a management problem. As climate breakdown accelerates, rainfall patterns are changing fast, and water will increasingly become less available at certain times of year. As Sir David King, a former UK chief scientific adviser who chairs the Climate Crisis Advisory Group, says: 'Drought in England is no longer a warning. It is a clear signal that climate collapse is unravelling our water, food and natural systems right now. 'This crisis demands a fundamental shift that places real value on our planet and environment, invests in nature, restores water cycles and transforms how we use every drop. If we rise to this moment we can turn crisis into opportunity, delivering economic resilience, ecological renewal and climate leadership.' The UK is not the only country that is already struggling to deal with changing weather patterns. Almost half of Europe is in drought, with wildfires tearing across the continent and farmers struggling to grow crops. Many of the economies of Southern Europe are dependent on sunny weather that has historically made the region the perfect place to grow vegetables for export. Scientists are concerned that farming in certain southern European countries will become less and less viable. More than 90 million people in eastern and southern Africa are facing extreme hunger after record-breaking drought across many areas has led to widespread crop failures and the death of livestock. As the impacts of the climate crisis unfurl around the world, is the UK government awake to the scale of the problem? Nine new reservoirs are in the pipeline to be built before 2050, while there are consultations on reducing demand for water. But this may be too little, too late; many housing developments are on pause because of water scarcity. The first new reservoir planned for Abingdon in Oxfordshire is sited in the same place as the government's new datacentre zone, leading to fears the water will be used to cool servers rather than serve customers in one of the most water-stressed areas of the UK. Green homes experts have said government building codes for new housing should include rainwater harvesting for internal use such as in lavatories and washing machines. People with gardens could use a water butt in summer, so that clean tap water is not being pumped through a hose into garden plants. Reducing time in the shower by a minute can save water, says Waterwise, while green building groups recommend the use of water-saving shower heads. A recent government commissioned report recommends smart water meters ate installed nationally, so households who use sprinklers and fill swimming pools are charged more than those who are more frugal with their use. More broadly, farmers could build reservoirs on their land to reduce the need for irrigation. Nature-based solutions could be used too, such as releasing beavers that create dams and hold water in the system, or restoring wetlands. 'We need to build more resilience into our rivers and their catchment areas with nature-based solutions at scale, such as healthy soils that allow water to filter into the ground and not rush off taking the soil with it; riverside tree planting to provide shade and further slow the flow of water; wetlands to store and slowly release water, and rewiggling streams to raise the water table and purify pollutants,' says Mark Lloyd, the chief executive of the Rivers Trust. 'We also need to finally implement the use of rainwater rather than drinking water where we can, such as car washing, gardening, washing pets, filling paddling pools and flushing the loo. Other water-stressed countries have used this approach for decades and we need to join that party.'
The Guardian
3 hours ago
- The Guardian
How can England possibly be running out of water?
During the drought of 2022, London came perilously close to running out of water. Water companies and the government prayed desperately for rain as reservoirs ran low and the groundwater was slowly drained off. Contingency plans were drafted to ban businesses from using water; hotel swimming pools would have been drained, ponds allowed to dry up, offices to go uncleaned. If the lack of rainfall had continued for another year, it was possible that taps could have run dry. That, however, was just a taster of what could come down the line. On Tuesday, the government announced a 'nationally significant' water shortage in England, which means the whole country is at risk of running out if the dry weather continues. People across England are already banned from using hosepipes, with more restrictions probable over coming months. The UK Centre for Ecology and Hydrology (UKCEH), an independent research institute, has warned of exceptionally low river flows. Reservoirs are also at extremely low levels and groundwater is dwindling. Droughts are generally two-year events. A year of dry weather means water supplies are running out – that is what is happening now. Things really come to a head if the following year does not bring above average rainfall. That is when the shortages start to bite, with farmers unable to irrigate and households and businesses hit with sweeping restrictions. With reservoirs at record lows and stream flows exceptionally low, England is desperate for rain. Forecasts indicate that by 2055 England's public water supply could be short by 5bn litres a day without urgent action to future-proof resources, the equivalent to more than a third of the supplies available today. The effect on the economy will be profoundly negative. The thinktank Public First has estimated that the economic cost of water scarcity could be £8.5bn over this parliament. So how on earth did famously rainswept England, notorious the world over for being green and wet with our national symbol pretty much a furled umbrella, come to this? Britain's geology and climate means there should be plenty of water. Underground in the south of England the rock is made of chalk, which is very soft and porous. These layers of rock filter rainwater into some of the cleanest water in the world, collecting in huge aquifers that have been tapped by local residents for centuries. Water companies now use those aquifers to provide the majority of the drinking water in some parts of the south. Further north, the rock underfoot is harder; sandstone and limestone, so lacking the benefits of the chalk aquifer. But it tends to receive more rainfall than the south, so there has generally been plentiful water from the skies to fill the reservoirs on which the northern water companies rely. There are also the rivers that crisscross the country, which (when clean) include gin-clear chalk streams buzzing with mayflies and thronging with salmon and other fish. The UK is one of the rainier places in Europe. Some areas are wetter than others. In England, the Lake District generally receives an average of 2,000mm of rainfall a year, while in parts of the south-east it is as low as 700mm. Perhaps it is because the country has always had such rich resources, that they have been taken for granted. Running out of water has never really been in question. But with population growth and climate breakdown, this is starting to look like folly. It was in the 17th century that the New River Company began piping water into London's homes from the springs in nearby Hertfordshire for the very rich. Slowly the technology began to spread and grow in popularity. Over the next decades, England's population would rise dramatically and the water systems of its rapidly growing cities would come under increasing stress. When the Great Stink hit London in 1858 during a heatwave, the civil engineer Joseph Bazalgette had already been commissioned to draw up plans to urgently update the city's sewage system. Known for his tirelessness, Bazalgette checked every connection himself, making thousands upon thousands of notes, and saved many lives as the system diverted sewage away from the city and into the Thames estuary. Later, treatment centres were added to purify the water. Today, consumers are used to having water coming out of a tap and they want to use a lot of it. Future generations, who will be dealing with long, dry summers, would probably be shocked at the profligate way clean tap water was used to flush toilets, water gardens and run washing machines. UK households use more water, mostly on showering and bathing, than other comparable European countries, at about 150 litres a day per capita. For France the average is 128, Germany 122 and Spain 120 (although in Italy its 243 litres a day). And the waste starts long before it gets to people's taps. Water companies in England and Wales lose about 1tn litres of water through leaky pipes each year. The industry has said that about 20% of all treated water is lost to leaks. The water firms have pledged to halve leakages by 2050. Meanwhile, the annual pipe replacement rate is 0.05% a year across all water companies: much of the sewage system in London, for example, has not been significantly updated since Bazalgette and his colleagues installed it in the 19th century. No new reservoir has been built in 30 years despite significant population growth and climate breakdown meaning longer, drier summers during which the country desperately needs to store water. The reservoirs England does have are at their lowest levels in at least a decade, just 67.7% full on average. According to Dr Wilson Chan, a hydroclimatologist at UKCEH, 'above average rainfall over several months is needed to ease pressures on water resources'. Was it the privatisation of the water and sewerage industry in 1989 that has led to this situation? England's water system has been widely criticised, and privatisation has been blamed for a lack of investment in infrastructure. Some say this is owing to the water companies paying out dividends rather than using the money raised by customer bills solely for investment in infrastructure; others blame a privatised regulated monopoly system that has prioritised low customer bills over investment. Experts have also pointed to the regulatory system. Water company drought plans compel firms to follow a series of steps before they can increase abstraction, taking more water from reservoirs, rivers and the ground to supply customers, beginning with reducing consumption (a hosepipe ban). 'Water companies must now take action to follow their drought plans – I will hold them to account if they delay,' says the water minister, Emma Hardy. 'We face a growing water shortage in the next decade.' But water companies believe that people hate being told to reduce their water consumption, so avoid hosepipe bans as much as possible. It does not help that bans may also lead to customers giving low satisfaction marks for their company, which are then taken into account by the regulator. The end result of these incentives; unsustainably high levels of abstraction from the natural environment, most of which will not be replaced by rain on the same timescale. Stores of water such as fossil aquifers and chalk streams recharge over centuries. The Environment Agency (EA) assess that 15% of surface water bodies and 27% of groundwater bodies in England have unsustainable levels of abstraction. 'We are calling on everyone to play their part and help reduce the pressure on our water environment,' says Helen Wakeham, the EA's director of water and chair of the National Drought Group. 'Water companies must continue to quickly fix leaks and lead the way in saving water.' This is not just a management problem. As climate breakdown accelerates, rainfall patterns are changing fast, and water will increasingly become less available at certain times of year. As Sir David King, a former UK chief scientific adviser who chairs the Climate Crisis Advisory Group, says: 'Drought in England is no longer a warning. It is a clear signal that climate collapse is unravelling our water, food and natural systems right now. 'This crisis demands a fundamental shift that places real value on our planet and environment, invests in nature, restores water cycles and transforms how we use every drop. If we rise to this moment we can turn crisis into opportunity, delivering economic resilience, ecological renewal and climate leadership.' The UK is not the only country that is already struggling to deal with changing weather patterns. Almost half of Europe is in drought, with wildfires tearing across the continent and farmers struggling to grow crops. Many of the economies of Southern Europe are dependent on sunny weather that has historically made the region the perfect place to grow vegetables for export. Scientists are concerned that farming in certain southern European countries will become less and less viable. More than 90 million people in eastern and southern Africa are facing extreme hunger after record-breaking drought across many areas has led to widespread crop failures and the death of livestock. As the impacts of the climate crisis unfurl around the world, is the UK government awake to the scale of the problem? Nine new reservoirs are in the pipeline to be built before 2050, while there are consultations on reducing demand for water. But this may be too little, too late; many housing developments are on pause because of water scarcity. The first new reservoir planned for Abingdon in Oxfordshire is sited in the same place as the government's new datacentre zone, leading to fears the water will be used to cool servers rather than serve customers in one of the most water-stressed areas of the UK. Green homes experts have said government building codes for new housing should include rainwater harvesting for internal use such as in lavatories and washing machines. People with gardens could use a water butt in summer, so that clean tap water is not being pumped through a hose into garden plants. Reducing time in the shower by a minute can save water, says Waterwise, while green building groups recommend the use of water-saving shower heads. A recent government commissioned report recommends smart water meters ate installed nationally, so households who use sprinklers and fill swimming pools are charged more than those who are more frugal with their use. More broadly, farmers could build reservoirs on their land to reduce the need for irrigation. Nature-based solutions could be used too, such as releasing beavers that create dams and hold water in the system, or restoring wetlands. 'We need to build more resilience into our rivers and their catchment areas with nature-based solutions at scale, such as healthy soils that allow water to filter into the ground and not rush off taking the soil with it; riverside tree planting to provide shade and further slow the flow of water; wetlands to store and slowly release water, and rewiggling streams to raise the water table and purify pollutants,' says Mark Lloyd, the chief executive of the Rivers Trust. 'We also need to finally implement the use of rainwater rather than drinking water where we can, such as car washing, gardening, washing pets, filling paddling pools and flushing the loo. Other water-stressed countries have used this approach for decades and we need to join that party.'
Telegraph
a day ago
- Telegraph
Spiralling building costs are wrecking Britain's prospects
It will provide the water for tens of thousands of homes, allow supply to catch up with a huge rise in the population, and it might even allow resource-hungry data centres to finally get built in the South East of England where they are most needed. There are lots of reasons to welcome the planned new Abingdon Reservoir in Oxfordshire. There is just one catch. The cost has tripled from the initial estimates, and will now come in at £7.5bn. In reality, from nuclear power stations, to rail lines, to runways, this is happening time and time again. Everything costs far more to build in Britain than it does in comparable countries. And until we work out how to fix that, there is no hope of the economy ever recovering. When, or rather if, it is finally opened in 2040, the Abingdon reservoir will be the first major new piece of water infrastructure the UK has built in more than 30 years. Even though we have added 11m people to the total population since 1995, and total output has almost doubled, at least in nominal terms, we have been squeezing every last drop of water out of a largely Victorian water system. The locals may not like it, but we desperately need some new reservoirs, and Abingdon is as good a place as any to start. The problem is the cost. From initial estimates of around £2bn, Thames Water said this week the bill was likely to rise to £7.5bn, and perhaps even more. We can add it to the list of escalating infrastructure costs. Last month, Ed Miliband, the Energy Secretary, in a rare example of a sensible decision, gave the go-ahead for the Sizewell C nuclear power station. Again, however, the price was shocking. It will come in at £38bn, almost double the £20bn that was estimated when it was first discussed five years ago. If anyone believes that will be the final figure, if I have a pre-loved windmill I would like to sell them. The estimated cost of a third runaway at Heathrow has risen from £14bn to close on £50bn; the cost of the HS2 rail link has already gone up to close on £100bn, and that is after we have halved its length; the cost of the Lower Thames Crossing connecting London and Kent has risen to £10bn, and work hasn't even started yet. The list goes on and on. It makes no difference whether a project is large or small. In my corner of south-west London, Hammersmith Bridge has been closed for years, clogging up traffic for miles, but now that the cost of fixing it has doubled to £250m, the money is not available to start work. Our rivals are far better at keeping costs under control. France is not a cheap country to do business in, but nuclear plants cost less than £10bn each. According to Britain Remade, nuclear power plants cost an estimated £9.4bn per megawatt in the UK compared with £4.4bn in France and £2.2bn in South Korea. Reservoirs are hard to compare precisely because the size and the value of the land varies so much. But the huge new Bassin d'Austerlitz built to clean up the Seine for the Paris Olympics cost only €1.4bn (£1.2bn), far less than Abingdon. As for high-speed rail lines, everyone else builds them for a fraction of the cost in the UK. The trouble is, the soaring cost of building anything is turning into a catastrophe for the economy. There are three big problems. First, hardly any new infrastructure projects get started because the costs are so horrendous. Thames Water was already in dire financial trouble, and adding billions to the cost of new reservoirs is not going to help fix that. Meanwhile, the Government is already so deeply in debt and so strapped for cash, it can't afford to fund them either. Next, the huge bills and the endless escalation of prices deter investors. After all, why bother with infrastructure investments in the UK when you can build the same kit somewhere else for half the price, and earn far better profits? Finally, it means the prices that have to be charged soar out of control. Energy from Sizewell C will cost a lot more than it would have done if it had been built more efficiently. Presumably, anyone planning to travel on HS2, if it ever gets finished, will have to take out a second mortgage to pay for the cost of the ticket to Birmingham. Expensive infrastructure pushes up the price of everything else. The Labour Government was meant to be cutting the costs of building projects. But so far it has failed dismally. We can see that from the way estimates for projects such as Abingdon and Sizewell C keep going up when they should be coming down. We could fix the crisis if the political will were there. Like how? The UK needs to streamline its planning rules so that a single minister could give the green light for a project, without local consultation, without endless reports, and most of all, without any right to judicial review. Likewise, we need to scrap the environmental rules that prioritise wildlife over people and the economy. And we need to train more engineers and skilled construction workers so the labour is available once a project is approved and the finance has been secured. The cost of building anything in Britain is an issue that has been growing for years, but it is now reaching crisis proportions. In the 19th century, Britain was a world leader in creating infrastructure. Until we can build again, at reasonable cost, there is no hope of the economy recovering – and eventually the water, and the power, will just run out.
