Unfair bonuses have been banned for senior executives at six water companies, under Labour’s new measures in the Water (Special Measures) Act
Bosses of water firms who pollute Britain’s rivers have been banned from taking bonuses under new laws taking effect from Friday.
Water bosses awarded themselves over £112 million in bonuses and incentive payments in the last decade.
Unfair bonuses have been banned for senior executives at six water companies, under Labour’s new measures in the Water (Special Measures) Act.
The ban applies to Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities, and Southern Water.
They have all been banned under new rules which prevent bonuses from being paid if a water company does not meet environmental or consumer standards, does not meet financial resilience requirements, or is convicted of a criminal offence.
The six companies are not under an indefinite ban, and those firms may be able to offer rewards for the 2025/26 year, provided they stick within the Ofwat rules, under the Water (Special Measures) Act which comes into force on Friday.
If a company pays a bonus while it is under a ban, the water regulator Ofwat has the power to claw the money back.
Environment Secretary Steve Reed 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.”
Campaign group River Action have called the move a “welcome step” but said that increased salaries should be prevented.
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Chief executive James Wallace 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.
“The era of rewarding criminal leadership must end. No more cream for the fat cats.”
Wessex Water have said that under their own rules, “which require the achievement of specific customer and environmental performance targets”, neither the chief executive nor chief financial officer would receive any bonus.
A spokesperson added: “Looking ahead, we are planning a step change in the maintenance of our sewerage infrastructure, with a proposed investment of approximately £300 million by 2030.”
A Southern Water spokesperson said: “We note the Government’s announcement and await full details of how this will impact our existing approach to performance-related reward.
“This is already closely tied to the delivery of improvements in customer satisfaction and environmental performance.
“Any bonuses are paid by shareholders, not customers, and are overseen by an independent committee.”
It comes after Thames Water were fined £122.7 million, the largest penalty the water watchdog has ever issued, after two investigations into wastewater and dividend payments.
The utility giant will pay £104.5 million for breaches of rules relating to its wastewater operations, and an extra £18.2 million for breaking rules related to dividend payments.