Water Company Executives Face Bonus Ban Over Illegal Sewage Spills
Water company bosses who preside over illegal sewage spills will be banned from receiving bonuses, according to the UK’s environment secretary, Steve Barclay. The ban will take effect in the 2024-25 financial year, starting from April. This move comes in response to public outrage over executives pocketing more than £26m in bonuses, benefits, and incentives over the past four years. Last year, senior executives from five out of the 11 water companies that deal with sewage received bonuses, while the remaining six declined them due to public anger.
At the same time, water companies are planning to increase consumers’ bills by approximately £156 a year to fund investments aimed at preventing 140,000 sewage overflow spills annually. The regulator, Ofwat, will consult on the proposed ban later this year, including defining the criteria for its enforcement. The ban could be triggered by successful prosecution for the most serious categories of pollution, such as causing significant pollution at bathing sites or conservation areas. It could also be imposed when a company is found guilty of serious management failings. The ban would apply to chief executives and all executive board members.
If implemented, Ofwat would enforce the measures by amending the conditions of water company licenses. Barclay expressed the need for tougher action to address poor performance by water companies and to hold them accountable for criminal behavior. The environment secretary plans to outline further steps to clean up UK waters, including reducing reliance on water company self-monitoring to ensure more effective regulation and improvement.
The shadow environment secretary, Steve Reed, commended the Conservatives for adopting Labour’s plan to give the water regulator new powers to block bonuses for polluting water bosses. However, he stressed the need for the government to go further and support Labour’s comprehensive strategy to tackle water pollution, including criminal charges for executives responsible for repeated illegal sewage dumping. It is estimated that under Labour’s proposals, Ofwat could have blocked six out of nine water bosses’ bonuses last year.
Ofwat, in a statement, noted that it introduced measures last year to tie executive bonuses to delivering better outcomes for customers and the environment. The regulator welcomes the announcement as an extension of this approach and plans to consult on the details of the proposed ban later this year.
The Liberal Democrat environment spokesperson, Tim Farron, welcomed the government’s decision to ban bonuses but criticized it for being weak and feeble. He argued that the public has been outraged by water companies’ environmental vandalism and called for an immediate ban on bonuses, regardless of criminal convictions.
Analyst comment
Positive news: The UK government plans to ban bonuses for water company executives involved in illegal sewage spills, addressing public outrage. The ban will take effect in 2024-25. Ofwat supports the move, having previously tied bonuses to better outcomes.
Market analysis: The ban on bonuses may lead to increased scrutiny and accountability for water companies, potentially improving their performance and reducing illegal sewage spills. However, the proposed increase in consumers’ bills could impact their financial situation.
