Announcing the crackdown, the Environment Secretary Steve Reed praised The i Paper‘s Save Britain’s Rivers campaign for “championing the issue”.
The new rules, which come into force on Friday, are part of Labour’s recently passed Water (Special Measures) Act.
Bonuses are also banned if a company fails to meet minimum credit rating requirements or does not meet core consumer standards around operating their sewerage network.
Others described the move as “performative politics” and warned companies must not be allowed to inflate wages to make up for the reductions in bonuses.
Among those who will have their bonuses banned are Thames Water’s CEO Chris Weston, who received a £195,000 bonus last year after three months of work at the company, and United Utilities CEO Louise Beardmore, who received a £420,000 bonus last year.
Northumbrian Water, Severn Trent and South West Water will still be allowed to pay bonuses for the 2024-25 financial year.
The rules only apply to firms in England. Water companies have a different ownership structure in Scotland, Wales and Northern Ireland, however their executives still receive bonuses.
Whose bonuses are being banned?
Clockwise from top-left, Southern Water CFO Stuart Ledger, Wessex Water CEO Andy Pymer, Yorkshire Water CEO Nicola Shaw, United Utilities CFO Phil Aspin, Thames Water CEO Chris Weston, Yorkshire Water CFO Paul Inman, Southern Water CEO Lawrence Gosden, Anglian Water CEO Mark Thurston and United Utilities CEO Louise BeardmoreThe ban only applies to CEOs and CFOs, meaning other senior executives at the sanctioned firms will still be allowed to receive their bonuses.
If a CEO or CFO is not on the list, it is because they were not in post at the time of the incident that led to the firm being sanctioned.
Anglian Water
CEO Mark Thurston will not receive a bonusSouthern Water
CEO Lawrence Gosden and CFO Stuart Ledger will not receive a bonusThames Water
CEO Chris Weston will not receive a bonusUnited Utilities
CEO Louise Beardmore and CFO Phil Aspin will not receive a bonusWessex Water
Wessex Water CFO Andy Pymer will not receive a bonusYorkshire Water
CEO Nicola Shaw and CFO Paul Inman will not receive a bonusThe manifesto was backed by over 20 leading environmental groups, many of whom have welcomed today’s announcement. However, they warn that more action is needed.
Mark Lloyd, Rivers Trust CEO, said it was a “really significant moment” in the push to clean up the UK’s waterways.
Giles Bristow, CEO at Surfers Against Sewage, said: “It’s right that the Government is finally acting on public outrage, but this is just the start. Water company bosses can still pocket bonuses even when sewage is pouring into our seas, lakes and rivers.”
Save Britain’s Rivers manifesto, one year on
It’s been exactly one year since The i Paper published its manifesto calling on the next Government to Save Britain’s Rivers.
Here’s how the Labour Government’s policy compares.
#1. RIVER HEALTH: 77% rivers in good health by 2027
We called on the Government to publish a roadmap outlining how it would meet its legal target of 77 per cent of rivers being in good health by 2027. It has not yet done this and just 14 per cent of rivers in England are currently in good ecological health
#2. SEWAGE: Sewage spills will not damage high-priority areas – including bathing spots and nature sites – by 2030
We called on the Government to bring forward targets to ensure high-priority sites are not damaged by sewage spills by 2030. Current targets introduced by the Tories say this won’t be done until 2045. Labour has yet not changed this.
#3. WATCHDOG: Regulators will stop water companies destroying the environment in pursuit of profit
We said the Government must overhaul the regulators, including tougher powers to prosecute bosses and restrict dividends and bonuses for underperforming water companies. Labour has introduced some of these changes through its Water (Special Measures) Bill and is currently undertaking a wider review of the regulators.
#4. BATHING: Create 100 clean bathing spots in rivers by 2030
We asked the Government to set a target of 100 bathing spots in rivers by 2030 and to change the rules so testing happens all-year-round. Labour has overhauled the bathing water regulations to include year-round testing at some sites, but has refused to set a target for the number of bathing spots
#5. FARMING: Farmers must be funded to improve water quality, and face enforcement action if they damage the environment
We urged the Government to boost funding for nature-friendly farming. The Budget will be announced at next week’s Spending Review, but there are reports of cuts.
They added: “We’re all going to pay a price for the colossal mismanagement of our water sector by these private monopolies – whether it’s sewage in rivers, leaky pipes or water shortages. Seeing bosses pocketing fat bonuses as a reward for this spectacular failure is an outrage, and the Government is right to put an end to it.”
Some campaigners are concerned that water companies will inflate wages to make up for the restrictions on bonuses, as happened in the financial sector following the caps on bonuses introduced as a result of the 2008 crash.
He described the move as “performative politics” and argued blocking dividend payments to shareholders would be more effective.
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A United Utilities spokesperson said: “We have a long track record of ensuring performance related pay for executives is closely linked to the outcomes that matter most to our customers. In addition, our performance related pay is funded by shareholders, not by customers.”
A Wessex Water spokesperson said: “This year, and irrespective of the Government’s new rules, our independent remuneration committee has already confirmed that neither our new CEO or CFO will receive any bonus. This decision reflects our own rules which require the achievement of specific customer and environmental performance targets.”
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