CEOs of polluting water companies who have been taking home multi-million pound payouts despite a ban on bonuses will be subject to a new clampdown on the use of “loopholes”.
These bosses have faced intense scrutiny for having large pay packets and bonuses while overseeing firms that pollute UK waterways with illegal sewage dumping.
Water companies that fail to meet standards were banned from paying executive bonuses last year, but some firms have gotten around this by increasing salaries or giving CEOs “retention” payments instead.
But the Government will now act to “close loopholes used to pay excessive bonuses” as part of the upcoming Clean Water Bill, Andy Burnham said in his speech to Labour Party Conference on Tuesday.
The step is a further win for The i Paper’s Save Britain’s Rivers campaign, which has been calling on the regulator Ofwat to be given tougher power to restrict bonuses for underperforming water companies.
Several water companies have been accused of circumventing the bonus ban through various means.
CEO of Anglian Water, Mark Thurston, was paid £1.9m, including a £500,000 “retention payment”, for example.
Nicola Shaw, CEO of Yorkshire Water, was paid £660,000 from Yorkshire Water’s parent company, Kelda Holdings, on top of her existing salary of £642,000.
This is despite both companies being hit by the bonus ban, which permits performance-related payments if a company failed to meet certain environmental, consumer or financial standards.
The Environment Secretary, Angela Eagle, is expected to launch a review into how water companies may be avoiding the bonus ban ahead of new measures being introduced as part of the Clean Water Bill, which is expected within the coming year.
Amy Fairman, Head of Campaigns, at River Action welcomed the move to “close the loophole allowing water bosses to bypass the bonus ban by massively increasing their fat cat salaries”.
“Polluters should pay for the damage they cause, not be rewarded for wrecking our rivers,” she added.
The Clean Water Bill was promised by Sir Keir Starmer’s Government as part of Labour’s promise to reform the water sector and will set out the Government’s plans to abolish Ofwat and set up a new regulator.
Burnham said on Tuesday that the bill will be “strengthened” and that the “centrepiece” will be a repeal of what he called Margaret Thatcher’s “ideological” ban on the public ownership of water.
The Prime Minister said the Government will publish a 10-year plan, which will set out a new direction for the water sector.
He said they will work with private companies that are serving the public interest but will be willing to take failing companies into “public ownership”.
The speech marked a significant shift in the Government’s language over the future direction of water, but stopped short of committing to bringing all water companies into public ownership.
Questions still remain over what the Government will do with Thames Water, which is expected to run out of money by the end of this year if ministers do not strike a deal with the company’s creditors or place them into a Special Administration Regime.
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