Half of water companies paid bonuses despite sewage crisis

Half of water companies paid out bonuses for the past financial year despite the sewage crisis, the regulator has revealed.

Ofwat revealed on Wednesday that five out of 10 water companies that deal with sewage had chosen to award performance-related bonuses.

Northumbrian Water, Wessex Water, Anglian Water, United Utilities and Severn Trent all paid out bonuses to at least one of their top executives. These were paid by shareholders rather than customer bills.

United Utilities had the most sewage spills during 2022, according to data from the Environment Agency, and Wessex Water and Northumbrian were in the top five for spills per sewage outflow.

Anglian and Wessex Water also came at the bottom of the Environment Agency’s league table for environmental performance last year, scoring two out of four stars.

Steven Mogford, who stepped down as the chief executive of United Utilities in March, received a £426,000 bonus, while Liv Garfield, the boss of Severn Trent, was awarded £359,000 and Peter Simpson, the Anglian Water CEO, got £302,000.

Water companies pay out bonuses based on several different performance criteria, of which their environmental record is one. Wessex Water said no directors received any of the bonus potential relating to environmental performance in 2022-23.

Ofwat said just three companies, Portsmouth Water, South West Water and Severn Trent, had fallen short of its expectations on customer and environmental performances linked to bonuses, but added that from next year it would start blocking companies from paying out bonuses from customer bills, a new power gained this year.

“It is welcome that a number of companies responded to our calls for a change in how bonuses are awarded,” said David Black, the Ofwat chief executive. “But we want to see more transparency around this, and if companies do not meet the criteria we have set out, from next year we will intervene to block customers from paying for these bonuses.”

The Lib Dems, who have made the sewage crisis a pillar of their campaigning, said all water firm executive bonuses should be banned.

“Bonuses should be a reward for success, not environmental vandalism,” said Tim Farron, the party’s environment spokesman. “It is frankly a scandal that the Conservative Government is just sitting on their hands. They are allowing a toothless regulator to let water firms get away with it.”

A spokesman for Water UK, the industry body, said: “We agree that any financial reward should be tightly linked to performance for customers and the environment. Today’s report shows that most companies have established this link.

“Water companies have set out the biggest ever investment plans to ensure the security of our water supply in the future and reduce the amount of sewage entering rivers and seas as fast as possible. Ultimately, it is this significant investment which will achieve the change we all want to see.”

A Department for Environment Food and Rural Affairs spokesman said: “This Government takes oversight of the water industry very seriously, which is why we have given Ofwat new powers allowing them to toughen up rules on dividends. 

“It’s also why we welcome Ofwat tightening rules on bonus payments. For 2022-23, no water company bosses in England are paying a CEO bonus out of customer money, and many CEOs have decided to take no bonus.”