Water company bosses see pay and bonuses rise, despite ‘national scandal’ of leakages and sewage issues

Water company bosses have seen their pay packets swell by a fifth on average in the last year, despite billions of litres of water lost to leaks, according to the Liberal Democrats.

Top executives at 10 water companies received remuneration packages worth almost £25m in total last year, analysis by the Liberal Democrats shows, described by one leading figure in the party as a ‘national scandal’.

The regulator has warned that performance- related pay at privatised water companies “‘cannot be a one way street”’ and said a review is being carried out of executive pay at the top firms.

This comes as Thames, Southern, South East, South West and Yorkshire Water leak the equivalent of 16 million bathtubs every day, according to the GMB union.

While a NationalWorld analysis has found water companies across England and Wales are losing the equivalent of half a million Olympic swimming pools worth of water through broken and burst pipes each year.

Despite their leaking infrastructure, researchers at the University of Greenwich found nine English water firms had paid out £0.5 billion in dividends last year alone, with private shareholders funnelling off £18.9 billion in payouts since 2010.

And while pay and bonuses are rising, hosepipe bans are being rolled out across the country, with parts of England and Wales being officially declared in drought.

Water company executives pay ‘rises by 20%’

Top executives at the UK’s water companies have seen their pay rise by around 20%on average, with bonuses alone averaging £670,000, according to new analysis by the Liberal Democrats.

Despite widespread issues with leaks and supply problems, salaries and bonuses rose by a fifth for water company bosses between 2020/2021 and 2021/2022, annual reports show, with an average increase of almost £200,000 per boss in the last 12 months.

Among 22 bosses, remuneration packages including basic pay, bonuses, incentives and benefits totalled £24.8m in the last year, analysis by the Liberal Democrats showed.

David Black, CEO of the regulator of Ofwat, said: “I was very clear with company remuneration committees in March that performance-related pay for CEOs should be clearly linked to their performance for customers, the environment and society. We are carrying out our own analysis and plan to report on whether we feel companies have clearly made this link.

“Performance-related pay can’t be a one-way street, if companies are not performing that should be reflected in executive pay.”

Meanwhile, sewage was released into the rivers and oceans along England’s entire southern coastline earlier this week and a hosepipe ban is set to come into effect for millions of people, after water companies lost billions of litres of water through leakages in the last year.

In Cornwall, eleven beaches have been plagued with human waste and the water at five Devon beaches were marked as unsafe to swim in.

Liberal Democrat MP for Tiverton and Honiton Richard Foord has seen beaches in his constituency marked as unsafe this week as a result of sewage discharges.

He has called for action “so our children do not have to build sandcastles next to sewage”.

He said: “Local people and holidaymakers shouldn’t be forced to swim amidst human waste. Devon’s beaches are amongst the best in the world but the Government is turning a blind eye while private companies ruin them.

“Conservative MPs are taking the side of water companies by not challenging this mess. There is outrage here about the actions of these companies and those West Country MPs who voted to allow it should be ashamed.”

Hosepipe bans imminent despite billions of litres lost to leakages

Meanwhile, a number of these water companies are set to implement hosepipe bans for millions of customers, despite wasting more than a billion litres of water every day last year, analysis by the GMB union found.

Thames, Southern, South East, South West and Yorkshire Water leaked the equivalent of 16 million bathtubs or 500 Olympic sized swimming pools every 24 hours, according to GMB.

In total, the union says the five companies wasted a massive 460 billion litres of water in the financial year 2020/21.

Liberal Democrat Environment spokesperson Tim Farron MP: “This is a national scandal. These disgusting polluting habits have made beaches unsafe in the middle of the summer holidays and harmed precious British wildlife.

“Hosepipe bans could have been avoided this summer if these water company CEOs bothered to invest in their rusting pipes rather than stuffing profits in their pockets.

“They are putting profit over the environment. Frankly, the whole thing stinks.

“Worst of all, Ministers are just letting them get away with it. The Government blocked a ban on sewage being pumped into our waterways and allowed creaking pipes to burst.

“This Government is guilty by association for letting water companies get away with this”

Water UK, which represents the private water companies, said the firms agree there is a need for “urgent need for action to tackle the harm caused to the environment by spills from storm overflows and wastewater treatment works”.

They said companies are investing over £3 billion to improve the environment between 2020 and 2025, while leakage is at the “lowest level on record” with further reductions planned each year.

A spokesperson said: “The bonuses of all water company executives are linked to performance and reflect customer and environmental outcomes. Private investment has brought more than £160 billion into an industry that was previously starved of cash, while improving water company efficiency by over 70%. That efficiency means costs are lower, allowing bills to remain around the same for over a decade in real terms, while still allowing new investment in resilience projects and reduced leakage.”