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Government bans unfair bonuses for water companies that don't meet high standards

• Unfair bonuses now banned for water companies that don’t meet high standards.  
• Water bosses awarded themselves over £112 million in bonuses and incentive payments in the last decade.  
• Strengthened enforcement is just one part of the Government’s strategy to reform the water sector and attract investment as part of its Plan for Change.  

Unfair bonuses have been banned for senior executives at six water companies, as new measures in the Water (Special Measures) Act come into force today (Friday, 6th June).  

The government is clear that transformative change across the water sector is needed to clean up our rivers, lakes and seas, and modernise the sector for decades to come.  

Under new rules, companies are not permitted to pay bonuses to water bosses that oversee poor environmental and customer outcomes. This delivers on a key manifesto commitment and has been backdated to apply to any bonuses relating to the financial year from April last year.  

This applies to Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities, and Southern Water, where bosses are not permitted to receive bonuses with immediate effect.  

Water companies have awarded over £112 million in bonuses and incentives over the last decade. Last year alone, £7.6 million in bonuses were paid to water bosses in England. 

It’s crucial that companies attract the best talent to deliver essential upgrades to the water system. Companies that do meet Ofwat’s standards will still be eligible to pay executives bonuses – a powerful incentive for them to deliver immediate environmental improvements, better customer outcomes, and improve financial resilience.  

Environment Secretary Steve Reed said:      

Water company bosses, like anyone else, should only get bonuses if they’ve performed well, certainly not if they’ve failed to tackle water pollution.  

Undeserved bonuses will now be banned as part of the Government’s plan to clean up our rivers, lakes and seas for good. 

Promise made, promise delivered. 

Today’s ban holds water bosses to account and ensures they can no longer cash in while their companies pollute rivers, neglect customers, or mismanage finances.  

Strengthened enforcement is just one part of the government’s strategy to reform the water sector, which also includes working with the companies and their investors to make the water industry one of growth and opportunity, attracting investment and ensuring its stable financial footing for years to come. 

The government is determined to reform the sector in a way that continues to attract high quality, long-term investors to rebuild our water infrastructure. Following the publication of the Independent Water Commission’s interim report, Ministers will look at proposals carefully, and outline further action in due course. 

While it is for water companies to set their own remuneration, new standards published by Ofwat that come into force today mean bonuses will not be permitted be handed out in specific cases when a water company:   

• Fails to meet core environmental standards and presides over serious pollution offences 
• Fails to meet basic financial resilience standards (e.g. meet minimum credit rating requirements)    
• Fails to meet core consumer standards (e.g. failure to operate and maintain sewage networks)   
• Is convicted of a criminal offence (e.g. criminal convictions for serious environmental failings including illegal spills)   

Under new rules published by Ofwat today, any company failing to meet key standards will automatically lose the right to award bonuses. If a company pays a bonus while banned, Ofwat has the powers under the Water (Special Measures) Act to direct the company to claw back the money. Any company that does not comply with Ofwat’s directions will face enforcement action. 

To further protect customers and clean up our waterways, the government has secured a record £104 billion of private investment – the largest ever since privatisation to cut sewage discharges by nearly half over the next five years. This money will now be ringfenced for new pipes and treatment works, not shareholder payouts.  

Notes to editors  

• The table below outlines companies’ compliance on current information. 

• It is up to individual water companies to determine appropriate financial rewards. Ofwat will consider action required once water companies publish their remuneration decisions in their annual reports for the 2024-25 financial year.

ANNEX A: Companies affected by the ban:

*Anglian Water’s CFO is not subject to the ban because they were not in post for the Cat.1 incident. Their CEO was in post during the Cat.1 incident and therefore faces a ban.   

**Wessex Water’s CEO is not subject to the ban because they were not in post for the criminal offence that triggers the ban.

ANNEX B: Total CEO/CFO bonuses paid by water companies in England (in thousands)

Water company	2014-15	2015-16	2016-17	2017-18	2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	Total
Anglian Water	1,482	1,798	1,569	3,429	3,234	713	2,222	1,152	1,291	95	16,984
United Utilities	3,227	2,942	2,284	2,247	2,733	2,733	3,138	2,763	2,377	1,366	25,810
Northumbrian Water	597	484	595	479	384	269	259	214	311	315	3,907
Southern Water	757*	427	187	756	645	815	842	669	-	312	5,410
Severn Trent Water	3,367	2,294	2,978	1,788	2,201	2,674	2,777	4,471	3,413	3,309	29,271
South West Water	556	832	640	259	521	984	1,230	755	362	470	6,609
Thames Water	2,432	609	203	807	448	937	538	794	-	770	7,538
Wessex Water	236	353	482	552	485	-	640	651	459	387	4,246
Yorkshire Water	2,305	1,288	Channel website: https://www.gov.uk/government/organisations/department-for-environment-food-rural-affairs Original article link: https://www.gov.uk/government/news/governments-new-law-sees-unfair-bonuses-banned-for-six-water-companies-with-immediate-effect Share this article twitter facebook linkedin Latest News from Department for Environment, Food and Rural Affairs Hundreds of thousands of homes and businesses to benefit from largest flood defence investment programme in history 16/06/2025 14:20:00 Almost £8 billion to be invested in flood defences over the next decade. Environment Secretary leads a new push with business to restore nature 12/06/2025 14:05:00 Environment Secretary Steve Reed has brought business leaders and investors together to scale up private investment in nature Badger TB vaccinations increase to a record high 12/06/2025 10:10:00 Record levels of badger vaccination as part of new approach to move towards non-lethal disease control Government to introduce legislation on High Seas Treaty by end of year 11/06/2025 12:10:00 Bill to be introduced by end of year to enable ratification of the treaty £13.6 million to help families and charities reap benefits of surplus farm produce 11/06/2025 11:20:00 Grants to ensure more than 19,000 tonnes of surplus food will be redistributed to homeless shelters, food banks and charities across the country Government proposes to extend ban on destructive bottom trawling 10/06/2025 11:20:00 Government proposals to ban bottom trawling in more vulnerable marine habitats aim to protect important and rare underwater life. National Drought Group meets after driest spring in 132 years 06/06/2025 14:20:00 Expert group told England has now experienced driest March, April and May since 1893. Farmers to get fairer deals for combinable crops 05/06/2025 17:20:00 New review aims to support fairer, more profitable deals for farmers. National Drought Group meets after driest spring in 132 years 05/06/2025 16:12:00 Expert group told England has now experienced driest March, April and May since 1893. Supplier Profiles United Kingdom Accreditation Service Accreditation: Delivering Confidence in Everyday Life View Profile Links Contact Us Client Testimonials Subscriber Testimonials Forgot Password Contracts Locator The WiredGov Privacy and Cookies Policy Follow Us twitter facebook linkedin Registered Office WIRED GOV LTD 7 St Petersgate, Stockport, Cheshire SK1 1EB www.wired-gov.net Registered in England and Wales No. 04667736