Ofwat tightens water bonus ban after Anglian chief's £800,000 deal

Nine water companies in England and Wales are barred from paying bonuses for the 2025-26 financial year, the regulator Ofwat said on Thursday. Seven of those bans were triggered by environmental pollution. Ofwat added that it is accelerating a review of the rules over concerns companies are deliberately undermining the prohibition.

Anglian Water took the hardest hit. Ofwat singled the company out over "retention payments" worth up to £800,000 for chief executive Mark Thurston, saying the arrangement "could give the impression the company had prioritised offering executive directors a cash award in a way that would not technically breach the rule and would in practice replace the loss of PRP [performance-related pay] prohibited by it." Anglian will face increased monitoring of its governance arrangements as a result.

The regulator warned that the trend is eroding confidence in the sector, saying: "The growing use of fixed so-called 'retention payments' and substantial increases in base pay without sufficient explanation or supporting evidence risks damaging public trust and creating a perception that companies are circumventing the rule." It is understood the review will also examine whether payments from water companies' parent companies should fall under the ban. Labour introduced the ban last year amid public outrage over sewage spilling into Britain's rivers and seas, yet water bosses' pay has risen over the past two years despite it, according to Guardian analysis.

Ofwat also flagged potential retention payments of £1m for Thames Water's chief financial officer, £1.5m for Northumbrian Water chief executive Heidi Mottram and £1.7m for Louise Beardmore, the chief executive of United Utilities. Thames paid chief executive Chris Weston a previously deferred bonus of £99,000 during the year despite the ban. Ofwat said Thames's future owners would have to cover that payment rather than customer bills, and criticised the company for raising executives' base pay.

The other banned companies were Severn Trent Water, Southern Water, South West Water, Wessex Water and Dŵr Cymru (Welsh Water), alongside Thames Water, Yorkshire Water and Anglian. Ofwat said they would have paid out another £6.5m to executives during the year had the ban not been in place. South East Water was not subject to the ban, but the regulator said its shareholders will have to pay for future bonuses after supply failures left tens of thousands of households without water during the financial year.

Helen Campbell, Ofwat's interim executive director for delivery, said: "It is disappointing that so many companies continue to trigger the rule through serious performance failures which has seen £10m in payments blocked in the past two years." She added that executive bonuses which do not reflect performance, retention payments and poorly explained base pay increases all feed low public trust in the sector. Ofwat also criticised the paucity of information on pay reported by South Staffs Water, while Andy Burnham faces pressure to clamp down on the industry — he has said he wants "more public control" over water companies but has yet to decide whether to move Thames into temporary government ownership.