Activists call for immediate ban on bonuses for water managers over sewage spill issue

Activists say water company executives should be stripped of their bonuses immediately if their companies cause environmental damage, such as illegally spilling sewage into rivers.

Regulator Ofwat will consult later this year on whether a no-bonus scheme can be introduced.

Environment Secretary Stephen Berkeley said it was time for water company executives to “take responsibility”.

But campaign groups insisted the policy should be implemented immediately.

“The issue here is black and white. We need to stop these illegal rewards for environmental damage now,” said Charles Watson, chairman and founder of River Action.

Britain's water companies, responsible for supplying water and managing wastewater, have recently faced intense criticism over leaks and sewage discharges into rivers. Climate change and population growth are putting increasing pressure on Britain's water systems, much of which were built decades ago.

There was also a backlash after suppliers announced plans to increase water prices by around £156 a year by 2030 to modernize Britain's aging water infrastructure.

Ofwat first announced measures in March last year to ban future bonuses for company executives found to have had a negative impact on the environment, but it remains unclear whether water companies will implement the plan and what types of incidents will result. Discussions are still underway as to whether executives will lose their bonuses. .

Activists and government opposition parties say they have long called for limits on bonuses for water managers but have not achieved sufficient results.

River Action's Mr Watson said it was “disappointing” that the proposals were subject to consultation.

He said fixing leaks “must be a top priority for all water companies and not reward board failures.”

Last year, executives at five of the 11 water companies that handle wastewater received bonuses. But at six other companies, bosses chose to abandon them following pressure from campaigners.

The government expects the policy to also apply to bonuses for the next financial year, which starts in April. Once the bill comes into force, it will also apply to water companies in England and Wales.

Environment Secretary Berkeley said, “There is no legitimacy in paying bonuses when a company commits a criminal act.This must stop now.''

The Department for Environment, Food and Rural Affairs (DEFRA) said incidents that could lead to executive bonuses being lost include the contamination of beaches or nature reserves, or companies being found guilty of serious mismanagement. He said that it would be possible. This rule also applies to executives and directors.

Labour's shadow environment minister Steve Reid said his party had been calling for regulator Ofwat to be given powers to block bonuses since last year.

Liberal Democrat environment spokesman Tim Farron said Mr Barclay's proposals should include a ban on bonuses “regardless of conviction”.

Meanwhile, Mark Lloyd, head of the Rivers Trust, said a ban on bosses' bonuses would “get some headlines in the run-up to the election, but won't address the more fundamental structural issues in the water sector.” ” he added.

Apart from the bonus ban, Ofwat was handed a range of other new tools on Monday designed to hold companies to account.

This includes imposing fines of up to 10% of turnover on businesses that provide poor customer service.

Ofwat previously said it was seeking “step change” in performance across the sector. The regulator last year ordered companies to repay millions of pounds to households after failing to meet key targets.

Ofwat said in its latest review of the industry that it found there were still too many instances where customers felt let down by their water companies.

David Black, Ofwat's chief executive, said: “Where we see failures, Ofwat can and will take action, which could result in significant fines.”

He said the fines for poor service levels were part of a series of new measures, including those related to environmental protection, shareholder payments and executive remuneration.

A spokesperson for Water UK, the water company representative body, said companies were providing record levels of support to customers, including financial support for the bills of 2 million households.

“Regulators are right to have all the powers they deem necessary to hold water companies to account,” the spokesperson said.

“Water companies are determined to provide the best possible service to their customers and are now providing an unprecedented level of support.”