Water bosses are set to be banned from receiving bonuses if a
company has committed serious criminal breaches, the Environment
Secretary has announced today.
Ofwat will be taking forward a consultation to define the
criteria for a ban. That could include successful prosecution for
a Category 1 or 2 pollution incident – such as causing
significant pollution at a bathing site or conservation area – or
where a company has been found guilty of serious management
failings.
The ban would apply to all executive board members and Chief
Executives and would be expected to come into effect later this
year, subject to consultation. If taken forward, Ofwat would
implement the measures by changing the conditions of water
company licences. For water companies in England this would be
done using the powers given to the regulator through the
Environment Act 2021.
Last year 10 water bosses received bonuses, totalling £2.5
million.
The measures form part of the government’s long-term strategy to
tackle pollution, clean up British waters and ensure a plentiful
supply for the future.
Environment Secretary said:
No-one should profit from illegal behaviour and it’s time that
water company bosses took responsibility for that.
Tougher action is needed to address poor performance by water
companies, which is why I am pleased Ofwat is going further today
on bonus payments. In cases where companies have committed
criminal breaches there is no justification whatsoever for paying
out bonuses. It needs to stop now.
I will shortly be setting out more detail on further steps to
clean up our waters, including reducing the reliance on water
company self-monitoring in order to hold them to account and
drive the improvements we all need to see.
The change follows the Environment Secretary’s recent meeting
with water company chief executives where he set out his
expectations on performance – and also builds on Ofwat’s
announcement last year to tighten restrictions on bonuses.
The policy would be expected to apply to FY24/25 bonuses from
April onwards – but the government is clear that companies should
follow these proposed new criteria for FY23/24 bonuses on a
voluntary basis.
