In a decisive move to protect public confidence, Ofwat, the UK water regulator, announced that the bonus ban for water companies will be tightened next year. The decision follows accusations that firms are finding ways to sidestep the ban, offering large payments that effectively replace prohibited bonuses.
Anglian Water, in particular, drew sharp criticism after revealing retention payments up to £800,000 for chief executive Mark Thurston. Ofwat said these payments could give the impression that the company prioritised executive rewards over compliance, potentially eroding public trust.
Other companies flagged for similar practices include Thames Water, Northumbrian Water and United Utilities, with potential retention payments of £1m, £1.5m and £1.7m respectively. Seven of the nine companies banned from paying bonuses in the 2025-26 financial year were cited for environmental pollution, underscoring the regulator’s focus on both financial and ecological accountability.
The Labour government introduced the bonus ban last year in response to widespread outrage over sewage leaks into rivers and seas. Despite the ban, executive pay has risen over the past two years, according to Guardian analysis. Campaigners and opposition politicians argue that companies are circumventing the rule through non‑performance‑related payments that effectively replace the banned bonuses.
Ofwat will accelerate a review of the rules, including whether payments from parent companies should be covered by the ban. The regulator warned that the growing use of fixed “retention payments” and substantial base pay increases without clear justification risks damaging public trust and creating a perception of rule circumvention.
Andy Burnham has expressed pressure to clamp down on the industry, hinting at increased public control and the possibility of temporary government ownership of Thames Water. No definitive decision has been announced yet.
Source: The Guardian World
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