Thames Water drops bonuses due for bosses after Government criticism
Environment Secretary Steve Reed confirmed the proposals had been dropped during an Environment, Food and Rural Affairs Committee session with MPs.
Thames Water has “withdrawn” plans to pay senior bosses large bonuses linked to the water company securing a £3 billion emergency loan, Environment Secretary Steve Reed has said.
Mr Reed confirmed the proposals had been dropped during an Environment, Food and Rural Affairs (Efra) committee session with MPs on Tuesday.
Earlier in the day, Thames Water’s chairman admitted to incorrectly stating that the so-called retention plan was “insisted upon” by the company’s lenders.
This was set to amount to 50% of senior bosses’ salaries, leading to them getting £1 million on top of their annual salaries and regular bonuses.
The payments were linked to Thames Water securing a rescue loan earlier this year that could reach £3 billion to stave off collapse.
Mr Reed told MPs that Thames Water had been “trying to circumvent” upcoming rules that can ban water companies from paying bonuses, by “calling their bonuses something different so they continue to pay them”.
“I’m very happy indeed that Thames have now dropped those proposals,” he said.
“It was the wrong thing to do. It offends against their own customers’ sense of fair play.
Asked if he was confirming Thames will not be making the retention payments, he said: “They won’t be doing that.
“The Government will take any action necessary to prevent them trying to circumvent the ban that we’ve now tried to put in law. They’ve now withdrawn their proposal to make those payments.”
A spokesman for Thames said: “It has never been the Thames Water board’s intention to be at odds with the Government’s ambition to reform the water industry.”
“Following recent discussions the board has decided to pause the retention scheme and await forthcoming guidance from the regulator” in relation to its new rules, he added.
Thames’ chairman Sir Adrian Montague said he may have “misspoken” when he said the group’s creditors “insisted” upon the retention incentives, when quizzed on the struggling water firm’s turnaround at an Efra committee session last week.
In a letter to the committee, Sir Adrian wrote: “I appreciate that in the heat of the moment I may have misspoken when I stated that the creditors insisted on the management retention plan.”
Thames Water is England’s biggest water firm and supplies around 16 million households across London and the South East.
The company has been at the centre of growing public outrage over the extent of pollution, rising bills, high dividends, and executive pay and bonuses at the UK’s privatised water firms.
Downing Street said on Tuesday that Thames Water bosses should not be receiving bonuses.
The Prime Minister’s official spokesman said: “Water bosses rewarding themselves for failure is clearly not acceptable and ministers are clear that, after presiding over years of mismanagement, Thames Water should not be handing itself bonuses.
“The new Ofwat powers that are set out in the Water Act and will be coming into effect shortly will be applied retrospectively, meaning that they apply to Thames Water, just as they will any other company.”
The regulator’s new rules mean it can ban bonus payments to water bosses if they fail to meet standards to protect the environment, their consumers, and their company’s finances.
It also means it could block payments funded not just by customer money, but also by lenders and shareholders.
Thames Water has said the retention incentives are different to performance-related bonuses, so are not covered by the rules, and will be funded by lenders.
