Ofwat warns water industry bonus rules need tightening over damage to public trust

Ofwat raises concerns over payments

Ofwat said the growing use of fixed retention payments, alongside substantial increases in base pay lacking adequate explanation or evidence, could undermine confidence in the sector. The regulator said such arrangements could create the impression that companies were circumventing the rules.

Campaigners and opposition politicians have said companies may be replacing prohibited performance-related bonuses with other payments. Ofwat said it was accelerating its review to make sure the rules deliver the outcomes customers expect.

Nine companies face bonus bans

Nine water companies in England and Wales were banned from paying bonuses in the 2025-26 financial year, Ofwat said on Thursday. Seven of the bans were linked to environmental pollution; Thames Water and Yorkshire Water were among the companies named. Ofwat highlighted 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 United Utilities chief executive Louise Beardmore.

Thames Water payment scrutinised

Thames Water paid chief executive Chris Weston a deferred bonus of £99,000 during the year despite the ban. Ofwat said the company’s future owners, rather than customers through their bills, would have to fund it.

The company was also criticised for increasing executives’ base pay. Ofwat’s concerns included whether such pay rises were adequately explained or supported by evidence.

Eagle calls for loopholes to close

Environment secretary Angela Eagle said she wanted to close loopholes so that failure did not pay. She said people were tired of water bosses profiting while rivers were polluted and customers were repeatedly let down.