UK Government Launches Review to Close Water Bonus Loopholes
Environment Secretary Angela Eagle and regulator Ofwat are reviewing water company pay structures to stop executives from using retention payments to bypass bonus bans.
The UK government and the water regulator, Ofwat, are accelerating a review to tighten bonus bans for water companies after accusing the industry of using retention payments and base pay increases to circumvent rules. Environment Secretary Angela Eagle announced the wide-ranging review to close loopholes and ensure that failure does not pay, noting that the public is tired of seeing executives profit while rivers remain polluted.
Ofwat has banned nine companies in England and Wales from paying bonuses for the 2025-26 financial year, with seven of those bans resulting from environmental pollution. The regulator specifically criticized Anglian Water for providing up to £800,000 in retention payments to CEO Mark Thurston. Similar payment practices were identified at United Utilities, Northumbrian Water, and Thames Water, the latter of which paid its CEO a deferred bonus of £99,000 and raised executive base pay.
Ofwat officials stated that while £10 million in payments have been blocked over the last two years, the continued use of fixed retention payments and unexplained base pay increases risks damaging public trust. The regulator argues these practices create a perception that companies are intentionally bypassing established rules to reward executives despite serious performance failures.
