Three water suppliers have been blocked from using customer money to fund bonus payouts – but the scandal-hit industry still paid out another £1billion in dividends
The fat cat boss of embattled Thames Water will keep a near £200,000 bonus despite a block – as the industry dished out £1billion in shareholder rewards.
Watchdog Ofwat said it was preventing Thames, and two other suppliers, from using customer money to fund executive bonuses for last year. But the Mirror understands that Chris Weston, Thames’ chief executive, has already pocketed a £195,000 reward for the final three months of its year, paid for by customers.
It is believed Mr Weston, 60, will be allowed to keep the cash. Instead, Thames will repay the money from its own coffers to ensure customers ultimately don’t lose out. Mr Weston, a former British Gas bigwig, was appointed as Thames chief executive in January this year as the debt-laden supplier battled to prevent being renationalised. He also picked up a £197,000 salary for the final three months of last year.
It emerged this month that Mr Weston flew to Argentina to fish at a pristine spot. He visited a posh angling retreat on the Rio Gallegos, where stays start at £9,000. Yet back here, Thames has been slammed for pumping raw sewage into rivers. Ofwat said it had blocked a total of £770,000 worth of bonuses to Thames’ bonuses from being funded from customer bills. Thames’ annual report showed its finance chief, Alastair Cochran, was handed a £446,000 bonus.
Ofwat has also blocked Yorkshire Water from funding £616,000 worth of bonuses to its chief executive and finance boss from customers, along with £163,000 at Dŵr Cymru Welsh Water. A further six suppliers have voluntarily agreed not to use cash from households to cover £5.2million worth of payouts.
This is the first year Ofwat, under-fire for not coming down hard enough on suppliers, has had the power to block bonuses in this way. Proposed new powers will allow the regulator to stop bonuses altogether, even if the money comes from investors or elsewhere. However, it comes as Ofwat confirmed the industry had dished out another £1billion in dividends to shareholders last year, abeit down from £1.4billion the prior year. Ofwat has no powers to control dividends.
It comes as Ofwat next month announces what it think suppliers can increase prices by over the next five years to fund long overdue investment to tackle the scandal of raw sewage pollution and leakages. Some companies have asked for massive increases. David Black, chief executive of Ofwat, said: “In stopping customers from paying for undeserved bonuses that do not properly reflect performance, we are looking to sharpen executive mindsets and push companies to improve their performance and culture of accountability.”
Environment Secretary Steve Reed said: “It is disgraceful that half of water companies have given out unjustifiable and unmerited bonuses. That is why this Government is introducing urgent legislation to ban the payment of unfair bonuses to polluting water bosses so payouts of this kind can never happen again. But there are deeper issues that need long-term solutions, which is why we have launched the largest review of the sector since privatisation.”
Gary Carter, national officer at the GMB union, said: “Water companies have been paying massive bonuses to senior executives for years whilst leaks and sewage spills have been increasing. Customers shouldn’t be paying for failure and GMB welcomes Ofwat’s actions. Water companies should stop executive bonuses and instead pay the workers who are trying to keep failing assets working, while taking the abuse for company failings.”
James Wallace, chief executive at campaign group River Action, said: “At a time when water companies discharge record amounts of sewage into our waterways while pleading poverty to the regulators, they reward their investors with dividends and CEOs with bonuses. To end this era of pollution for profit, the new Government must start by banning financial gain to the owners and leaders of persistent polluters, and enforce the law with hefty fines that incentivise investment. Then they must change the governance of water companies to put public benefit and environmental protection first. The privatisation experiment has failed. It’s time for a complete reformation of the water industry and its regulators.”
