Six water companies, including the crisis-stricken Thames Water, will be prohibited from paying bonuses to senior executives.
The Water (Special Measures) Act, which comes into effect on Friday, bars utility firms that are responsible for "poor environmental and customer outcomes" from offering bonuses to top bosses, as reported by .
The affected companies include Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities, and Southern Water. If any of these firms pay bonuses while under the ban, the water regulator Ofwat has the authority to intervene and reclaim the money.
Over the past decade, º£½ÇÊÓƵ water firms have awarded more than £112m in bonuses and incentives. Last year alone, some £7.6m was awarded.
"Water company bosses, like anyone else, should only get bonuses if they've performed well, certainly not if they've failed to tackle water pollution," said Steve Reed, the Environment Secretary.
"Undeserved bonuses will now be banned as part of the government's plan to clean up our rivers, lakes and seas for good."
Thames Water on the brink
This development comes just days after Thames Water, the º£½ÇÊÓƵ's largest water supplier, found itself on the brink of a crisis when KKR abandoned a rescue bid attempt.
The utility has accumulated debts of nearly £20bn while failing to adequately invest in its infrastructure network, leading to a significant increase in sewage leaks.
Thames Water has been criticised for allocating substantial bonuses to its executives from a £3bn emergency loan secured from major creditors. It also faced a record fine imposed last week by Ofwat due to issues with dividend disbursement and wastewater operations.
Responding to the latest developments, a Southern Water spokesperson remarked: "We note the Government's announcement and await full details of how this will impact our existing approach to performance-related reward."
They further elaborated, "This is already closely tied to the delivery of improvements in customer satisfaction and environmental performance."
The spokesperson clarified, "Any bonuses are paid by shareholders, not customers, and are overseen by an independent committee."
Waterº£½ÇÊÓƵ, the representative body for the sector, has not yet given a statement regarding the situation.
