Water companies raise bonuses to £9.1m despite record sewage discharges

The payouts pile further pressure on the regulator, Ofwat, to intervene in the decisions of water company boards. Last year, raw sewage was discharged for more than 3.6m hours into rivers and seas, a 105% increase on the previous 12 months.

Thames Water, which is labouring under more than £15bn of debts, is understood to have enough cash left to run its operations for only eight months, creating uncertainty for its 8,000 employees and 16 million customers. Managers at Thames have booked dates at the high court in November to try to gain court approval to change repayment terms as part of its wider effort to stave off falling into a form of temporary renationalisation.

Severn Trent had the biggest bonus payout, at £3.361m, compared with £3.319m last year. The company’s chief executive, Liv Garfield, has previously come under fire for her £3.2m pay and bonus package despite its fine for discharging 260m litres of sewage into local rivers.

South West Water also increased its bonus pot, from £325,000 to £504,000. This year, the company presided over a mass tap water contamination event, when dozens of people fell unwell after drinking water containing the parasite cryptosporidium.

Pension contributions for water company executives also rose to a new high of £1.7m this year.

Labour pledged during the election campaign to ban bosses of polluting water companies from receiving bonuses, but the water (special measures) bill, which is in committee stage in the House of Lords, does not ban all bonuses. Instead, it will give the regulators powers to ban bonuses for water company chief executives who fail to meet environmental and consumer standards, and if their company is not financially resilient. It is understood that the definition of environmental standards had not yet been decided by Ofwat.

Liv Garfield, chief executive of Severn Trent, has been criticised for her £3.2m pay and bonus package. Photograph: Tayfun Salcı/Zuma/Rex

The Liberal Democrats are pushing for a ban on bonuses while water companies clean up their act. The party is to table an amendment to Labour’s water bill, to try to force a ban. Its environment spokesperson, Tim Farron, said: “It is a national scandal that these bonuses are being paid out by firms who disgustingly pollute rivers, lakes and beaches. These executives are pocketing more every year while sewage levels rise. Frankly, the whole thing stinks.

“The last Conservative government shamefully let these disgraced firms get away with it, and now the new government has to step up. These bonuses are an insult to the British public and must be banned straight away.”

Meanwhile, water companies are fighting to raise bills substantially for customers in order to invest in the infrastructure required to clean up the rivers. Companies in England and Wales requested to spend a total of £104.5bn by raising bills by £144 over the next five years in their submissions to Ofwat’s price review process, but in July the regulator provisionally allowed them only £88bn, capping the increases at £94.

Companies formally responded the following month and Ofwat is due to make a final decision in December, although this could slip to January.

A spokesperson for Water UK said: “Almost all of these bonuses were paid by shareholders, not customers, but all companies recognise the need to do more to deliver on their plans to support economic growth, build more homes, secure our water supplies and end sewage entering our rivers.

“We now need the regulator Ofwat to fully approve water companies’ investment plans so that we can get on with it.”