Water bosses’ pay rises despite bonus ban and public fury over bills and pollution

One chief executive, Mark Thurston of Anglian Water, received £1.9m – including a £500,000 “retention payment”, despite the bonus ban.

The biggest package went to Louise Beardmore, chief executive of United Utilities, who received £2.5m – £1.1m more than the previous year.

Overall reported pay packets rose by 1.5% to £25.3m for chief executives and chief financial officers in the year, thanks to salary rises and the use of pay loopholes, according to analysis of the 14 companies that serve most of England and Wales.

With water bills soaring and with Britain’s biggest water company, Thames, on the brink of insolvency and about 23 million people covered by hosepipe bans as drought status looms, the revelation sparked criticism of companies for allegedly finding ways to pay their bosses more, despite the bonus ban being introduced in 2025.

The news will add to pressure on Andy Burnham to clamp down on the industry. Burnham has said he wants to exert “more public control” over the water industry, and has suggested he could move Thames into temporary government ownership after years of financial struggles and mismanagement.

Adrian Ramsay, a Green party MP, said: “The astronomical sums paid to water company executives are a perfect illustration of everything that is wrong with treating this essential public resource as a private commodity.

“Andy Burnham must surely now reach the obvious conclusion that water should be brought back into public ownership, as the Green party would do, so that any money raised goes back into the system, not into shareholders’ pockets and excessive executive pay.”

Water company pay has come under intense scrutiny in recent years because of persistent dumping of sewage into Britain’s rivers and seas. The utilities have been allowed to raise bills sharply to make belated investments in their leaking pipes, ageing treatment works and new reservoirs. Recent hot weather has added to the frustrations of customers.

Eight companies said they expect to be covered by the bonus ban for 2025-26, with bans applied retrospectively to companies responsible for the most serious pollution incidents or financial failings.

Yet despite the ban and heavy criticism, total pay for chief executives and chief financial officers reported by water companies was £25.3m for the year to the end of March, up from £24.9m the year before, according to analysis of company accounts. It is the second year in a row that executive pay has risen despite the bonus ban.

In some cases the companies have given their bosses extra awards that they claim are not “performance-related payments”, or bonuses, which they argue means the cash is not covered by the ban.

Anglian Water said it will be caught by the bonus ban, but still gave more to Thurston. The chief executive, who was Britain’s best-paid public servant when he ran the late and hugely over-budget HS2 rail project, received the bulk of his pay through Anglian’s parent company, including a £500,000 “retention payment”.

Anglian, which provides water and sewerage services to nearly 7 million customers in the East of England, claimed the payment did not count as a bonus because it was not linked to the regulated water company’s performance. The company said the payout was funded by shareholders for work outside the regulated company, and it needed “targeted, time-limited retention arrangements to maintain leadership continuity”.

Yorkshire Water said it was likely to be banned from paying bonuses, but its parent company, Kelda Holdings, paid another £600,000 to its chief executive, Nicola Shaw, on top of her fixed pay of £732,000. The regular payment – which Yorkshire has said is not related to the water company’s performance – was first revealed last year by the Guardian.

Gary Carter, a national officer for the GMB union, which represents many water workers, said: “Finding ways round the bonus ban further tarnishes the reputations of private water companies. It makes them look like money-grabbing asset strippers who care more about lining their own pockets than providing fresh, clean water for the UK public.

“Senior executive pay is out of control and the government needs to fundamentally overhaul the water companies – with more public control – to fix it.”

Executive pay dropped at some of the companies covered by the ban, including Severn Trent, Southern Water and Northumbrian Water – although Northumbrian also made a £300,000 “retention payment” to its chief executive, Heidi Mottram. However, the High Pay Centre, which scrutinises executive pay, said the analysis raises questions over whether the government’s bonus ban has been effective in cutting pay for those companies who are responsible for serious pollution, or which have failed financially.

Andrew Speke, the High Pay Centre’s interim director, said: “These figures show the government’s current measures have not gone far enough. Restricting bonuses makes little difference if executives continue to receive broadly the same overall level of pay through other forms of remuneration. The government could go further by introducing measures such as maximum pay ratios, but more fundamentally it needs to address the corporate governance model that has allowed these levels of executive pay to persist despite years of poor performance.

“If Thames Water does come under public ownership or control, ministers should seize the opportunity to demonstrate a different approach to executive pay and corporate governance. Setting clear expectations that pay should reflect performance and the public interest would establish a benchmark for the rest of the sector and increase pressure on other water companies to follow suit.”

The water company reports showed other ways used by water companies and their owners to reward executives. United Utilities does not expect to be banned from paying bonuses this year, but it still gave Beardmore a £435,000 “annual allowance” with no performance conditions, on top of a 16% increase in fixed pay to £971,000. The FTSE 100 company, which has 7.3million customers, said the money came from shareholders, and was required to retain its leaders.

Wessex Water was also banned from paying bonuses. However, it granted its chief executive, Ruth Jefferson, a 14% salary increase. Wessex said the higher salary better reflected the job’s responsibilities.

The other companies that indicated they would be covered by the ban were D?r Cymru Welsh Water and Thames. Thames still paid £4.1m in bonuses to senior staff not covered by the ban.

The water regulator for England and Wales, Ofwat, is not expected to confirm formally which companies are subject to the bonus ban until the autumn. However, the ban applies retrospectively to any company responsible for the most serious pollution incidents during that year, as well as those such as Thames Water which are failing financially.

A spokesperson for the Department for Environment, Food and Rural Affairs said: “We have banned undeserved bonuses for water company bosses. Any attempt to circumvent the rules is completely unacceptable.

“We will leave no stone unturned in ensuring bonuses can only be paid where companies deliver environmental and customer outcomes and Ofwat’s review of the bonus rule will carefully consider if any requirements need to be tightened.”

Water UK, which represents companies across country, declined to comment.

The Guardian’s analysis included pay awarded to all people who held chief executive or chief financial officer roles during the respective years, including from parent companies where reported. Two companies did not disclose pay for chief financial officers.