Regulator bans nine water companies from paying bonuses for 2025-26

Ofwat, the regulator for water companies in England and Wales, has banned nine of them from paying bonuses for the 2025-26 financial year. The regulator has also said it will speed up a review of the ban's rules, after concerns that some companies were undermining it.

Seven of the bans relate to environmental pollution. Severn Trent Water, Southern Water, South West Water, Wessex Water and Dŵr Cymru were among the companies named. Ofwat said the banned companies would otherwise have paid another £6.5m to executives during the year.

The main concern now is a type of payment that falls outside the ban. A retention payment is a sum paid to keep a senior manager in the job. Ofwat said the growing use of fixed retention payments, along with substantial base-pay increases that lack sufficient explanation, risks damaging public trust. It highlighted potential retention payments of £1m for Thames Water's chief financial officer, £1.5m for Northumbrian Water's chief executive, Heidi Mottram, and £1.7m for United Utilities' chief executive, Louise Beardmore.

Anglian Water has been criticised over retention payments worth up to £800,000 for its chief executive, Mark Thurston, despite the bonus ban. As a result, the company will face increased monitoring of its governance arrangements, meaning the way it makes and oversees decisions on pay and leadership.

Thames Water also paid its chief executive, Chris Weston, a previously deferred bonus of £99,000 during the year, despite the ban.

Environment Secretary Angela Eagle said she wanted to close loopholes so that failure does not pay. The government's stated aim is to ensure that companies whose performance has fallen short cannot reward their executives. Ofwat's review of the bonus-ban rules is expected to examine how far such payments can be used to get around the restrictions.