Thames Water says it is going to elevate base pay of bosses if Ofwat limits bonuses | Thames Water

Troubled Thames Water has threatened to extend the salaries of its executives if the trade regulator sees via on plans to restrict bonuses for the bosses of water firms.

The corporate, which serves greater than 16 million prospects throughout the London space and the Thames valley, is making an attempt to stabilise its debt-laden funds. It has informed Ofwat that it intends to boost base govt pay.

Thames informed Ofwat that the bonus proposals would make it onerous to draw expertise to the sector, in keeping with a report submitted in early December by the corporate’s regulatory technique committee to the regulator’s board, the Monetary Instances reported.

“Now we have made it very clear to Ofwat that, if it proceeds with its proposals, it’s extremely possible that base pay will must be elevated to compensate for the lack of performance-related pay plans,” stated the report by Jonathan Haskins, the chief threat and compliance officer at Thames Water.

“We additionally spotlight the affect the proposals may have on attracting, retaining and motivating critically wanted expertise throughout the sector, and the significance of this for attracting funding.”

In recent times, water firms have confronted public anger and political backlash over govt bonuses, leaks and sewage discharge at a time when many individuals have additionally come below growing monetary pressure.

Chris Weston, the chief govt of Thames Water, stated final month that it wanted to supply “aggressive packages” to draw expertise, as he defended bonuses value £770,000 that had been awarded to him and the corporate’s finance chief. Weston was awarded £195,000 for his first three months at Thames, in early 2024.

Feargal Sharkey, the previous Undertones lead singer turned campaigner, stated Thames’s demand confirmed that banning water chief govt bonuses was “nothing however ineffectual, low cost political posturing”.

“The straightforward reality is that if they need to change the tradition they should change the entire ethos of Ofwat and the water firms,” Sharkey stated.

“Ofwat can already set limits on CEO pay by setting an enforcement order. CEOs are all the time going to attempt to make as a lot cash for themselves as they’ll with no care in regards to the surroundings. The federal government tried limiting bonuses within the Metropolis already and that didn’t work as they simply massively inflated their salaries. The identical is occurring right here.”

The federal government is seeking to strengthen regulation of water firms and ban the cost of bonuses on the worst performers via laws that’s making its manner via parliament. It might additionally introduce private prison legal responsibility for water executives accountable for air pollution.

Ofwat is ready to pressure water firms to make traders choose up the tab for govt bonuses, relatively than permitting prospects to foot the invoice.

The regulator used its new powers in November for Thames Water, Yorkshire Water, and Dŵr Cymru Welsh Water, after figuring out the sector had awarded “undeserved” further funds.

Final month, Ofwat levied an £18.2m penalty on Thames – which is planning to boost buyer payments by a 3rd over the subsequent 5 years – after the corporate was discovered to have breached dividend guidelines on shareholder payouts made in 2023 and 2024.

Thames hopes to safe a £3bn emergency funding package deal, which it has described as important to make sure the corporate has sufficient cash to stave off momentary nationalisation.

The Guardian revealed in December that Thames Water deliberately diverted thousands and thousands of kilos pledged for environmental cleanups in the direction of different prices together with bonuses and dividends.

Thames declined to remark.