Yorkshire Water blocked from using customers cash for bosses bonuses
The move is thought to be worth nearly £7 million
Last updated 21st Nov 2024
Nine water companies, including Yorkshire Water, have been prevented from using customer money to fund "undeserved" bonuses for top bosses.
Regulator Ofwat said it had stepped in to halt water companies that cannot show that bonuses are sufficiently linked to performance from using customer money to fund the payouts, amounting to 73% of the total executive awards proposed across the industry.
Three firms - including Yorkshire Water, Thames Water and Dwr Cymru Welsh Water - which were directly blocked from allowing customers to pay £1.55 million of bonuses.
Ofwat said a further six companies had voluntarily decided not to push the cost of executive bonuses worth a combined £5.2 million onto customers, with shareholders instead paying.
It added it would otherwise have moved to block the payouts.
David Black, chief executive of Ofwat, said: "In stopping customers from paying for undeserved bonuses that do not properly reflect performance, we are looking to sharpen executive mindsets and push companies to improve their performance and culture of accountability.
"While we are starting to see companies take some positive steps, they need to do more to rebuild public trust."
Ofwat said new rules on water company bonuses and dividend payouts to shareholders were "beginning to bite" in their first full year since being introduced.
In blocking the awards, Ofwat will instead adjust costs for the companies so that they cannot recover it from customers.
Action was taken against £616,000 worth of payouts for top bosses at Yorkshire Water.
Secretary of State for Environment, Food and Rural Affairs Steve Reed said: "It is disgraceful that half of water companies have given out unjustifiable and unmerited bonuses.
"That is why this Government is introducing urgent legislation to ban the payment of unfair bonuses to polluting water bosses so payouts of this kind can never happen again.
"But there are deeper issues that need long-term solutions, which is why we have launched the largest review of the sector since privatisation."