Thames Water bonuses could be blocked by regulator

Thames Water and different h2o companies could beryllium prevented by the manufacture regulator from paying immoderate bonuses, nether rules owed to travel into effect adjacent month.

Environment Secretary Steve Reed said caller measures would halt h2o companies dumping a "tidal question of sewage into our rivers portion pocketing millions of pounds of bonuses".

Regulator Ofwat has been capable to halt firms utilizing lawsuit wealth to money bonuses, but the caller rules mean they could not usage funds from shareholders oregon lenders either.

However, successful a connection Thames, which precocious agreed a £3bn rescue loan, said it was not paying performance-related bonuses but alternatively "retention payments", which were not covered by the caller rules.

Thames Water is the UK's biggest h2o company, serving astir a 4th of the UK's population, but has travel nether occurrence successful caller years.

It has immense debts and is struggling to hole leaks, sewage spills and modernise outdated infrastructure.

Earlier this year, it secured £3bn successful exigency funding, which it said would springiness it the abstraction needed to implicit a restructuring of its debts and pull a currency buyer.

Subsequently it picked US backstage equity elephantine KKR arsenic its "preferred partner" to bargain the firm.

Under its caller powers contained successful the the Water (Special Measures) Act, Ofwat volition beryllium capable to prohibition "undeserved bonuses erstwhile precocious standards connected the situation and fiscal absorption of h2o companies are not met".

It could mean that Thames Water's bonuses could beryllium blocked arsenic soon arsenic adjacent month.

The prohibition would besides beryllium retrospective, meaning bonuses paid successful the past fiscal twelvemonth could beryllium clawed back.

The Department for Environment, Food and Rural Affairs (Defra) said customers "should not wage the terms for h2o institution mismanagement" and that it was "demanding an betterment successful performance".

It said firms would beryllium judged each twelvemonth connected 4 measures - biology performance, user matters, fiscal resilience and transgression liability.

Bonuses would beryllium "prohibited if [the h2o companies] neglect to conscionable acceptable standards".

"The authorities volition prohibition the outgo of unfair bonuses for polluting h2o bosses," Reed said. "The days of profiting from nonaccomplishment are over."

Earlier this week, Thames president Sir Adrian Montague told MPs that hundreds of thousands of pounds worthy of caller bonuses for bosses had been justified.

"We unrecorded successful a competitory marketplace and we person to supply the close benignant of packages to these radical different the caput hunters travel knocking," helium said.

Sir Adrian said apical executives could get millions of pounds successful bonuses arsenic portion of the exigency indebtedness agreement.

In a statement, a Thames spokesperson said the institution was progressive successful a "complex turnaround and restructuring process" to "deliver amended results for our customers and the situation and question a semipermanent solution to our fiscal resilience".

"It is captious that the concern retains the radical champion placed to present the improved outcomes our stakeholders rightly expect."

Thames said the payments were not performance-related bonuses covered by the caller rules, but alternatively "retention payments".

It said nary of these retention payments would beryllium be funded by customers.

Last November, Ofwat blocked 3 h2o firms - including Thames, Yorkshire Water and Dwr Cymru Welsh Water - from utilizing lawsuit wealth to money a full of £1.6m successful bosses' bonuses.

It said that by stopping customers from "paying for undeserved bonuses", it was looking "to sharpen enforcement mindsets" and to propulsion firms to amended their cultures of show and accountability.