Water bill hike: Bosses paid £41m in bonuses while customers asked to pay for upgrades

• Lib Dems write to Ofwat and DEFRA Secretary Therese Coffey demanding ban on water company bosses bonuses and shareholder dividends

• New analysis reveals water company executives received £41 million in bonuses over three years despite sewage scandal

• £84 proposed increase in bills amounts to a 18.75% increase in the average water and sewage bill

The Liberal Democrats have called on the regulator Ofwat and government to ban water companies from paying out executive bonuses and shareholder dividends, and instead invest the money in upgrading infrastructure to prevent sewage dumping.

It comes as new analysis by the Liberal Democrats has revealed water company executives have been paid over £41 million in bonuses, benefits and incentives over the past three years, despite the ongoing sewage scandal they have presided over.

This includes £9.7m paid out in executive bonuses and benefits in 2022/23, down slightly from £15m the previous year.

Last year dividends paid out to shareholders nearly tripled to £1.4 billion, from £540 million the previous year. 

The party’s Environment Spokesperson Tim Farron has written to Environment Secretary Thérèse Coffey and Chief Executive of Ofwat David Black, saying that no increase to customers’ bills should be approved while the water companies are paying out huge dividends and bonuses.

It comes after water companies have proposed hiking customer bills by £84 a year to pay for infrastructure upgrades. This is equivalent to an 18.75% increase on the current average water and sewage bill for a household of £448 a year. 

Liberal Democrat Environment Spokesperson Tim Farron MP said:

“It is scandalous that water companies are proposing to hike people’s bills to pay to clean up the mess they themselves have created.

“To make matters worse, water company bosses have paid out millions in bonuses and dividends, money that could have been spent upgrading infrastructure instead.

“The government and Ofwat must step in and make sure this money is spent on fixing leaky pipes and stopping sewage discharges, instead of on lining the pockets of overseas investors and water company execs.

“The public would be rightly outraged if they are made to pay the price for this sewage scandal, while water company bosses continue to trouser huge bonuses.”

ENDS

Notes to Editors

House of Commons Library research said that in 2023-23, the average household bill for water and sewerage was £448 (Source: Discover Water, Annual bills).

Full analysis by the Liberal Democrats on water company renumeration over the past three years can be found here. Data is sourced from water company annual reports.

Full letter to the Secretary of State for DEFRA and Ofwat can be found below. 

Dear Secretary of State Therese Coffey,

Copied to David Black, Chief Executive of Ofwat

I am delighted to see that the water companies are finally making the investment we need to see in our water infrastructure including tackling storm overflows and building new reservoirs.

I am however disappointed to see this will mean increased bills for consumers. Water companies have underinvested significantly in our water infrastructure and now it is bill payers that are paying the price for this. 

I hope that you will consider introducing a nationwide social tariff for the most vulnerable to ensure they are properly protected from the bill increases to come. 

I am also extremely concerned that this new investment contains no restrictions on remuneration, particularly bonuses, for water companies executives, nor limiting dividends to ensure maximum investment.

Over the past three years water companies bosses have been paid £73 million in remuneration including £41 million in bonuses, benefits and incentives - given the state of our water infrastructure this is simply unacceptable.

Last year dividends paid out to shareholders nearly tripled to £1.4 billion, from £540 million the previous year. When water companies are expecting bill payers to pay even more for their water bills it is only fair that they see much lower earnings. 

We urge both you and the regulator Ofwat to ensure that water companies are making the investments required while delivering a fair deal to customers.

Yours sincerely,

Tim Farron

MP for Westmorland and Lonsdale and Liberal Democrat Spokesperson for the Environment