December 13, 2023

Ofwat will now take action against water companies for inappropriate shareholder bonuses

Thanks to collective campaigning by the Organise network, Ofwat will now take action against water companies that pay out inappropriate bonuses to their shareholders.

In response to Organise's 42,000-strong petition and the 3,000 emails sent by members, Ofwat has acknowledged the strength of public opinion and has given itself enforcement power to challenge these huge payouts. Read the full response letter from Ofwat below.

"Thank you for sending through the petition report calling on Ofwat to take action on executive bonuses at water companies. We have noted the strength of feeling evidenced in the report provided in your email, and in the many emails we received directly from your supporters who had signed the petition. We wanted to update you on the latest work in this space. Please share this response with your supporters.

On 8 November 2023, we published our assessment of how performance related pay, or bonuses, awarded to water company executives during 2022-23 aligned to delivery for customers and the environment, and overall company performance. The report looks at the 16 largest companies in England and Wales and is the latest step taken by Ofwat to crack down on inappropriate pay outs in the sector.

We have told companies to show clearly how both annual and long-term pay incentives are substantially linked to stretching delivery for customers and the environment. Where such rewards are found to be inappropriate, Ofwat will step in and ensure that customers do not foot the bill. New powers will enable us to enforce this for the first time.

We also wanted to update you on the steps Ofwat is taking to improve future performance. In October, all water companies submitted to Ofwat their plans for 2025-2030. The plans are now being scrutinized and challenged by Ofwat before final decisions on companies' future investment plans, and what that means for customers' bills, are made in December 2024. Ofwat has told companies that they had to be ambitious in their plans to reduce pollution, while delivering value for money for bill payers.

We want to see companies transform their performance for consumers and the environment and will use all of our powers to drive that and hold companies to account for delivering. Ofwat has made clear there is a pressing need to reduce pollution from storm overflows, improve river and bathing water quality and increase capacity in water resources, so England and Wales are better placed to meet the challenges of climate change and population growth, while continuing to deliver reliable supplies of world-class drinking water.

We are acutely aware that families are struggling with higher household bills as further demonstrated in the report you provided in your email. It is important that the much-needed improvements in performance and investment offer customers value for money. It is also vital that customers only pay for new investment and not to put right past failings.

We thank you for your correspondence and hope you will support us as we continue and expand our efforts to drive up standards of performance and governance in the water industry.

Yours sincerely

Ofwat Customer Enquiries and Disputes Team"