Water company executives should not be able to get around the government's bonus ban by recasting rewards as other kinds of pay, Environment Secretary Dame Angela Eagle said on 12 November. According to GOV.UK, her warning came on the day a review of the rule started. Eagle wants that review to be broad in scope so that gaps in the rules can be shut. The water regulator Ofwat describes it as an accelerated review of its performance-related executive pay prohibition rule, which it says will decide what reforms, if any, are needed.
Four companies lose bonuses
The Environment Agency's latest Environmental Performance Assessment Report gave a one-star rating to Southern Water, Thames Water, South West Water and Yorkshire Water. The government says that rating means bonuses for executives at those four firms are blocked automatically. The same penalty hits any company responsible for a Category 1 pollution incident, the most severe classification, used where harm to people, property or the environment is major, serious, persistent or extensive.
According to the government, the agency's assessment found pollution incidents are still at unacceptable levels, and just one company earned the highest rating of four stars. The assessment was released together with the regulators' first joint report. Ministers argue that sharing data in this way stops weak performers from pointing to a favourable score from one watchdog while missing standards set by another.
Pay still rising for some
Government figures show more than £10 million has been withheld from water bosses since the ban started. In the last financial year, nine companies triggered it, and more than £6.5 million in potential bonuses was stopped. Even so, the government says total pay for some executives went up over 2025-26 while performance stayed poor. Ofwat has cautioned that retention payments and large base-salary increases that lack explanation could cut against the purpose of the ban and damage public trust.
Eagle said a broad review would ensure "failure doesn't pay, whatever name the payment goes by."
How to respond
Ofwat's call for evidence runs for four weeks and closes on 10 December. The regulator says anyone can take part, naming customers, companies, NGOs, investors, trade bodies and regulators. It would like submissions through its consultation platform but will also accept them by email or post. The government says it will use the results in its efforts on accountability across the water sector, including the strengthened Water Bill.
Separately, Eagle plans to give each water company improvement actions covering leakage, lasting cuts in pollution incidents and better customer satisfaction. She has also told companies that the next Price Review must deliver better value for money for households under financial strain.
