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Water bosses urged to cut their bonuses ahead of law change over illegal sewage leaks

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Published Time: 13.02.2024 - 02:40:31 Modified Time: 13.02.2024 - 02:40:31

Bonus ban will impact executives whose companies are prosecuted for serious pollution incidents MAUREEN MCLEAN/ALAMY Water bosses have been urged to voluntarily cut their own bonuses this year if their companies have been responsible for illegal pollution, ahead of a proposed law change by the Government

Bonus ban will impact executives whose companies are prosecuted for serious pollution incidents

: MAUREEN MCLEAN/ALAMY

Water bosses have been urged to voluntarily cut their own bonuses this year if their companies have been responsible for illegal pollution, ahead of a proposed law change by the Government.

The Government plans to bring in new rules that would ban bonuses for water company bosses and executive board members at companies that have been successfully prosecuted for serious pollution incidents.

The rules would not come into force until the financial year 2024/25, but the Government has said companies should apply the rules voluntarily for this year’s bonuses.

The full criteria for the bonus ban will be decided in consultation with the regulator Ofwat, which is responsible for remuneration.

However the Government has suggested that it could include successful prosecution for a Category 1 or 2 pollution incident, including causing significant pollution at a bathing site or conservation area.

It could also be applied where a company has been found guilty of serious management failings.

Four prosecuted pollutions in 2023

Last year the Environment Agency concluded four successful prosecutions for pollution incidents.

Anglian Water was prosecuted for a Category 1 incident in January and a Category 2 incident in April.

It was originally fined £2.65m for allowing untreated sewage to overflow into the North Sea in 2018, although the fine was reduced to £300,000 last week by a judge.

South West Water and Thames were also both prosecuted for category 1 incidents, in April and July respectively.

It is unclear at this stage over what retrospective period the bonus criteria would cover, and successful prosecutions can take years from the date of the incident.

Several water company bosses last year voluntarily declined to receive their bonuses, after apologising for the extent of sewage amid a public outcry. Bosses have received £26 million in bonuses since 2019.

The Government has been under pressure to do more to stop water companies from spilling sewage into rivers and seas, even after it announced a major plan for the industry last year.

“In cases where companies have committed criminal breaches, there is no justification whatsoever for paying out bonuses. It needs to stop now,” Steve Barclay, the Environment Secretary, said.

Ban on bonuses ‘does not go far enough’

Campaigners said that the proposed ban on bonuses was welcome, but did not go far enough to tackle the regular release of sewage by water companies, the vast majority of which is considered legal.

“This system needs to be fundamentally changed, and a symbolic bonus ban – whilst tiptoeing in the right directionis not fundamental change,” said Doug Parr from Greenpeace.

Overall prosecutions by the Environment Agency have fallen from 800 a year in 2007 to just 17 in 2020-21, during which time the agency faced significant funding cuts, according to a 2022 report from the National Audit Office.

The environment department will set out further measures including reducing the EA’s reliance on water companies self-reporting pollution incidents amid concerns some are being downplayed, Mr Barclay said.

Ofwat has also announced that water companies could be fined up to a 10th of their turnover for poor customer service, under new powers.

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