Fifth water company boss waives bonus over sewage pollution
Southern Water’s chief executive has become the fifth leader of a water company to give up their bonus over shortcomings on sewage pollution.
The move by Lawrence Gosden is a victory for The Times Clean It Up campaign and means that half of the sector’s leaders in England have waived bonuses. The Liberal Democrats have called on the other half to follow suit.
Water companies apologised on Thursday for raw sewage being dumped into rivers and seas, promising to invest £10 billion by 2030 to tackle future spills. Campaigners want them to shoulder the costs by cutting profits and dividends rather than excessively raising bills.
Gosden, who took charge of Southern Water last summer, said: “In my first year as CEO, I will not be taking any bonus because we have clearly not met the wider expectations of our customers.” His predecessor, Ian McAulay, received a bonus of £550,900.
“Our board is sensitive to customer concerns on remuneration and has developed pay and bonus policies that reflect our environmental and customer service performance, as well as the challenges of our turnaround,” Gosden added.
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Southern Water spilt sewage from storm overflows almost 17,000 times last year and in 2019 the firm was fined a record £90 million for pollution.
Jim Murray, an actor and the founder of the campaign group Activist Anglers, said that Gosden should focus his attention on fixing infrastructure, allowing pollution of the River Test, a globally rare chalk stream habitat.
“Whilst to some the CEO of my water provider forgoing a six-figure bonus may seem admirable, ‘horse’ and ‘bolted’ spring to mind,” said Murray, who is based in Winchester.
John Nelson, chairman of the Chichester Harbour Trust, which has been fighting to improve water in the area, said that Gosden’s move was the right thing to do. However, he said he feared that the water sector’s investment plans could be hampered by the “massive amounts of capital” being sucked out of firms for debt repayments, an issue that the regulator Ofwat has raised concerns about too.
Gosden follows the heads of Welsh Water, Yorkshire Water, Thames Water and South West Water forgoing their bonuses. Half of the ten wastewater companies operating in England have now waived bonuses, each worth hundreds of thousands of pounds.
Tim Farron, the Lib Dem environment spokesman and former leader, said: “Every water company CEO should give up their bonuses until these filthy sewage dumps are brought to an end. It is a kick in the teeth that customers are being asked to pay more in bills to clean up the water companies’ own mess, all while CEOs pocket massive bonuses.”
Debate has begun on who will pay for the £10 billion modernisation of the sewage network. Water companies paid out £1.4 billion in dividends last year, according to the Financial Times; Ruth Kelly, chairwoman of Water UK, said that profits were small compared with other sectors.
“The customer will pay that [investment] back through modestly increased bills. We are acutely aware of the cost of living crisis,” she said. Asked about the combined profit of water companies last year, she told Times Radio that three firms had lost money. “Across England and Wales water and sewage companies made less than 4 per cent return on their capital. That’s only a little bit more than you’d make on a bank account,” she said.
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The government expects tackling sewage spills to add £12 to the average household bill between 2025 and 2030. Analysts at Barclays have said it could be as much as £30. The Consumer Council for Water, a watchdog, said one in five households were already struggling to afford their water bills and would need support if prices rise as expected.
Dr Doug Parr, Greenpeace UK’s policy director, said: “The promised £10 billion is a start but if it’s all charged on peoples’ bills whilst the shareholder dividends remain untouched, that would be a very strange way of being sorry.”
The Times is demanding faster action to improve the country’s waterways. Find out more about the Clean It Up campaign.
