Thames Water boss defends his bonus after surge in sewage spills

Thames Water’s chief executive has defended his bonus package despite the company’s sewage spills more than doubling last year. 

Chris Weston said his bonus was based “purely on performance”, as he claimed it was necessary to reward executives “to be able to attract the right talent”. 

Thames Water was responsible for 16,990 sewage discharges last year, which was a significant increase on the 8,015 recorded in 2022. This was alongside an increase in serious pollution incidents, which rose from 331 to 350. 

Details of Thames Water’s bonus payments were revealed as part of its full-year results on Thursday, as Mr Weston received £195,000 after his appointment in January. This took his total pay to £437,000 for the three months to the end of March. 

Alastair Cochran, Thames Water’s chief financial officer, was also handed a £446,000 bonus, in part because he previously stepped in as the company’s interim co-chief executive.

When asked about executives bonuses on Tuesday, Mr Weston said: “You need to be able to attract the right talent, the best talent to that company and going hand in glove with that is an appropriate remuneration package.”

His comments come alongside a warning that any move to nationalise Thames Water under Labour would hurt taxpayers. 

The company is currently battling to stave off special administration after it said on Tuesday that it risked running out of cash in less than a year amid an increase in its debt pile.

The group said it would be engaging with potential investors and creditors to seek around £3.25bn of fresh equity to improve its funding position.

If Thames fails in its funding bid, the Government could be forced to bail out the business. 

Mr Weston, said: “Special administration is something that is not in the interests of any of our stakeholders or the UK taxpayers. 

“I can’t put any probability on whether it will or won’t happen, but it is a long way off if it were to happen and there is a lot more that we can do and will do and are focused on doing over the coming months to make sure that that does not happen.”

Sir Keir Starmer has vowed to crack down on Britain’s water suppliers, pledging to put failing companies into “special measures” if they do not “clean up their act” on sewage pollution.

A spokesman for No 10 said on Monday the water industry was in an “unacceptable situation” and had not done enough to tackle pollution.

The Government has so far refused to spell out what special measures would involve but Jonathan Reynolds, the Business Secretary, said prior to the general election that Labour would not want to see a nationalisation. 

He said last month: “I think there should be a solution that falls short of that.”

Mr Weston said on Tuesday he did not “fully understand” what the special measures referred to in the Labour manifesto involved, but said he was hoping for a “very constructive relationship” with the Government.

In an update to shareholders on Tuesday, Thames said it had liquidity until the end of May totalling £1.8bn, but faced a cliff edge unless fresh cash could be secured.

The group’s shareholders, which include pension fund giants USS and Omers, have previously rebuffed plans to inject fresh capital into the business and have written off their investments.

Mr Weston said: “We are going through a process and that process is wholly focused on bringing new equity into Thames Water. We will go to the market and we will look at a broad church of investors. 

“Some of those investors may or may not be some of our existing shareholders. That process will stretch well into next year.”

Thames’s directors warned the funding crisis meant there was a “material uncertainty” over whether the company could remain a going concern beyond the initial 12-month period.

Thames posted its first pre-tax profit in four years for the year ending March 2024, totalling £75.4m compared with a £30m loss last year.

However, net debt rose to £15.3bn, up from £13.9bn a year ago owing to higher levels of spending on its creaking infrastructure.

Thames Water said it increased dividend payments to £196m, up from £45m a year ago, to cover the cost of debt interest payments. Shareholders did not receive the dividends, the group said.

Ofwat, the water regulator, is due to issue a draft judgment on Thames’s five-year business plan on Thursday. Thames is seeking to raise customer bills by an average of 59pc between 2025-29 as part of its request to the regulator. 

Without such a steep increase, Thames has said it cannot attract new shareholders to invest in the company.  

Ofwat’s July 11 judgment is a draft determination, with a final decision expected in December. If Thames is unhappy with the decision it can appeal the matter to the competition watchdog, which could further slow the process of attracting new investors.