For the typical household, being unable to switch water supplier can be a big frustration, not least when they see water companies underperforming when it comes to leaks, dumping sewage in rivers and then paying executives big bonuses. But for companies with a choice, voting with your company wallet is an option.
The latest news will certainly give some people food for thought, as Thames Water tried to defend the bumper bonuses paid to executives despite being in a financial crisis and standing accused of a very poor performance, which has led to fines from water regulator Ofwat.
Thames was bailed out earlier this year through a £3 billion emergency loan from creditors, yet the chief executive, Chris Weston, who has been working on a recovery programme with chairman Sir Adrian Montague, told a House of Commons Environment Select Committee their bonuses were deserved, Business Live reported.
Rewards For Failure
He said: “I started to put in place the new organisational structure, I started to give people confidence and reassurance about how proud they could be of the job they did,” he said, arguing this has helped the company start to get back on its feet.
This must have happened quickly to justify extra payments, as Mr Watson picked up his first bonus of £195,000 just three months into the job. In total, the last year has seen Thames, in debt by £20 billion, shell out £770,000 in bonuses.
Sir Adrian said bonuses were essential as a means of retaining top executives. “The fact is we are in a marketplace for talent, talent goes where it thinks it is going to have the best future,” he claimed.
However, such talent appears not to have done much to improve performance. Indeed, the opposite has happened, as these payouts were being made over a period when pollution incidents on Thames Water’s watch rose by 46 per cent, with 33 of the 469 recorded instances being classed as ’serious’.
Thames may attract the most attention because of this combination of existential debt and pollution scandals, but it is far from alone in these issues, or the lavish payment of bonuses.
People On Boards Swimming In Something Other Than Money
At the sharp end of it are water users. While the water that gets used to keep golf courses green – vital in the current dry spell – or industries like drinks won’t come full of sewage, few can be unconcerned with what is happening to the UK’s rivers, or indeed the beaches and seas that many will want to enjoy while the sun shines.
This issue has been highlighted by protestors from pressure group Surfers Against Sewage, which picked May 17th as the date for a nationwide series of ‘paddle out’ protests against sewage pollution. The contrast was stark: While those on one kind of board have to navigate unclean waters, those on another type of board rake in the cash.
Protests took place across the UK, but a map of the locations was notably skewed towards the south of England, especially the south coast, but also around the Thames estuary in places such as Southend-on-Sea in Essex and Broadstairs in Kent.
During their evidence to the committee, the two Thames executives did admit that pollution is still a huge problem.
Mr Weston commented that the situation is “not acceptable” but insisted nobody at the company was deliberately causing leaks, while Sir Adrian said “acknowledging that we haven’t always served our customers as well as we should” must be a part of the turnaround plan for the firm.
At the same time, Mr Weston said the system of water regulation in the UK is “flawed”, which some may suggest is passing the buck somewhat, although others would agree it should be tighter to protect against the kind of failings that Thames epitomises.
Executive Bonuses Face Curbs
Tighter regulation, it seems, is on the way. Environment secretary Steve Reed said the upcoming Water (Special Measures) Bill, which will come into force next month, will give Ofwat the power to ban executive bonuses at underperforming water companies.
Speaking about the outrage people and businesses will feel about such payments, Mr Reed remarked: “That ends now. The Government will ban the payment of unfair bonuses for polluting water bosses. The days of profiting from failure are over.”
As the Oxford Mail noted in reporting these comments, there is much to do, with the city’s sewage treatment works pumping sewage into the Thames for one minute in every five over the past six months.
Indeed, banning executive bonuses may be the easy part. Getting water companies to fix their operational issues could be another altogether. It might require those who can switch to hit those who fail and reward providers who get it right.
