Labour calls for ban on water company bonuses

Water companies could be banned from issuing bonusses to their top executives under a Labour government, shadow environment secretary Steve Reed has revealed.

During a House of Commons debate, Reed called for a ban on bonuses and threatened to impose special measures on companies if Labour wins the next election.

The party would also end self-monitoring by water companies of discharges in favour of increased oversight and enforcement by regulators to impose “immediate and severe” fines for illegal spills.

Reed promised “no more delays, no more appeals, and no more lenient fines that are cheaper than investing to upgrade crumbling infrastructure”.

Labour raised the issue of water company executive bonuses as an opposition day debate and threatened “rogue” bosses with criminal liability for repeated, severe and illegal discharges.

“It is as clear as day that the water companies are covering up illegal sewage discharges,” Reed said.

The shadow environment secretary also highlighted budget cuts at the Environment Agency made between 2016 and 2021. He said these left it insufficiently resourced to adequately monitor, enforce and prosecute the sector.

“If they downgrade and cover up sewage spills they are rewarded with permission to increase their customers’ bills, which boosts their profits. Fewer reported spills – not actual, but reported – and more profits mean bigger bonuses for the water bosses,” he said.

He blamed 13 years of successive Conservative governments for the “broken” industry and regulatory framework before taking aim at “indefensible” executive bonuses.

Salaries of the chief executives of Yorkshire, Wessex, Thames were raised by various MPs calling out remuneration in the face of pollution records.

Reed insisted government had turned a blind eye to warnings about the sector and an environmental regulator that is “too weak to regulate”. This, Reed told the House, led to “weak self-monitoring, cover-ups, financial corruption, and our waterways awash with stinking sewage”.

He added that the state of regulation deters much needed investment in the water industry.

Parliamentary under secretary of state for the environment, Rebecca Pow, dismissed the idea of automatic fines. They would she said, backfire because “if regulators found evidence of criminal misdemeanors, it would prevent them going through the courts and we would effectively end up with even higher fines.”

Pow was absent from a vote this week to add a clause to the Victims and prisoners bill to extend compensation to people who become ill from contact with polluted waterways. Pow explained her absence was due to dealing with “particularly urgent business” and added the clause was superfluous because compensation can already be sought when there is evidence of injury, loss or damage.

Likewise, she added that the suggestion to ban bonuses was unnecessary “because we are already doing really strong work on bonuses and dividends”. This work includes linking environmental performance with remuneration.

“The official Opposition and the Liberal Democrat party do not have credible plans to reduce discharges—we cannot just switch off storm overflows overnight, as some suggest—and their mixed bag of proposals would actually add hundreds pounds to customers’ bills,” she said in defence of government’s approach.

Shadow minister for rural affairs, Toby Perkins, noted that there has been six Defra secretaries since 2019.

The current one, Steve Barclay, “could not be bothered to turn up and respond” to the debate, Perkins said and added that minister Pow “could not wait to race away” after speaking at the start of it.