Water firms defend CEO pay amid call for renationalisation

Water companies have defended the pay of their chief executives and said they are delivering for customers, after the GMB union branded nine water CEOs “fat cats”.

Figures released by GMB today (5 June) outline water bosses “trousered” £58 million in “salary, bonuses, pensions and other benefits” over the past five years.

The union has also launched its “Take Back the Tap” campaign to bring England’s privatised water industry back into “public ownership”.

GMB placed Severn Trent’s chief executive, Liv Garfield top of what it dubbed the water industry’s “fat cat league”.

It said the CEO “took home a staggering” £2.4 million in 2017, a 50 per cent increase since 2013.

A spokesperson for Severn Trent, said: “Our priority is to perform for our customers, and our performance on customer ODIs [outcome deliver incentives], which are the measures that matter most to our customers, has been strong.

“Remuneration for our executives is based on a range of challenging performance targets and is in line with pay at companies of a similar size.”

United Utilities was listed as having “splashed out” £2.3 million on its chief executive, Steve Mogford last year – an increase of 49 per cent since 2013.

A spokesperson for the water company, said: “The vast majority of Steve Mogford’s remuneration is linked to the delivery of stretching targets aimed at further improving customer service, operation delivery and environmental performance.

“In 2017, his total remuneration was approximately half the average for a FTSE 100 CEO.”

GMB cited a report by the National Audit Office from 2015 and said water bills in England and Wales have increased 40 per cent above inflation since privatisation in 1989.

Michael Roberts, chief executive of Water UK responded to GMB’s campaign to renationalise the water sector.

He said: “Water companies have invested around £150 billion on improvements and infrastructure in the last 30 years and continue to spend £8 billion a year to keep on improving.

“Thanks to this large investment, we’ve seen leakage reduced, drinking water quality improved, a better environment, and bills are roughly where they were 20 years ago – about £1 a day – and people need to ask themselves whether a water industry owned and run by the government would invest the same money and deliver the same good results for customers.”

Roberts added: “If the water industry was owned and run by the government in England, it is far from obvious that it would be a priority for ministers, given the pressures they face to spend on areas like health and education.”

GMB also listed the pay of seven other chief executives of water companies: Anglian Water; Northumbrian Water; South West Water; Southern Water; Thames Water; Wessex Water and Yorkshire Water.

The figures came from a joint investigation into company accounts by GMB and Corporate Watch, which were revealed at GMB’s 101st Congress in Brighton this week.

Tim Roache, GMB general secretary, said: “Privatisation of the water industry has been a costly mistake and these eye-watering sums are further proof the water industry must be returned to public hands.”

The Consumer Council for Water argued it wants to see a “stronger correlation” between pay bonuses and achieving customer commitments.

Its chief executive, Tony Smith, said: “Otherwise there is a risk that the legitimacy of the industry will be further eroded in the eyes of customers.”

A spokesperson for Ofwat, added: “We have been very clear that we want to see water company executives rewarded for delivering for customers – not just shareholders.”

The regulator said it has consulted on measures which aim to ensure the decisions companies make on executive pay, reference “exceptional delivery for customers”.

“Transparency on the relationship between pay policy and outperformance or bill reductions by way of exceptional delivery would help customers see how performance pay is earned in providing a public service,” Ofwat said.