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Bosses at six water companies have been banned from receiving bonuses for the last financial year under new legislation that comes into force on Friday.

Senior executives at Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities and Southern Water all face the restriction on performance-related pay for breaches of environmental, customer service or financial standards.

All six companies committed the most serious ‘Category 1’ pollution breaches, with Thames responsible for six such incidents, as well as breaching financial resilience regulations when its credit rating was downgraded.

 

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‘Paddle-out’ protest against water pollution

The nine largest water and wastewater providers paid a total of £112m in executive bonuses since 2014-15, though the 2023-24 total of £7.6m was the smallest annual figure in a decade.

The new rules give water industry regulator Ofwat the power to retrospectively prevent bonuses paid in cash, shares or long-term incentive schemes to chief executives and chief financial officers for breaches in a given financial year.

Ofwat cannot, however, prevent lost bonuses being replaced by increased salaries, as routinely happened in the banking sector when bonus pots were capped following the financial crisis.

Government sources insist they do not want to cap executive pay, but suggested the regulator could consider expanding its powers to ensure any remuneration is covered by shareholder funds rather than customer bills.

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Water suppliers have routinely defended executive bonuses and pay on the grounds that awards are necessary to attract and retain the best talent to lead complex, multi-stakeholder organisations.

Thames Water’s chief executive, Chris Weston, was paid a bonus of £195,000 three months after joining the company in January 2024, taking his total remuneration to £2.3m.

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Thames Water fine explained

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‘Our rivers are devastated’

Last month, the company withdrew plans to pay “retention” bonuses of up to 50% of annual salary to senior executives after securing an emergency £3bn loan intended to keep the company afloat into next year.

Earlier this week, its preferred equity partner, US private equity giant KKR, walked away from a deal to inject £4bn despite direct lobbying from 10 Downing Street, in part because of concern over the negative political sentiment towards the water industry.

The decision came a few days after Thames was hit with a record fine of £123m for multiple pollution incidents and breaching dividend payment rules.

Welcoming the bonus ban, the Environment Secretary Steve Reed said: “Water company bosses, like anyone else, should only get bonuses if they’ve performed well, certainly not if they’ve failed to tackle water pollution.

“Undeserved bonuses will now be banned as part of the government’s plan to clean up our rivers, lakes and seas for good.”

Read more:
Water boss defends six-figure bonus
Thames Water fined £123m
Yorkshire Water fined £40m

Whitehall sources say they “make no apology” for calling out water company conduct, despite concerns raised by an independent reviewer that negative sentiment and misdirected regulation has put off investors and raised the cost of financing the privatised system.

In an interim report, former Bank of England deputy governor Sir Jon Cunliffe said “negative political and public narrative and Ofwat’s approach to financial regulation have made the sector less attractive”.

Sir Jon will publish final recommendations to reform water regulation next month, with the aim of addressing public concerns over pollution and customer service, while attracting long-term, low-risk, low-return investors.

Water bills will rise on average by 36% over the next five years as companies pledge to spend £103bn on operating, maintaining, and improving infrastructure, including £12bn on cutting sewage spills.

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CBI kicks off search for successor to ‘saviour’ Soames

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CBI kicks off search for successor to 'saviour' Soames

The CBI has begun a search for a successor to Rupert Soames, its chairman, as it continues its recovery from the crisis which brought it to the brink of collapse in 2023.

Sky News has learnt that the business lobbying group’s nominations committee has engaged headhunters to assist with a hunt for its next corporate figurehead.

Mr Soames, the grandson of Sir Winston Churchill, was recruited by the CBI in late 2023 with the organisation lurching towards insolvency after an exodus of members.

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The group’s handling of a sexual misconduct scandal saw it forced to secure emergency funding from a group of banks, even as it was frozen out of meetings with government ministers.

One prominent CBI member described Mr Soames on Thursday as the group’s “saviour”.

“Without his ability to bring members back, the organisation wouldn’t exist today,” they claimed.

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Rupert Soames
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Rupert Soames. Pic: Reuters

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Mr Soames and Rain Newton-Smith, the CBI chief executive, have partly restored its influence in Whitehall, although many doubt that it will ever be able to credibly reclaim its former status as ‘the voice of British business’.

Its next chair, who is also likely to be drawn from a leading listed company boardroom, will take over from Mr Soames early next year.

Egon Zehnder International is handling the search for the CBI.

“The CBI chair’s term typically runs for two years and Rupert Soames will end his term in early 2026,” a CBI spokesperson said.

“In line with good governance, we have begun the search for a successor to ensure continuity and a smooth transition.”

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Ryanair and easyJet cancel hundreds of flights over air traffic control strike

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Ryanair and easyJet cancel hundreds of flights over air traffic control strike

Ryanair and easyJet have cancelled hundreds of flights as a French air traffic controllers strike looms.

Ryanair, Europe’s largest airline by passenger numbers, said it had axed 170 services amid a plea by French authorities for airlines to reduce flights at Paris airports by 40% on Friday.

EasyJet said it was cancelling 274 flights during the action, which is due to begin later as part of a row over staffing numbers and ageing equipment.

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The owner of British Airways, IAG, said it was planning to use larger aircraft to minimise disruption for its own passengers.

The industrial action is set to affect all flights using French airspace, leading to wider cancellations and delays across Europe and the wider world.

Ryanair said its cancellations, covering both days, would hit services to and from France, and also flights over the country to destinations such as the UK, Greece, Spain and Ireland.

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Group chief executive Michael O’Leary has campaigned for a European Union-led shake-up of air traffic control services in a bid to prevent such disruptive strikes, which have proved common in recent years.

He described the latest action as “recreational”.

Michael O'Leary. Pic: Reuters
Image:
Michael O’Leary. Pic: Reuters

“Once again, European families are held to ransom by French air traffic controllers going on strike,” he said.

“It is not acceptable that overflights over French airspace en route to their destination are being cancelled/delayed as a result of yet another French ATC strike.

“It makes no sense and is abundantly unfair on EU passengers and families going on holidays.”

Ryanair is demanding the EU ensure that air traffic services are fully staffed for the first wave of daily departures, as well as to protect overflights during national strikes.

“These two splendid reforms would eliminate 90% of all ATC delays and cancellations, and protect EU passengers from these repeated and avoidable ATC disruptions due to yet another French ATC strike,” Mr O’Leary added.

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How markets reacted to uncertainty over Rachel Reeves’s future

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How markets reacted to uncertainty over Rachel Reeves's future

The pound fell and state borrowing costs rose during a period of uncertainty over the chancellor’s future on Wednesday.

During Prime Minister’s Questions, Sir Keir Starmer declined to guarantee whether a visibly emotional Rachel Reeves would remain chancellor until the next election following the government’s welfare bill U-turn.

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Following his remarks, the value of the pound dropped and government borrowing costs rose, via the interest rate on both 10 and 30-year bonds.

Although market fluctuations are common, there was a reaction following Sir Keir’s comments in the Commons – signalling concern among investors of potential changes within the Treasury.

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Sterling dropped to a week-long low, hitting $1.35 for the first time since 24 June. The level, however, is still significantly higher than the vast majority of the past year, having come off the near four-year peak reached yesterday.

While a drop against the euro, took the pound to €1.15, a rate not seen since mid-April in the aftermath of President Donald Trump’s tariff announcements.

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Meanwhile, the interest rate investors charge to lend money to the government, called the gilt yield, rose on both long-term (30-year) and ten-year bonds.

The UK’s benchmark 10-year gilt yield – so-called for the gilt edges that historically lined the paper they were printed on – rose to 4.67%, a high last recorded on 9 June.

And 30-year gilt yields hit 5.45%, a level not seen since 29 May.

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Both eased back in the hours following – as a spokesperson for the prime minister attempted to quell speculation about the chancellor’s future.

Sky News understands the prime minister made clear to the chancellor that she has his “complete support” and remains integral to his project.

Ms Reeves has committed to self-imposed rules to reduce debt and balance the budget. Speculation around her future led investors to question the government’s commitment to balancing the books – and how they would do that.

The questions over her future came after the government scrapped the core money-saving component of its welfare bill, which had been intended to reduce spending in order to meet fiscal rules.

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