Water company bosses in England and Wales have been blocked from receiving more than £6.5 million in bonuses after nine water companies triggered Ofwat's bonus ban, and a review launched on 12 November 2026 now targets the payments that slip past it: retention payments and big rises in base pay. The Environment Secretary, Dame Angela Eagle, says failure must not be rewarded "by another name", and the public can have a say until 10 December.[1][2][3]
 | |
| Announced | 12 November 2026[1][3] |
|---|---|
| Bonuses blocked (latest year) | More than £6.5 million[1][2][3] |
| Companies that triggered it | 9[1][2][3] |
| Blocked since the ban began | More than £10 million[1][3] |
| Review targets | Retention payments, unexplained base pay rises[1][3][4] |
| Call for evidence closes | 10 December 2026 (four weeks)[1][3] |
| Regulator | Ofwat[2] |
| Minister | Dame Angela Eagle, Environment Secretary[1][3] |
What was announced on 12 November
Two things happened at 07:30 GMT. Ofwat published the latest results of its rule that stops water companies paying performance bonuses to bosses when they fail on pollution, customer service or finances. Nine companies triggered it in the last financial year, and more than £6.5 million of potential bonuses were blocked.[1][2][3]
At the same time, a review of the rule started. Defra says Dame Angela Eagle has asked for it to be "wide-ranging" so it can close the loopholes that still reward failure. Ofwat is running a four-week call for evidence that closes on 10 December 2026, and anyone can respond.[1][3] The Mirror reports that Ofwat brought the review forward from 2027.[3]
"People are sick of seeing water bosses profit while rivers are polluted and customers are repeatedly let down," Eagle said. "The bonus ban was the first step. Where there are loopholes, I want them closed."[1][3]
Which water companies triggered the ban
According to the Mirror's report of Ofwat's findings, the nine companies are Anglian Water, Northumbrian Water, Severn Trent Water, Southern Water, South West Water, Thames Water, Wessex Water, Yorkshire Water and Dŵr Cymru (Welsh Water). The bans mostly hit chief executives and finance directors, including some who have since left.[3] The rule itself covers all 16 water companies in England and Wales.[3]
Some of these names are less obvious than others. Severn Trent was the only company to earn the top four-star rating from the Environment Agency for 2025, yet it is on the list.[3][6] That is because the ban has several triggers. A one-star rating blocks bonuses automatically, but so does a single Category 1 pollution incident, the most serious kind, with a major, persistent or extensive effect on the environment, people or property.[1][5]
Four companies were rated one star for 2025: Southern Water, South West Water, Thames Water and Yorkshire Water. The government had already said in October that their executives' bonuses would be blocked.[5][6]
The loopholes: retention payments and base pay
The bonus ban only stops payments linked to performance. Ofwat says some companies have responded with fixed "retention payments", which reward a boss simply for staying, and with large rises in base salary that are not properly explained. It warns that this "risks damaging public trust" and undermines the spirit of the ban.[1][3][4]
Defra puts it plainly: some executives saw their total pay rise over 2025-26 despite continued poor performance.[1] Helen Campbell, Ofwat's interim executive director for delivery, told the Mirror that "executive bonuses which do not reflect performance, use of retention payments and poorly explained increases in base pay" all feed low trust in the sector.[3]
The Mirror also reports two company examples from Ofwat's findings. Ofwat called Anglian Water's approach to retention payments "especially concerning" and has written to the company about governance and transparency on pay. And Ofwat says it will stop Thames Water customers from paying for a bonus of about £99,000 that the company had already paid its chief executive under a 2023-24 scheme.[3] We could not check these two details against Ofwat's own text, so treat them as reported.
How the bonus ban works
The ban came in on 6 June 2025 under the Water (Special Measures) Act 2025, and it was backdated to bonuses for the financial year that began in April 2024. Ofwat's rules say a company may not pay performance-related bonuses if it:[7][1]
- fails core environmental standards or presides over serious pollution offences;
- fails basic financial resilience standards, such as minimum credit ratings;
- fails core customer standards, such as running and maintaining sewers properly;
- is convicted of a criminal offence.
If a company pays a bonus while banned, Ofwat can order it to claw the money back.[7] When the law started, the government said water bosses had been given more than £112 million in bonuses and incentive payments over the previous decade.[7] Since then, more than £10 million has been blocked in total.[1][3]
The performance picture behind it
The review follows the first joint report from the four water regulators, the Environment Agency, Natural Resources Wales, the Drinking Water Inspectorate and Ofwat, published on 29 October 2026. By pooling their data, the regulators wanted to stop companies pointing to a good score from one watchdog while doing badly with another.[5][1]
The Environment Agency's own ratings were poor. Out of a possible 36 stars across the nine water and sewerage companies in England, the sector scored 16 for 2025, the lowest total since the assessment began in 2011. It was 25 in 2023 and 19 in 2024.[6] There were also six Category 1 pollution incidents in 2025.[5]
| Company | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Anglian Water | 2 | 2 | 2 | 2 | 2 |
| Northumbrian Water | 4 | 3 | 3 | 2 | 2 |
| Severn Trent Water | 4 | 4 | 4 | 4 | 4 |
| Southern Water | 1 | 2 | 2 | 2 | 1 |
| South West Water | 1 | 2 | 2 | 2 | 1 |
| Thames Water | 2 | 2 | 2 | 1 | 1 |
| United Utilities | 4 | 3 | 4 | 2 | 2 |
| Wessex Water | 2 | 2 | 4 | 2 | 2 |
| Yorkshire Water | 2 | 3 | 2 | 2 | 1 |
| Sector total (of 36) | 22 | 23 | 25 | 19 | 16 |
Source for the table: Environment Agency, EPA star ratings 2011 to 2025.[6] Dŵr Cymru operates mainly in Wales and is not in the Environment Agency's England ratings.
What happens next
Ofwat's call for evidence runs until 10 December 2026. Its findings will feed into the government's plans to tighten accountability in the water sector, including a strengthened Water Bill.[1][3] Defra also says the Environment Secretary will set out improvement actions for each company covering leaks, pollution incidents and customer satisfaction, and that eight new regional water councils will give local people a say.[1][5]
The October announcement added that a single new water regulator for England and Wales is planned, and that ministers will meet the chief executives of the worst performers.[5] No date has been given for any change to the bonus rule itself. That will come after the call for evidence closes.
Frequently asked questions
Has the water bonus ban been tightened already?
Not yet. On 12 November 2026 a review began, with a call for evidence until 10 December. Any tighter rule comes after that.[1][3]
How much has the bonus ban stopped?
More than £6.5 million in the last financial year, across nine companies, and more than £10 million since it started in 2025.[1][3]
Can water bosses still get paid more?
Yes. The ban covers performance bonuses only. Retention payments and base salary rises are outside it today, which is exactly what the review is looking at.[1][3]
Will my water bill change because of this?
Not directly. The review is about executive pay. Ofwat says it will stop Thames Water customers paying for one already-paid bonus, according to the Mirror.[3]
How can I respond to the review?
Through Ofwat's call for evidence, which is open to the public until 10 December 2026.[1][2]
References
- "Water bosses must not be rewarded for failure by another name, says Environment Secretary". Defra, GOV.UK. November 12, 2026. gov.uk
- "£6.5m in bonuses blocked as nine water companies trigger Ofwat's rule". Ofwat. November 12, 2026. ofwat.gov.uk
- Hiscott, Graham. "Failing water firms banned from handing fatcat bosses £6.5million in bonuses". The Mirror. November 12, 2026. mirror.co.uk
- "Water industry bonus ban to be tightened as Ofwat warns of 'damage to public trust'". The Guardian. November 12, 2026. theguardian.com
- "Environment Secretary commits to take further action against water bosses over pollution". Defra, GOV.UK. October 29, 2026. gov.uk
- "Environmental performance assessment (EPA) star ratings 2011 to 2025". Environment Agency, GOV.UK. October 29, 2026. gov.uk
- "Government's new law sees unfair bonuses banned for six water companies with immediate effect". Defra, GOV.UK. June 6, 2025. gov.uk