Water company bosses should be stripped of their multibillion-dollar bonuses until they fix leaks and build reservoirs, politicians and campaigners have said as the country is gripped by drought.
The current drought, with parts of England the driest since records began after five consecutive months of below-average rainfall, has left homes without water, rivers dry up and farmers face poor harvests, causing many to be outraged. to companies that have failed to invest in reservoirs, fix leaks and stop sewage pollution from their pipes.
Bosses at England’s water companies have been criticized for blowing £58m into pay and benefits over the past five years. Since the privatisation, shareholders have received £72 billion in dividends. The cash came from big debts, with companies borrowing £56 billion, and big bills, with prices rising by 40%.
Stuart Singleton-White, head of campaigns at the Angling Trust, said: “The profits made by water companies, which are effectively private monopolies, dividend payments to shareholders, inflated salaries and bonuses to chief executives and the debts that have been run by these companies, mainly to support inflated dividends and wages, rather than to fund investment, is a clear sign that this is a broken market.”
He pointed out that no new reservoirs have been built in England since the water companies were privatised, and that years of underinvestment had led to “unacceptable levels of leakage”. Water companies currently filter around a quarter of their supply through old pipes, with 2.954 million liters per day last year.
“[W]When the crisis hit, our water system wasn’t ready,” Singleton-White said, blaming “water company greed, regulatory weakness and government complacency.”
Even some Tory MPs say the money water company bosses earn is “unacceptable”. Former Environment Minister Rebecca Pow, who had water in her powers, said the regulator should take tougher measures and give companies heavy fines.
She told the Guardian: “These salaries are unacceptable if they cannot in good conscience provide clean, abundant and sustainable water.
“But that also depends on the regulator.”
He added that “We also have the opportunity to charge water companies 10% of their turnover in fines, so we should look at that.”
Former Undertones singer-turned-activist Feargal Sharkey from Rivers agrees that companies should face heavy fines, but noted that this is under the government’s control.
He said, “What [environment secretary] What George Eustice needs to do is something the government has had the power to do for 30 years: put in place an enforcement order where they can legally require water companies to do things exactly as the government chooses and when the government wants”.
Sharkey added: “If water companies lost 10% of their annual revenue, that would focus minds, wouldn’t it?”
Campaigners have argued that privatization is not working as England is an outlier on the world stage with privately owned and managed water companies increasingly criticized for failing to invest in infrastructure.
The Green party called for the nationalization of the water companies. Caroline Lucas, MP for Brighton, said: “Water company bosses are taking home huge pay packets and obscene bonuses, and shareholders are getting big dividends – meanwhile what we get in the the rest of us is widespread, chronic water leakage, underinvestment and raw sewage dumped into our rivers.
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“The sooner we get water companies back into public hands, the better. But that’s not enough: it’s now more urgent than ever to introduce pay ratio legislation to enact the long-standing green policy that ensures that bosses earn no more than 10 times the salary of the lowest paid in their companies, so the grotesque inequalities in our society are finally addressed.”
Eight of England’s 14 areas are now classified as drought, with hose bans being implemented in increasing areas of the country.
The Lib Dems first called for a ban on water company bonuses last week, and today the Lib Dems’ environment spokesman, Tim Farron, told the Guardian: “Wealthy water company executives ‘water are taking advantage of the rusting of Britain’s water infrastructure Multi-million pound bonuses are being handed out, while people this week had to queue for bottled water in unbearable heat, all because of a refusal to fix leaks.These are the same executives who were paid huge salaries despite pumping poisonous sewage into our rivers.
“Ministers are just looking the other way while this scandal is happening. This Tory government cannot be trusted to stand up for people and the environment. Instead, all they care about is keeping the CEOs of the companies rich “water”.
The Environment Agency recently called for water company bosses to be jailed for serious pollution, after finding that water companies’ performance on pollution had fallen to its worst in years.
A spokesman for Water UK, which represents water companies, said:
“Private investment has brought more than £160 billion into a previously cash-strapped industry, while improving the efficiency of the water company by more than 70%. This efficiency means that the costs are lower, allowing bills to remain roughly flat for more than a decade in real terms, while allowing for new investments in resilience projects and reducing leakages.
“Dividends over the past two years have averaged around 3%, in line with Ofwat’s expectations. Most companies last year lost money or failed to achieve the basic profitability allowed by the regulator.
“We are very ambitious about the additional projects needed to protect against climate change. We have proposed large cross-country schemes, including reservoirs and grid connections, which will provide enough new water for ten million people. It is vital that regulators now allow let these schemes continue.”