Sir Adrian Montague, chair of Thames Water, recently faced significant backlash over his support for a controversial bonus structure while admitting to the company’s failures in managing water pollution and service interruptions. Appearing before the Environment, Food and Rural Affairs (Efra) select committee, he expressed regret for the company’s shortcomings, acknowledging the distress caused by ongoing issues, such as pollution incidents and service outages. He stated, “We realise there is a vast amount to be done to bring performance up to scratch. We know we are letting customers down.”
Thames Water has been entangled in a series of scandals, including complaints regarding rising customer bills alongside widespread water pollution concerns. For instance, the Oxford Sewage Treatment Works, the largest in the county, has reportedly discharged untreated waste into a nearby river for 12 minutes every hour over the last six months. Other treatment works, such as the one in Wheatley, have faced similar criticisms. Compounding these issues are growing concerns about exorbitant costs for necessary upgrades, with the price to modernise the Oxford plant soaring tenfold, raising alarm among local residents and activists.
Despite these challenges, Montague dismissed the idea that Thames Water is failing, describing it instead as a “company in recovery” that is making progress. He believes that to retain talent in a competitive market, the company must offer attractive compensation packages, reinforcing this stance even amid criticism that those very packages could lead senior executives to earn bonuses as high as £1 million.
This issue has drawn ire from advocacy groups like Windrush Against Sewage Pollution (WASP). Its founder, Ash Smith, condemned the bonus structure as “ridiculous,” arguing that it fails to align with the company’s operational failures. Smith believes Montague should resign, claiming, “The owners of that company are extracting cash in obscene ways.” He called for more rigorous government intervention, stating that state oversight is necessary to ensure accountability and better outcomes for the public.
The dilemma over executive pay is compounded by the fact that Thames Water has been allowed to take on an additional high-cost loan of up to £3 billion amidst difficulties servicing its existing £19 billion debt. This precarious financial situation only underscores the tension between operational failings and executive compensation. Montague described the company as being in a “beggars-can’t-be-choosers situation,” urgently needing to attract investment while managing its overwhelming debt.
Interestingly, while Thames Water’s executive team has faced scrutiny, some, such as chief executive Sarah Bentley and CFO Alastair Cochran, took the initiative to forgo their own bonuses due to the company’s poor performance, citing unprecedented challenges from rising energy costs and severe weather events. However, bonuses for other board members have still escalated, with reports indicating a rise in total bonus payments across English and Welsh water companies to £9.1 million in the last financial year. This increase has occurred despite public uproar over record pollution discharges and ongoing financial struggles.
As Efra committee chairman Alistair Carmichael noted, there are “real concerns about the company’s commitment to transparency and accountability to its customers.” The various criticisms levied against Thames Water not only reflect widespread dissatisfaction among the public but also highlight a systemic issue within the water management sector that demands urgent reform.
In this climate of increased scrutiny and community activism, it remains to be seen whether Thames Water can navigate its myriad challenges and restore public trust, or if structural changes will be necessary to address the underlying concerns about governance and accountability within the industry.
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Source: Noah Wire Services