This article is more than 2 years old

This article is more than 2 years old

The bosses of England’s privatised water companies have been criticised for banking £58m in pay and benefits over the last five years while customers have been faced with above-inflation rises in their water bills.

The GMB union said the chief executives of England’s nine water and sewage companies were “fat cats” earning “staggering sums” from the management of a natural resource.

Tim Roache, GMB’s general secretary, said the pay awarded to water bosses was a national scandal and launched a campaign to return the industry to public ownership.

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Household water bills have risen by 40% above inflation since the industry was privatised in 1989, according to a National Audit Office report. The average bill this year will be £405, a 2% increase on last year, according to Water UK, the trade body that represents water and sewerage companies.

“It’s a national scandal that over the last five years England’s hard-pressed water customers have been forced to splash out £58m through their bills to go into the pockets of just nine individuals,” Roache 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 GMB is urging people and politicians to Take Back the Tap and make our water services work for the many and not the few.”

Rebecca Long Bailey, the shadow business secretary, said: “Clearly the only people privatised water companies work for are the big bosses who are cleaning up at the expense of bill payers. It’s scandalous that the government is sitting idly by while households continue to face skyrocketing water costs.

“Labour will end their failed ideological experiment and bring water companies back into public ownership, saving households £100 per year on their bills.’’

Michael Gove, the environment secretary, has also attacked water companies for paying their bosses large salaries and huge dividends to shareholders while contributing little or no tax.

Facebook Twitter Pinterest Liv Garfield, the chief executive of Severn Trent. Photograph: Matt Crossick/PA

“One might hope that companies making such massive profits, paying out such big dividends and supporting such generous executive salaries, would be big contributors to the exchequer through their tax bill,” Gove said in a speech to industry executives earlier this year. “[But instead we have had] 10 years of shareholders getting millions, the chief executive getting hundreds of thousands, and the public purse getting nothing.”

He said Anglian Water and Southern Water paid no corporation tax last year, while Thames Water “has paid no corporation tax for a decade”.

Ofwat, the industry regulator, said that it had repeatedly told water companies that they must do more to make sure executive pay better reflects customer service.

“We have been very clear that we want to see water company executives rewarded for delivering for customers – not just shareholders,” an Ofwat spokesman said.

Liv Garfield, the chief executive of Severn Trent, was paid £2.45m last year, making her the UK’s best-paid water company boss. Garfield took home a salary of £674,000, a £615,000 bonus, and long-term incentive shares worth £975,000, a pension contribution of £168,000 and other benefits worth £18,000.

Garfield’s total pay was down slightly from £2.49m in 2016, as her bonus decreased by £86,000. Following public and political pressure Severn Trent included “customer experience” in its bonus calculations last year. But the new metric only accounts for 8% of the total bonus compared to 47% for meeting profit targets.

Over the past five years, Severn Trent has paid Garfield and her predecessor, Tony Wray, £10.5m.

The company, which serves 4.5m across the Midlands, said: “Our priority is to perform for our customers, and our performance on those measures that matter most to our customers, such as preventing sewer flooding, has been strong. Executive pay is based on a range of challenging performance targets and is in line with pay at companies of a similar size.”



The second-highest paid water company boss, according to GMB’s research, is the United Utilities chief executive Steve Mogford, who collected £2.3m. His pay has increased by 49% since 2013.

A company spokesperson 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.”