Southern Water bosses blocked from receiving bonuses under new law
Senior executives at Southern Water will no longer receive performance-related bonuses if the company fails to meet standards.
The ban comes into force immediately as part of the Labour Government’s Water (Special Measures) Act 2025, which came into effect this week.
The new rules prevent firms such as Southern Water from awarding bonuses to senior figures when performance falls short. The measures have been applied retrospectively, covering the financial year from April 2024.
Southern Water has awarded more than £5.4m in bonuses and incentives over the past decade, including £312,000 last year.
Under the Act, water companies that meet Ofwat’s performance standards will still be allowed to offer executive bonuses.
In a statement, the Department for Environment, Food and Rural Affairs (Defra) said the measures are part of a wider drive to address pollution and infrastructure failings across the water industry.
Portsmouth South MP Stephen Morgan welcomed the move, saying: “Sewage dumping in Portsmouth has been a stain on our local environment for too long.
"That’s why I’ve relentlessly campaigned to stop the sewage and why I’ve long called for unfair bonuses for water bosses to be stopped.
"This Labour Government is sorting out the dirty mess the Conservatives failed to tackle. We are banning unfair bonuses with immediate effect and ensuring investment is made to clean up our seas for good.”
A spokesperson for Southern Water responded to the announcement, saying: “We note the government’s announcement, and await full details of how this will impact our existing approach to performance-related reward – this is already closely tied to the delivery of improvements in customer satisfaction and environmental performance.
"Any bonuses are paid by shareholders, not customers, and are overseen by an independent committee.”
The government says the Act forms part of a wider package of reform, which includes £104bn of planned private investment over the next five years aimed at reducing sewage discharges and improving the quality of the UK’s rivers, lakes, and coastal waters.