Water companies circumventing bonus rules? What did ministers expect? | Nils Pratley
Guardian AU Business
β’Mon, 10 Aug 2026 17:44:09 GMT
π° What Happened
Columnist Nils Pratley argues water companies have circumvented the executive-bonus clampdown through the 'waterbed principle,' where cutting performance-linked bonuses leads to higher fixed pay. He says the flaw in the Water (Special Measures) Act 2025 was obvious from the start.
π The Backstory
The 2025 Act gave Ofwat power to block performance bonuses at the worst environmental and financial performers, but left room for companies to compensate executives with higher salary and fixed pay instead. This mirrors how banks created 'role-based allowances' to bypass EU bonus caps after the 2008 crash.
π― Why It Matters
The commentary exposes a loophole in UK water regulation, showing how executive-pay curbs can be evaded, and feeds into the public and political debate over punishing failing water utilities.
Columnist Nils Pratley argues water companies have circumvented the executive-bonus clampdown through the 'waterbed principle,' where cutting performance-linked bonuses leads to higher fixed pay. He says the flaw in the Water (Special Measures) Act 2025 was obvious from the start.
The 2025 Act gave Ofwat power to block performance bonuses at the worst environmental and financial performers, but left room for companies to compensate executives with higher salary and fixed pay instead. This mirrors how banks created 'role-based allowances' to bypass EU bonus caps after the 2008 crash.
The commentary exposes a loophole in UK water regulation, showing how executive-pay curbs can be evaded, and feeds into the public and political debate over punishing failing water utilities.