Thames Water has put on hold a controversial £2.5 million retention bonus scheme for senior executives following a political backlash, as the heavily indebted utility struggles under £21 billion of debt.
The plan would have seen 21 executives receive average payouts of £117,000 each this month to encourage them to stay amid the company’s financial turmoil. MPs branded the proposal an “outrage”, prompting Thames to defer the scheme indefinitely rather than scrap it outright.
While the pause averts an immediate row, critics warn the issue may resurface. Around £13.5 million is still expected to be paid to staff under the wider retention scheme next year, drawing renewed criticism from politicians and unions who argue the payments should be cancelled entirely.
Henry Tufnell, a Labour MP on the environment select committee, said bonuses should not be paid until Thames delivers a clear financial and environmental turnaround. The GMB union echoed the criticism, calling on regulator Ofwat to intervene if the company fails to act.
The controversy comes as Thames Water, which supplies around 16 million customers, races to avoid taxpayer-backed special administration. The company is in talks with lenders over a rescue package, with creditors reportedly opposed to the bonus scheme and pushing for changes to governance.
Chris Weston, Thames’s chief executive, is barred by Ofwat rules from receiving a bonus and was not eligible under the retention plan. The company’s difficulties have been compounded by poor environmental performance, with Thames receiving just one star from the Environment Agency this year.
Looking ahead, Thames plans to seek Ofwat approval in 2026 for around £5 billion of investment to stabilise the business. Meanwhile, lenders are exploring a restructuring that could involve writing down debt, injecting new capital and installing new leadership, with veteran executive Mike McTighe proposed as chairman.
The Government said pausing the payments was the right move and confirmed Ofwat would scrutinise all such schemes to ensure compliance with performance-related pay rules. Ofwat said it would review the retention payments to ensure they meet regulatory requirements.
