Labour slams Southern Water as 'unfair' bonuses banned

The Water (Special Measures) Act 2025 means that companies, including Southern Water, are not permitted to pay bonuses to bosses that oversee poor environmental and customer outcomes.

This applies to Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities, and Southern Water, where bosses are not permitted to receive bonuses with immediate effect.  

However, companies that do meet Ofwat's standards are still eligible to pay executives bonuses.

READ MORE: Huge rise in bills announced - as residents remain without water for second day

The government argues that this acts as a powerful incentive for Southern Water to deliver "immediate environmental improvements, better customer outcomes, and improve financial resilience".

The utility company that serves Southampton residents awarded over £5.4 million in bonuses and incentives over the last decade, paying £0.3 million in bonuses last year alone.

Labour’s Environment Secretary Steve Reed said: “Cleaning up our rivers, lakes and seas after 14 years of shameful Conservative failure is essential to this Labour Government’s Plan for Change.

“Water company bosses, just like anyone else, should only get bonuses for good performance, certainly not if they’ve failed to tackle water pollution.

“That’s why Labour is banning undeserved bonuses with immediate effect, including at Southern Water, delivering on the promise we made at the General Election.”

The new legislation delivers on a key Labour manifesto commitment and has been backdated to apply to any bonuses relating to the financial year from April last year.

READ MORE: Southern Water boss defends six-figure bonus in Parliament

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.”

Southern Water chief executive Lawrence Gosden defended his bonus in Parliament in January. (Image: parliamentlive.tv) Southern Water chief executive Lawrence Gosden defended taking a £160,000 in Parliament in January as the water sector was put under scrutiny over price hikes and outages.

In an inquiry by the Environment, Food and Rural Affairs Committee on January 21, Mr Gosden argued that the industry had been playing catch up on investment after 15 years of 'flat bills' and curbs.

Ofwat announced that Southern Water customers would see a 53 per cent increase in bill prices by 2030 - the highest increase of any company.