SIX water companies have been banned from paying bonuses to senior bosses under new rules that came into force today.
Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities and Southern Water were all included in the ban, which covers the 2024-25 financial year.
Environment Secretary Steve Reed warned companies would be “extremely foolish” to try getting around the new ban by increasing salaries.
He warned water companies should avoid moves that would lose the “confidence” of customers and said there was a need to “rebuild their broken relationship.”
“Customers are furious at the fact that they’re seeing local waterways being polluted, but bosses taking multimillion-pound bonuses,” he told Times Radio.
A worker from Thames Water delivering a temporary water supply from a tanker to the village of Northend in Oxfordshire
THAMES Water’s record fines for sewage spills and improper dividends only underline our inability to hold water companies to account.
Water regulator Ofwat is hardly blameless when it comes to the supplier’s crippling debts, amassed by unscrupulous transnational corporations to shower their shareholders in cash — safe in the knowledge that when an essential service goes bust, it’s the British public that foots the bill.
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Ofwat is a captured regulator, and not just because chairman Iain Coucher (who made a fortune in another publicly subsidised privatised service, the railway, and who has named his extensive Sound of Jura estate Iainland) has been caught enjoying the hospitality of the water companies (as has Steve Reed).
Its negotiations with water firms on price hikes have allowed steep rises in household bills despite the rotten state of the network, which they say they have to pay to repair, being the direct result of their own mismanagement.
As Weston has himself made clear before parliamentary committees, making a privatised water firm pay for its crimes will simply see investors pull out, forcing the government to rescue it. Fines for bad behaviour are just one of the recognised business costs they weigh against the greater cost of water companies investing in infrastructure and repairs, or delivering a value-for-money service.
Designing elaborate regulatory regimes to stop capitalists behaving like capitalists hasn’t worked any better for water than it has for energy. It’s a con, and the only way to ensure our water supply is managed in the public interest is to take it into public hands.
CAMPAIGNERS called for an end to water privatisation as Thames Water was today fined a record £122.7 million for breaking rules over sewage treatment and paying out dividends.
An investigation into Britain’s biggest water supplier revealed “a series of failures by the company to build, maintain and operate adequate infrastructure,” said water regulator Ofwat.
Nearly £170m of dividend payments by Thames in October 2023 and March 2024 were not justified in “a clear-cut case where Thames Water has let down its customers and failed to protect the environment,” said Ofwat chief executive David Black.
We Own It founder and director Cat Hobbs said: “None of this changes the underlying problem — as long as water is privatised, we will continue to be ripped off, and rivers will continue to be polluted for profit.”
River Action chief James Wallace added that “nothing will change unless the privatisation of Thames Water stops.” He urged Environment Secretary Steve Reed to “put this failing company into special administration and restructure its ownership and governance so it can be owned by and operated for public benefit.”
Thames Water has been fined £122.7m for breaching of rules relating to its sewage operations and shareholder payouts.
It is the biggest ever penalty issued by the water regulator Ofwat.
The regulator said the fines followed its “biggest and most complex investigation” and confirmed it would be paid by the company and its investors, not by customers.
A Thames Water spokesperson said: “We take our responsibility towards the environment very seriously.”
The fine issued by the water industry watchdog has ordered Thames Water to pay a £104.5m penalty for breaches of rules connected to its sewage operations.
That is on top of an additional penalty of £18.2m for breaches relating to shareholder payouts – known as dividends. It is the first time Ofwat has fined a water company over “undeserved dividends”.
Thames Water is currently in “cash lock up” and no further dividend payments can be paid without approval from Ofwat.
U.S. President Donald Trump next to the Thames Water and KKR logos. DeSmog collage. Credit: Gage Skidmore / Thames Water / KKR
The U.S. private equity firm KKR, which has been selected as the ‘preferred bidder’ for the takeover of Thames Water, gave a seven-figure sum to Donald Trump’s inauguration committee, DeSmog can report.
Official records show that Kohlberg Kravis Roberts Co LP (KKR) donated $1 million to the Trump Vance Inaugural Committee on 7 January. The committee is appointed by the president-elect to arrange the inauguration ceremony, when a U.S. president is formally sworn into office.
The embattled London-based utilities provider Thames Water, in debt to the tune of £20 billion, is attempting to secure new investment to save it from nationalisation. In March, KKR was granted preferred bidder status, giving it a 10-week period to raise the equity to buy the water company.
KKR is reported to have lodged an initial £4 billion bid in exchange for a majority stake in Thames Water, which serves 16 million customers.
However, campaigners have raised concerns about KKR’s suitability to own Thames Water, given its financial ties to Trump.
“KKR recently donated $1 million to the inauguration fund of President Trump, a man who has repeatedly called the climate crisis a hoax,” said Matthew Topham, lead campaigner at the pro-nationalisation campaign group We Own It. “Let’s not kid ourselves that this company will swoop in and clean up our rivers and lakes.
“The government has ducked the issue for too long – special administration to slash the rotten debt, then full public ownership, is the only way to reverse this catastrophe.”
The new Trump administration has initiated a bonfire of clean air and water regulations – rules that were set to save the lives of 200,000 people according to The Guardian. Gina McCarthy, chair of the Environmental Protection Agency (EPA) under former U.S. President Barack Obama, said the announcement of the mass rollbacks was the “most disastrous day in EPA history”. During his first term, from 2017 to 2021, Trump repealed more than 100 environmental regulations.
Since being inaugurated for a second time, Trump has pledged to once again withdraw the U.S. from the flagship 2015 Paris Agreement, which set an international target for limiting global warming, and has declared a “national energy emergency” to allow the U.S. to “drill, baby, drill” for new fossil fuels.
KKR’s prospective ownership of a vital public utility has also been questioned on the basis of the U.S. firm’s business model. Private equity firms – which buy and restructure companies – are known to cut costs, and increase prices for consumers, in order to maximise their profits.
KKR was infamously dubbed the “Barbarians at the Gate” in the late 1980s for its takeover of U.S. conglomerate RJR Nabisco.
“It beggars belief that anyone could seriously think this is a business model and owner who will truly fix the crisis at Thames Water,” said Mathew Lawrence, director of the think tank Common Wealth. “It is exactly the behaviour of loading Thames Water up with debt, extracting money, and underinvesting that has led us to this point. What is needed is long-term stewardship, patient investment, and putting the public and our water system first for once – not the interests of elite financial firms.”
These sentiments were reflected in Parliament this week, through a House of Lords address by Labour peer Prem Sikka. “Thames Water was put on the road to ruin by private equity,” he said. “Now its shareholders have designated KKR, another private equity group, as their preferred bidder. KKR’s business model is profiteering, high leverage, low investment, asset stripping and high cash extraction. That will inevitably multiply Thames’s problems.”
KKR and Thames Water were approached for comment.
Debt and Donations
Thames Water’s debt ballooned under the ownership of Australian private equity firm Macquarie, increasing from £3.4 billion in 2006 to £10.8 billion when the firm sold its stake in 2017.
During Macquarie’s ownership of Thames Water, the private equity firm extracted roughly £2.7 billion in dividends and a further £2.2 billion in loans. Despite this, Macquarie has recently said that it is “very proud” of its ownership record.
KKR’s preliminary bid proposed a mechanism that would allow the holders of Thames Water debt – including the U.S. hedge fund Elliott Management – to become Thames Water shareholders.
Elliott Management is an activist hedge fund that recently built up a large stake in BP and has urged the British fossil fuel major to ditch a number of its green commitments. BP’s profits recently dropped by 48 percent amid this pivot back to oil and gas. The hedge fund is run by Paul Singer, who also donated $1 million to Trump’s inauguration committee.
Turning around the performance of Thames Water will take considerable investment and business acumen. Thames Water reported a 40 percent increase in pollution incidents in the first half of 2024, while the firm has been allowed to raise customer bills by 35 percent on average over the upcoming years. Senior KKR Europe executive Johannes Huth said last year that water bills must rise to boost investment in ageing infrastructure.
KKR also has a 25 percent stake in Northumbrian Water, which it acquired in 2022.
KKR’s Connections
In addition to its donation to Trump’s inauguration fund, KKR has other ties to fossil fuels and those who oppose climate action.
Analysis by the investigative group Private Equity Climate Risks published in April 2024 reported that KKR has a large fossil fuel portfolio, with 188 assets in 21 countries.
KKR has also created a $50 billion fund with Energy Capital Partners to invest in artificial intelligence (AI) data centre energy infrastructure. Data centres are heavily energy intensive, and DeSmog recently revealed that AI executives have told major polluters that the nascent industry can keep fossil fuels alive.
KKR is also the co-owner of Marshall Wace, a hedge fund co-founded by UK media baron Paul Marshall, holding a 39.9 percent stake as of June 2023. The same month, Marshall Wace reported investments of at least £1.8 billion in fossil fuels companies, including in the oil and gas giants Shell, Chevron, and Equinor.
Marshall is the co-owner of GB News, a broadcaster that has frequently given a platform to climate falsehoods, and is an opponent of policies to reach net zero emissions.
Speaking at a conference in February hosted by the Alliance for Responsible Citizenship (ARC), a group funded by Marshall, he said that the UK’s net zero plans are “leading the way in wrecking our industrial base”, “impoverishing people”, “sacrificing our energy security”, and “sacrificing our ancient rural landscape.”
The UK’s net zero sector is growing at three times the rate of the rest of the economy, according to the Confederation of British Industry (CBI).
DeSmog also revealed that Warren Stephens, Trump’s ambassador to the UK, donated $4 million to the president’s inauguration fund on the day that he was nominated for the diplomatic position.
The inauguration committee raised a record $239 million, including from fossil fuel giants Chevron ($2 million), ExxonMobil ($1 million), the U.S. branches of BP and Shell ($500,000 each), and Valero ($250,000).
A tanker from Thames Water
