Key Takeaways
- The former CEO of Wessex Water, Colin Skellett, received a £170,000 bonus from its parent company, YTL Utilities (UK), despite a ban on performance-related pay due to the company’s criminal pollution failures.
- The bonus was given for Skellett’s work on a property development project, which is part of YTL’s business, and not directly related to Wessex Water’s regulated activities.
- The payment has sparked criticism from the Liberal Democrats, who argue that the government’s bonus ban is not strong enough to prevent such payments.
- The incident highlights the lack of transparency in payments to water company bosses from other group companies, which has been a subject of controversy in recent years.
- The government has introduced new rules to block unfair bonuses and increase transparency, but critics argue that more needs to be done to hold water companies accountable for their actions.
Introduction to the Controversy
The former chief executive of Wessex Water, Colin Skellett, has received a £170,000 bonus from its parent company, YTL Utilities (UK), despite a ban on performance-related pay due to the company’s criminal pollution failures. This has sparked strong criticism from the Liberal Democrats, who argue that the government’s bonus ban is not strong enough to prevent such payments. The bonus was given for Skellett’s work on a property development project, which is part of YTL’s business, and not directly related to Wessex Water’s regulated activities. However, critics argue that this is a loophole that allows water company bosses to receive large payments despite their companies’ poor performance.
Background on Wessex Water and YTL
Wessex Water was bought by the Malaysian group YTL in 2002, and Skellett has been a director of YTL Utilities (UK) since May 2002. Despite stepping down as CEO of Wessex Water in 2024, Skellett has continued to draw a large salary from YTL, including £8.4m in pay over the last decade, including £3.4m in bonuses. The company has been fined £500,000 for a sewage pumping station failure that killed over 2,000 fish, and received another £11m fine last month for more sewage failures. The lack of transparency in payments to water company bosses from other group companies has been a subject of controversy in recent years, with MPs and Ofwat raising questions over the issue.
Criticism and Response
The Liberal Democrats have criticized the payment, saying that it shows the government’s bonus ban is "nowhere near strong enough". Anna Sabine, the Liberal Democrat MP for Frome and East Somerset, said: "For far too long, water company fat cats have been taking huge bonuses for pouring filthy sewage into our rivers. It is absolutely disgusting that the chief executive receive any kind of bonus after Wessex Water’s reckless and blatant disregard for nature, and even more disgusting that Ofwat allowed them to accept it on a technicality." YTL has denied that the bonus was a "technicality", saying it related to Skellett’s work on the property development project. Ofwat has said that the payment was outside the scope of the rule on executive performance-related pay, as it was awarded for work not related to the regulated company.
Government Response and Reforms
The government has introduced new rules to block unfair bonuses and increase transparency, including a ban on performance-related pay for water company bosses. The environment department has said that the government has imposed "the toughest enforcement framework the sector has ever seen", and that water companies are expected to follow both the letter and spirit of the law. Ofwat has also proposed an update to water company annual reporting to include more transparent disclosures on remuneration. However, critics argue that more needs to be done to hold water companies accountable for their actions and to prevent large payments to bosses despite poor performance.
Conclusion and Future Developments
The payment of a £170,000 bonus to Colin Skellett has highlighted the need for greater transparency and accountability in the water industry. The government and Ofwat have introduced new rules and proposals to address these issues, but critics argue that more needs to be done to prevent such payments in the future. The abolition of Ofwat and the introduction of a new regulator are expected to bring about changes to the way the water industry is regulated, and it remains to be seen how effective these changes will be in addressing the issues of pollution and accountability. The incident has also raised questions about the structure of the water industry and the role of parent companies in paying bonuses to water company bosses. As the water industry continues to face criticism and scrutiny, it is likely that there will be further developments and reforms in the coming months and years.