Thames Water chief ‘may have misspoken’ after saying lenders of £3bn rescue fund ‘insisted’ bosses receive bonuses

20 May 2025, 14:06 | Updated: 20 May 2025, 15:54

Thames Water's chairman said he ‘may have misspoken’ after he told MPs that the water firm's lenders insisted on top bosses receiving large bonuses as part of a recent £3 billion emergency loan.

Sir Adrian Montague said he may have "misspoken" during an Environment, Food and Rural Affairs (Efra) committee session with MPs last week.

He told the session that the lenders “insisted” that the firm’s top bosses should receive “very substantial” bonuses from the controversial emergency loan, in order to retain key staff.

These bonuses could amount to 50% of senior bosses' salaries, leading to them getting £1 million on top of their annual salaries and regular bonuses.

Rewarding executives was important to stop rivals from "picking off" senior members of the team, the chairman said last week.

The payments are linked to Thames Water securing a £3 billion emergency debt package as the nation's biggest water company scrambles to avoid collapse.

Read more: UK hits Russia with 100 new sanctions to 'ramp up' the pressure after Putin-Trump call

Read more: Spain struck by phone and internet blackout - just four weeks after nationwide electricity outage

The company, which has around 16 million customers serving 25% of the UK population, has been on the brink of collapse for months. The firm has debts of around £19 billion, and employs around 8,000 people.

The proposed bonuses from the emergency fund sparked an uproar, as Montague said the company’s finances were “hair raising” and that it had come “very close to running out of money entirely” last year.

In a letter to the committee, published on Tuesday, Sir Adrian wrote: "I appreciate that in the heat of the moment I may have misspoken when I stated that the creditors insisted on the management retention plan."

In the letter, Sir Adrian went on to suggest that creditors agreed to, rather than insisted upon, the bonus payments linked to the funding.

"It was agreed that a retention plan was important to retain the people best placed to deliver the improved outcomes our stakeholders rightly expect during this current period of uncertainty and this was reflected in the term sheet we agreed with our creditors," he wrote.

Water boss: I deserved my £200k bonus for 'boosting staff morale'

It is now understood Montague will be recalled in front of the committee.

Thames Water has been at the centre of growing public outrage over the extent of pollution, rising bills, high dividends, and executive pay and bonuses at the UK's privatised water firms.

Downing Street said bosses at the company should not be paid bonuses.

The Prime Minister's official spokesman said: "Water bosses rewarding themselves for failure is clearly not acceptable and ministers are clear that, after presiding over years of mismanagement, Thames Water should not be handing itself bonuses.

"The new Ofwat powers that are set out in the Water Act and will be coming into effect shortly will be applied retrospectively, meaning that they apply to Thames Water, just as they will any other company."

The water regulator Ofwat will soon be given the power to block bonuses and financial rewards being paid to executives if their company is failing.

But Thames water is attempting to argue that since the bonuses are coming out of the loan, and not customer funds – while also being retention payments rather than performance bonuses – mean they fall outside of Ofwat’s remit.

Ministers reportedly disagree, and say they can still ban the bonuses.

A Defra spokesperson said: “Following robust and urgent discussions with Thames Water, we are pleased that the company has decided to pause the payment of retention payments.

“For too long, customers’ money has been spent on unjustified payouts, rather than investing in vital improvements to the water system. This government has been clear that the era of profiting from failure is over.”