Environment Agency Minister Steve Reed has asked Ofwat to assess £1.3 million payments to Yorkshire Water CEO Nicola Shaw “as a matter of urgency”.

Speaking in a debate in the House of Commons yesterday, the Minister was responding to two separate questions from Sally Jameson, Labour MP for Doncaster Central and Uma Kumaran, Labour MP for Stratford and Bow.

Sally Jameson said this summer it was reported that the CEO of Yorkshire Water had received an extra payment from a parent company, in spite of recent admissions that it would not be appropriate to receive a bonus due to the company’s poor performance.

Steve Reed said the payment had “outraged customers” and he had asked Ofwat “to assess its legality as a matter of urgency.”

He told MPs:

“I will not tolerate any company attempting to circumvent this Government’s ban on unfair bonuses through exorbitant salary increases, secret bonuses, payments through parent companies, or any other deception. If Ofwat finds that the rules have been broken, companies will face sanctions, including fines imposed at a level that will deter future abuses.”

Joshua Reynolds, Liberal Democrat MP for Maidenhead went on to ask the Minister:

“The public will have been pleased to hear recently about the bonus ban for water company bosses, but they would have been equally surprised to hear that a water company boss in England was awarded a massive pay increase to £1.4 million, with the public being told that that was not a bonus but a two-year long incentive plan. What further steps can the Secretary of State put in place to ensure that water companies are playing fair, when those are the tactics that they use to circumvent the rules?”

Steve Reed said the scheme had been put in place and related to years when the Conservative party was in government and the scheme “would not be allowed today.”

He went on to say during the debate:

“The previous Conservative Government quite disgracefully let water bosses awards themselves more than £112 million in bonuses that they did not deserve. This Government are putting a stop to that. We have banned the payment of unfair bonuses and brought in new jail sentences for pollution offences. The Tory era of profiting from pollution is over.”

Reed - "customers had been hit with outrageous bill increases last year"

Commenting on household bills, the Environment Secretary told the House that customers had been hit with “outrageous bill increases” last year as a direct result of the previous Government’s failure to ensure that water and sewage pipes were properly maintained over the long term, saying:

“They deliberately imposed a light-touch approach to regulation that let the system crumble, while investment funding was diverted to line water bosses’ pockets, leaving customers to pay the price. Our powerful new regulator will get a grip on the sector and ensure the regular maintenance of pipes, so that hard-working British families are never again left to pay the price of under-investment and weak regulation.”

Reed - “Reason Thames is in the state that it is in is “weak, so-called “light-touch” regulation”

Conservative MP for Epping Forest Dr Neil Hudson raised the issue of Thames Water, saying the future of the company wasin sharp focus again, affecting millions of people and potentially the wider UK taxpayer.

“Bizarrely”, the Liberal Democrat Party had led legal action that “could have sunk the company”, he said, while Reform UK was “also happy for the company to go under, exposing taxpayers to a cost of billions and pushing consumer water bills through the roof.”

In addition, he suggested that the Labour Government, in the passing of the Water (Special Measures) Act 2025, had repeatedly blocked a Conservative amendment that would have enabled limits to be placed on the amount of money that could be borrowed by water companies.

He asked the Minister:

“As we reach a precipice with Thames Water, and given the Cunliffe review’s clear call for improved financial responsibility, will the Government rethink their approach and adopt sensible measures to put water companies on a more stable and secure financial footing to protect water, the environment and the British taxpayer?”

Steve Reed responded:

“The reason that Thames is in the state that it is in is the weak, so-called “light-touch” regulation that the Conservatives imposed on the water companies when they should have been getting a grip. The point beyond that that the hon. Gentleman makes is a sensible one, however, and our reforms to water regulation and indeed to the regulator are intended to ensure that such problems cannot happen again. In the case of Thames, we are of course keeping a very close eye on what is going on with that company. At the moment, it remains viable, but we are ready for all eventualities, should they occur.”

Asked whether he saw a path towards nationalisation sitting within his wider efforts to protect our waters, Steve Reed said:

“Nationalisation is not the answer, because it would require handing over more than £100 billion to water company owners that could only be raised through higher taxation or cuts to vital public services. It would also take years of legal wrangling that would see the brakes slammed on investment, causing pollution to get worse and, ultimately, lead to higher bills for customers. This Government are taking the fastest possible route towards cleaner water and fairer bills.”