LONDON, United Kingdom – In a decisive move against corporate malpractice, the UK’s water regulator, Ofwat, has blocked approximately £4 million (KSh 668 million) in bonuses for senior executives at six major water companies following severe environmental pollution incidents. The decision, announced on Wednesday, November 5, 2025, comes amid widespread public fury over the persistent discharge of raw sewage into Britain's rivers and seas.

The six firms facing the ban—Anglian Water, Southern Water, Thames Water, United Utilities, Wessex Water, and Yorkshire Water—were found to have failed to meet required environmental and customer service standards. This action was enabled by new powers granted to Ofwat under the Water (Special Measures) Act 2025, which explicitly links executive performance-related pay to environmental performance. The UK government implemented the rules in June 2025, backdating them to cover the 2024-2025 financial year, after data revealed sewage was discharged into English waterways for a record-breaking 3.6 million hours in 2023, a 105% increase from the previous year.

This regulatory crackdown highlights a growing global trend towards stricter oversight of utilities, a development with significant implications for Kenya. While the UK context involves privatised entities, the core issues of regulatory strength, corporate governance, and funding for infrastructure are directly relevant to Kenya's water sector. Kenya's Water Services Regulatory Board (WASREB) faces similar challenges in ensuring accountability among the country's water service providers, where issues like non-revenue water (NRW) reach a staggering 44%, leading to massive financial losses.

A Loophole Exposed and a Pledge to Tighten Rules

The regulatory action has been complicated by revelations of corporate manoeuvres to bypass these restrictions. An investigation by The Guardian, published in August 2025, discovered that Nicola Shaw, the chief executive of Yorkshire Water, received £1.3 million in previously undisclosed payments through the company's offshore parent firm, Kelda Holdings, registered in Jersey. These payments, made over the 2023-24 and 2024-25 financial years, were not detailed in the regulated company's public accounts, sparking accusations of attempts to circumvent the bonus ban.

In response, Ofwat announced on November 5, 2025, that it is consulting on new rules to compel water companies to disclose all payments made to executives from parent or group companies. "Greater transparency on executive remuneration is always welcome... this should be the minimum of what should be expected of all water companies to follow," the regulator stated, signalling its intent to close existing loopholes.

Despite the bonus ban at the six firms, a broader analysis found that the average pay for chief executives across England and Wales still rose by 5% in the last financial year to £1.1 million (KSh 183 million). This has led to criticism that the current measures are not sufficient to curb excessive remuneration in a sector failing to meet public expectations.

Lessons for Kenya's Water Governance

The situation in the UK serves as a critical case study for Kenya as it seeks to reform its own water sector. Kenya's 2030 vision for universal water access faces a significant funding gap, and public-private partnerships are often cited as a necessary solution. However, the UK experience underscores the vital importance of a robust and empowered regulator to protect the public interest and prevent corporate profiteering at the expense of essential services and environmental health.

WASREB, established under Kenya's water reforms, has made strides in professionalising utilities and monitoring performance. Yet, with 41% of Kenyans living outside regulated service areas and national water quality declining, the challenge is immense. The UK's struggle with holding powerful, privatised utilities to account demonstrates the need for clear legal frameworks that prioritise transparency and give regulators the authority to enforce penalties that genuinely deter misconduct, including blocking unearned executive rewards.

As Helen Campbell, Ofwat's Senior Director for Sector Performance, noted, the new rules are "an important step towards rebuilding public trust within the water sector." For both the UK and Kenya, ensuring that executive pay is tied to performance—and not awarded in the face of failure—is fundamental to creating a sustainable, equitable, and accountable water future for all citizens.