Revealed: Thames Water diverted 'clean-up' cash to help pay bonuses

Work to tackle pollution shelved after internal risk assessment

- Anna Isaac

Thames Water intentionally diverted millions of pounds pledged for environmental clean-ups towards other costs including bonuses and dividends, the Guardian can reveal.

The company, which serves more than 16 million customers, cut the funds after senior managers assessed the potential risks of such a move.

Discussions - held in secret - considered the risk of a public and regulatory backlash if it emerged that cash set aside for work such as cutting river pollution had been spent elsewhere. This could be seen as a breach of the company's licence commitments and leave it vulnerable to accusations it had broken the law, according to sources and material seen by the Guardian.

Thames Water continued to pay staff bonuses worth hundreds of thousands of pounds and paid tens of millions in dividends as recently as March this year while cutting back on its spending promises. The company did so despite public claims from its leaders that improvements to its environmental performance, including on pollution, were a priority.

Sources told the Guardian that internal deliberations about cutting back on the environmental works occurred as early as the end of 2021 and throughout 2022, when bosses weighed up the political and reputational risks of such a move.

Meanwhile, Thames continued to charge customers for the works and Ofwat was formally told of some of the company's plans not to deliver these major projects only in August 2023. A letter, seen by the Guardian, was sent to the head of the regulator Ofwat, David Black, by the company's then interim co-chief executive and former boss of the watchdog, Cathryn Ross.

In its response to the Guardian and the 2023 letter to Ofwat, Thames said sharp increases in its costs such as energy and chemicals - which it claims went beyond standard measures of inflation - lay behind its decisions to delay the works.