Image source, Getty Images
- Author, Dearbail Jordan
- Role, Business reporter, BBC News
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The Severn Trent boss has defended her multi-million pound pay package despite the company’s sewage leaks rising by a third by 2023.
Liv Garfield received £3.2million in salary, bonuses and shares last year, while she has earned almost £13million over the past four years.
Severn Trent was responsible for more than 60,000 sewage spills last year, with Ms Garfield telling the BBC’s Today program: “It doesn’t make me feel good.”
However, she said Severn Trent has made “huge progress in river quality” in recent years.
The industry is under intense scrutiny over the quality of Britain’s water following a series of sewage leaks.
Sewage is defined as anything that goes down the drain of a home, including the toilet, personal laundry, or household cleaning such as the washing machine or dishwashing.
This also includes road runoff. Due to a warmer winter and wet weather, the grills along the road in particular are overloaded.
Water companies claim they need more money to improve their infrastructure and help limit leaks. The coming weeks will be crucial in determining how much they can increase customer bills.
Some, such as Thames Water, want to increase bills by 44% over the next five years to pay for the investments.
Industry regulator Ofwat will meet soon to decide on how to increase bills between 2025 and 2030. Draft proposals will be announced on June 12.
Ofwat’s decision on the bills could be a deciding factor for Thames Water, Britain’s largest water company, with 16 million customers in London and the Thames Valley region.
Its parent company, Kemble, owns some of the largest pension and sovereign wealth funds in the world, but has recently defaulted on debt payments. It means it is now effectively insolvent.
Kemble would pump billions of pounds into Thames Water to improve its facilities, which provide clean water and waste removal for a quarter of the UK.
On Thursday, Michael McNicholas, a non-executive director of Thames Water who represents Omer – a Canadian pension fund that is Kemble’s largest shareholder – stepped down from the board “with immediate effect”.
Jim Wright, manager of listed infrastructure funds at Premier Miton Investors, which invests in the water industry, said the departures could be the first in a series.
“I think this is part of a wider process,” he told the BBC. “We know that Kemble defaulted on debt payments last month because its underlying shareholders were unwilling to inject further equity. Therefore, I think this is the continuation of that process and the owners are simply walking away from the ownership vehicle.”
Thames Water is ring-fenced and regulated, but has debts worth billions of pounds. Chris Weston, who joined Thames Water as chief executive in January, has said there are sufficient cash and overdrafts available until May next year.
But if the country cannot raise more money, it risks being nationalized under a measure known as special administration.
There are concerns that if Thames Water is placed into special management it could make investors nervous about lending money to the rest of the sector.
But Ms Garfield said: “For us it’s very different. We went to our investors last October and asked them to inject money into the company and they gave us £1 billion in cash, so it’s very, very different.
“I am not in a position to comment on Thames, but I can reassure every Severn Trent customer that we are in a very healthy, very strong financial position.”
Ms Garfield said the company would invest “hundreds of millions of pounds” in “storm overflow solutions at 900 sites across the Midlands” over the course of the year.
Between 2020 and 2025 the average annual bill for Severn Trent was £402.63, for the next five years the average would be £546.35 if the business plan is accepted by Ofwat.