AceBusinessDesk – The boss of Severn Trent has defended her multi-million-pound pay package despite sewage spills by the company rising by a third in 2023. 

Ace Press News From Cutting Room Floor: Published: May.18: 2024: Dearbail Jordan: Business reporter, BBC U.K News: Published: 17 May 2024, 10:15 BST: TELEGRAM Ace Daily News Link https://t.me/YouMeUs2 

Liv Garfield was awarded £3.2m in pay, bonuses and shares last year, while over the past four years she has earned nearly £13m.

Severn Trent was responsible for more than 60,000 sewage spills last year which Ms Garfield told the BBC Today programme “doesn’t make me feel good”.

However, she said that over the last few years Severn Trent has “made massive progress on river quality”.

The industry is under intense scrutiny about the quality of Britain’s water following a series of sewage spillages. Sewage is anything that goes down a home’s drain, including from the toilet, personal washing, or domestic cleaning, such as from the washing machine or doing the dishes. 

It also includes run-off from roads. A warmer winter and wet weather mean that mainly roadside grills have been overwhelmed. 

Water firms argue they need more money to improve their infrastructure to help limit leaks. The next few weeks are key in determining by how much they can raise customers’ bills. Some, such as Thames Water, wants to lift bills by 44% over the next five years to pay for investment.

Industry regulator Ofwat will meet soon to decide on the increase for bills between 2025 and 2030, with draft proposals set to be announced on 12 June.

Ofwat’s decision on bills is potentially make-or-break for Thames Water, which is the UK’s largest water company, with 16 million customers in London and the Thames Valley region.

Its parent company, Kemble, is owned by some of the world’s largest pension and sovereign wealth funds but recently defaulted on debt payments. It means it is now effectively insolvent.

Kemble was supposed to pump billions of pounds into Thames Water to upgrade its facilities that supply clean water and remove waste for a quarter of the UK.

On Thursday, Michael McNicholas, a non-executive of Thames Water who represents Omer – a Canadian pension fund that is the biggest shareholder in Kemble – stepped down from the board “with immediate effect”.

Jim Wright, listed infrastructure fund manager at Premier Miton Investors, which invests in the water industry, said the departure 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 a debt payment last month because the underlying shareholders were not prepared to inject any more equity and so I think this is the continuation of that process and of the owners simply walking away from the ownership vehicle.”

Thames Water is ring-fenced and regulated but has billions of pounds worth of debt. Chris Weston, who joined Thames Water as chief executive in January, has said it has enough in cash and overdraft facilities last until next May.

But if it cannot raise more money, it faces being nationalised under a measure known as special administration.

There have been concerns that if Thames Water is placed in special administration it could make investors nervous about lending money to the rest of the industry.

But Ms Garfield said:

It is quite different for us. We actually went to our investors just last October and asked them to inject money into the company and they gave us £1bn of cash so it is very, very different.

“I’m not in a position to comment on Thames but I can reassure every Severn Trent customer that we have a very healthy, very, very strong financial situation.”

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