Thames Water paid its finance chief a £1 million signing on payment last month, despite the troubled water company being weighed down by around £20 billion of debt and facing the possibility of temporary nationalisation.
Steve Buck joined Thames Water in April 2025, but the seven figure payment was reportedly not made until July after the company sought legal advice over its contractual obligations.
Details of the payment emerged in a letter sent by Thames Water chairman Sir Adrian Montague to MPs on the House of Commons Environment, Food and Rural Affairs Committee.
Sir Adrian acknowledged that customers were likely to view large payments to senior executives as unfair, particularly given the company’s financial position and record on pollution and infrastructure. However, he defended the decision by arguing that Thames Water needed to retain experienced executives capable of overseeing its attempted turnaround.
He said many members of the current leadership team had only recently joined the company and were not responsible for creating the problems it now faces.
According to Sir Adrian, senior figures at Thames Water have been approached about taking jobs elsewhere, with alternative positions potentially offering higher salaries, less scrutiny and significantly less pressure.
He described the £1 million payment to Buck as a “necessary incentive” and confirmed that the money came from emergency funding provided by the company’s lenders.
Sir Adrian also warned that Thames Water was already struggling to recruit and retain senior staff, suggesting those difficulties could continue if the company enters special administration.
The payment has triggered criticism from Downing Street.
The Prime Minister’s official spokesman said it was “unacceptable” for one of Britain’s worst performing water companies to make huge payments to executives while customers continue to face problems with its performance.
The government said companies should be concentrating on improving services and rebuilding public confidence, pointing to new rules designed to prevent executives at poorly performing water companies from receiving certain bonuses.
Those rules mean water companies which fail to meet key standards can automatically lose the ability to award some performance related payments to senior executives.
Liberal Democrat MP Alistair Carmichael, who chairs the Environment, Food and Rural Affairs Committee, also criticised the payment.
He argued that Thames Water’s money should be directed towards improving services rather than increasing the remuneration of senior executives who are already highly paid.
Carmichael said the government had previously made clear that it wanted excessive executive payments in the water industry to end, but argued the latest revelations showed it had failed to achieve that.
Concerns over executive pay have also been raised by water regulator Ofwat.
Writing in July, Ofwat executive director Helen Campbell warned that public confidence in the industry was being damaged by payments which customers did not believe were justified.
She specifically raised concerns about large payments being presented as necessary to retain senior leaders without sufficient transparency or explanation.
The controversy comes at a critical moment for Thames Water.
The company is carrying approximately £20 billion of debt and has been holding discussions with creditors and government officials as it attempts to secure its financial future.
If a viable rescue agreement cannot be reached, Thames Water could be placed into a special administration regime.
Under that process, the company would effectively enter a form of temporary nationalisation, with government appointed administrators taking control to ensure water supplies continue while its finances are restructured.
The government could be required to fund the company’s day to day operations and infrastructure improvements while also dealing with its enormous debt burden.
Thames Water could eventually be returned to private ownership, potentially allowing the government to recover some of the taxpayer money used during the administration process.
Prime Minister Andy Burnham has previously argued in favour of greater public control over essential water and energy utilities.
The latest controversy also follows scrutiny over the wider pay packages handed to Thames Water executives.
Chief executive Chris Weston saw his overall pay rise by 14 per cent to £1.63 million over the past year, while other directors received bonuses worth a combined £4.1 million.
Weston has acknowledged public anger over executive pay but insists Thames Water must offer competitive salaries if it wants to attract people capable of fixing the company.
Speaking to the BBC last month, he argued that experienced executives would simply choose to work elsewhere if Thames Water was unwilling to pay market rates.
Weston has also warned that placing Thames Water into special administration could leave taxpayers facing a substantial bill.
Instead, he has backed a rescue proposal put forward by the company’s lenders.
Under the proposed agreement, some of Thames Water’s debt would be written off while creditors would provide additional investment to keep the business operating. In return, the company is seeking greater flexibility over some of its environmental targets.
The previous Environment Secretary Emma Reynolds rejected the proposal, arguing that it was too weak and failed to provide sufficient benefits for customers. She has since been replaced by Angela Eagle.
Thames Water has faced years of criticism over sewage discharges, leaking pipes, poor infrastructure and its financial management.
Last year, Ofwat imposed a record £122.7 million fine on the company after concluding that it had failed its customers and failed to adequately protect the environment.
Weston has said Thames Water needs to improve its performance, although he has also argued that some of the targets imposed on the company are unrealistic.
The situation is becoming increasingly urgent.
Thames Water has warned that its existing cash reserves may only be enough to keep the company operating until the end of the year.
That leaves the new government facing a major decision over the future of Britain’s largest water company, which supplies around 16 million people across London and the Thames Valley.
Ministers must now decide whether to support the lender backed rescue package, pursue an alternative restructuring or allow Thames Water to enter special administration, potentially bringing the company under temporary public control.