Water boss pay ‘outrageous’, says environment secretary

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BBC Steve Reed was speaking on Sunday With Laura Kuenssberg

The environment secretary has urged Southern Water’s chief executive to turn down a pay rise worth hundreds of thousands of pounds, saying it was not “merited”. Lawrence Gosden was awarded £691,000 as part of a long-term incentive plan this year, on top of his fixed pay of £687,000, according to the company’s annual report. It is understood that he has only received half of this payment this year, taking his total pay to more than £1m. Environment Secretary Steve Reed told Sunday With Laura Kuenssberg it was “outrageous” and suggested the water company to “think about how this looks to their customers”.

He said: “Trust between the customers and the water companies is at the lowest point probably ever and, by paying their senior executives rises of that kind, what message are they sending to their customers?” Asked whether Mr Gosden should turn down the pay rise, Mr Reed said: “I think it would be right if he did.” “I don’t think Southern Water has performed well enough for that kind of pay increase to be merited,” he added.

PA Media Lawrence Gosden has led Southern Water since 2022

Also talking to Laura Kuenssberg, shadow housing and communities secretary Kevin Hollinrake agreed with Mr Reed, calling the pay rise “ludicrous”. He added that it was a matter for Southern Water’s shareholders, before suggesting the payment “should be stopped” by water regulator Ofwat.

Southern Water was banned from paying bonuses last month over a so-called category 1 sewage spill in the New Forest, Hampshire, in August 2024. Under new rules, companies are banned from paying bonuses if they do not meet environmental, consumer or financial standards, or are convicted of a criminal offence. Southern Water has insisted the payment to Mr Gosden is not a bonus but part of a long-term incentive plan set up in 2023, and would be paid directly by shareholders. A company spokesperson said its chief executive’s pay and benefits were decided by a remuneration committee “following protocols and rules set out by Ofwat and in accordance with the law”. They added: “Lawrence Gosden’s 2025 package includes a relocation allowance and long-term incentive plan paid by shareholders, which marks improvements made during the delivery of our turnaround plan. “Both of these payments represent common industry practice.”

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