Severn Trent boss defends multi-million pay packet

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.

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 defined as 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 many roadside grilles 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 are due to meet 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 it 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 which 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 to 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."

Ms Garfield said that the company would invest "hundreds of millions of pounds" in "storm overflow solutions across 900 locations in the Midlands" over the year.

In it five-year plan submitted to Ofwat, Severn Trent wants to invest £12.9bn and increase customer bills by 35.7%.

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 its business plan is accepted by Ofwat.

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