Thames Water risks fresh storm over £1m payment to finance chief

Thames Water risks igniting a fresh storm over boardroom pay after handing a £1m signing-on fee to its finance chief even as it teeters on the brink of collapse.

Sky News has learnt that Britain's biggest water company made the delayed seven-figure payment to Steve Buck, who joined the company in April 2025, at the end of last month.

The money to pay Mr Buck is understood to have been drawn from an emergency borrowing facility made available to Thames Water by a syndicate of lenders which are trying to persuade the government to back a solvent rescue plan for the company.

The £1m signing-on payment came 15 months after Mr Buck joined the struggling utility, and followed legal advice taken by Thames Water over its obligations.

A Whitehall source said the payment was disclosed in a letter sent last week by Sir Adrian Montague, Thames Water's chairman, to MPs on the environment, food and rural affairs select committee.

It can also be revealed that Thames Water has reached settlements over retention payments to 14 other executives, including two who have now left the company.

Many of these are understood to involve Thames Water paying smaller sums than those originally envisaged under the retention scheme, and over a longer period.

The payment to Mr Buck, a former finance chief at Pennon Group and Anglian Water, was part of a signing-on package constructed to persuade him to join Thames Water as it fought to avoid being taken over by the Labour government.

One source said the £1m payment had been deferred with Mr Buck's agreement when he arrived, but that Thames Water's board had ultimately decided it could not avoid handing it to him accordance with his contractual rights.

A wider retention payments scheme set up last year to avert the mass defection of Thames Water executives did not make agreed payments at the end of last year or on June 30 after directors decided to "pause" the programme amid a political outcry.

Whitehall insiders who have seen Sir Adrian's letter said it acknowledged that customers would regard it as unfair that senior managers were being paid significant sums while service standards had yet to improve.

The letter, which was copied to Ofwat and the Department for the Environment, Food and Rural Affairs (DEFRA), is likely to spark fresh demands from campaigners for Thames Water's immediate nationalisation.

In its annual results last month, the company disclosed that chief executive Chris Weston's total pay package had risen above £1m last year - although he does not participate in any bonus schemes provided by Thames Water.

Sir Adrian is said to have made it clear to MPs that it had taken legal advice on the retention programme's participants' rights under employment law.

According to one source, he told them that Thames Water had been struggling to recruit and retain senior staff during the ongoing crisis, which has left its future shrouded in uncertainty for the last three years.

Sir Adrian's letter comes amid a wider row over executive pay in the water industry, with several companies offering 'allowances' to bosses in order to circumvent bonus restrictions imposed by Ofwat.

The regulator has said it would pay close attention to retention payments which are not linked to performance, with a review of the practice expected to take place next year.

"Retention payments are not an uncommon practice but are often for limited exceptional periods which justify the need for retaining leadership, such as during mergers and acquisitions or leadership transitions," Ofwat said last year.

The likelihood of a further pay row at the industry's biggest company will pose a headache for Angela Eagle, who was appointed as environment secretary by Andy Burnham last month.

Thames Water's fate, and whether it can be resolved silently, is among the most pressing challenges facing her, with a revised rescue proposal from creditors expected to be submitted within weeks.

Ms Eagle's predecessor, Emma Reynolds, appeared to increase the prospects of Thames Water being placed into a special administration regime (SAR) when she told Ofwat in June that a proposed rescue deal was inadequate.

"I am not yet convinced that the Proposal demonstrates sufficient protection for consumers' interests," she told the watchdog.

A new proposal, which will include a golden share for the government to satisfy Mr Burnham's desire for greater "public control" of the water industry, is widely regarded as a last chance to avoid a SAR, which would wipe out billions of pounds of value for Thames Water's owners.

Sky News revealed last month that the group of investors engaged in a rescue bid for Thames Water have hired litigation specialists to prepare for a legal battle with the government if it forcibly nationalises the company.

The London & Valley Water consortium has been formed by a syndicate of fund managers including Apollo Global Management, Elliott Management, Farallon Capital Management and Silver Point Capital, which collectively hold £17bn of Thames Water's £21bn debt pile.

They have so far proposed a £10bn deal to take control of Thames Water, which includes injecting £3.35bn of fresh equity into the company.

The funds would also provide a total of £6.25bn of new debt, while writing off £9.6bn of Thames Water's existing borrowings.

Under their plans, the creditors would not pay any dividends to shareholders until the 2030s, with a plan to return the company to the public markets in about five years' time.

Ofwat is required to hold a three-month public consultation on a private sector deal, meaning that time is running out for such a process to be launched.

Thames Water repeated a warning this week that it would run out of money by the end of the year, although creditors have stated their intention to continue financing the company into 2027.

On Monday morning, Thames Water declined to comment on Sir Adrian's letter.

(c) Sky News 2026: Thames Water risks fresh storm over £1m payment to finance chief