Emma Howard Boyd, President of the Environment Agency, did not hold back. Fines for polluting water companies in England should be much higher, errant directors should go to jail in the worst cases and investors should not profit from a ‘one-way bet’. All are reasonable ideas. The current state of river pollution is indeed ‘shocking’, ‘unacceptable’ and all the other damning descriptions found in EA’s annual environmental performance report on water companies.
Serious pollution incidents rose to 62, the highest total since 2013. Seven of the nine privatized companies oversaw the increase in serious incidents in 2020. Only three companies – Northumbrian, Severn Trent and United Utilities – achieved a rating four out of four stars.
Yet the degradation in performance raises an obvious question: how did the EA, England’s main public environmental protection body, let things get so bad?
You will find little regulatory self-reflection in the report. Closest to this was a new ambition to prosecute repeat offenders through criminal prosecution in less serious incidents, rather than relying on civil powers. Yes, that sounds like a good idea – but it would have also been a good idea ten or two years ago. EA averaged seven lawsuits per year between 2015 and 2021. That’s not a lot.
Feargal Sharkey, activist extraordinaire in this field, rightly pointed out that Howard Boyd has been on the EA board for 13 years, has been its chairman since 2016, and as recently as August 2019 was writing letters to newspapers about how “the quality of water in our rivers today is better than it has ever been since the beginning of the industrial revolution”.
To be fair to her, she was also calling for more government funding for environmental assessment and heavier fines, even then. But the new surge in rhetoric came very late in the day, as did the major ongoing investigation by EA and price regulator Ofwat into waste water discharges. . It is suspected that more terror would be created in boardrooms if the whole regulatory framework for the water industry in England were to be overhauled under new leadership. The stench of regulatory drift was also shocking.
Where Pret could put some of his money
Pret a Manger’s aim is to “make every day a little brighter”, says the annual report, and the coffee and sandwich outfit fulfilled that ambition to the fullest in the case of general manager Pano Christou. In a year in which the business recorded an operating loss of £125m and a pre-tax loss of £255m, he received £4.2m in wages , primarily comprising a one-time bonus and stock awards, as we report today.
Pret is owned by JAB Holding, a private investment firm that primarily manages the money of the German Reimann family, which earned billions in consumer goods group Benckiser. So, you could say, if JAB wants to ignore a profit-eliminating pandemic at Pret and throw big inducements at Christou, that’s up to him.
Except the annual report also details how much UK public money Pret is claiming to keep the business going during the lockdown. In 2020 and 2021, around £100m arrived through the furlough scheme to support staff salaries; and the company was relieved of the burden of paying £31million in professional fees.
There is no obligation for Pret to return a single penny to HMRC or the Treasury, it must be said. Job losses were minimized, as was ex-Chancellor Rishi Sunak destined for the hospitality sector. JAB didn’t get a free lunch either: shareholders injected £285m of fresh capital along the way.
Still, if JAB can afford a nearly £4million bounty for Christou and thinks Pret is “very well placed for 2022 and beyond”, he could consider a voluntary return of a few pounds of public money. Many others have, and not all say they try to brighten up life by “doing the right thing,” as the annual report also says. Customers can form their own opinion.
A disturbing minnow
So Admiral (share price down 18% Thursday) and Direct Line (down 11%), what do you think of these inflationary storms ravaging your auto insurance industry? You know: delays in the supply of auto parts, additional costs related to the supply of replacement vehicles to customers, etc.
Saber Insurance, a relative minnow, was the cause of the stock price plunge as it issued a profit warning. Its share price fell 40%. But its managing director, Geoff Carter, was also adamant: “We believe our performance will compare favorably to that of the wider market.” Either he is dead wrong or his biggest rivals should give shareholders a pointed assessment of the damages.