Thames Water bosses have been attacked over executive pay after the company, which has been heavily criticised for leakage, paid out large pay rises and bonuses.

The utility last year pushed up pay by 66 per cent for executives, many of whom left last October after its takeover by Macquarie, and gave a further £1 million in incentive schemes.

The move was condemned by London politicians, who said that Thames had imposed the first hosepipe ban for 15 years during the period.

Thames angered consumers and politicians last year after losing nearly a third of its water through leakage but increasing its profits by 31 per cent to £346.5 million.

Mike Tuffrey, Liberal Democrat spokesman on the environment in the London Assembly, said that some of the money should have gone to customers and to help to repair leaks.

Accounts from the utility show that four directors – Jeremy England, Stephen Walker, Richard Aylard and Simon Bates – received cash bonuses totalling more than £200,000 although the company had said that no bonuses would be paid because of the controversy over leakage.

Thames said that these bonuses were for the extra work by the directors as the business was sold by RWE, the German power group, to Macquarie.

Two directors – Steven Buck and Mr England – received severence pay of £244,000 and £187,000 respectively.

The former chief executive, Jeremy Pelczer, is believed to have received about £450,000 although the accounts do not detail his severance because he was directly employed by RWE. His pay for the year had been £609,000.

Darren Johnson, a Green Party member of the London Assembly, said it defied belief that the executives had received pay increases and bonuses after they had failed to speed up investment to tackle leakage.

But investment has accelerated since the £8 billion takeover by the Australian investment bank. Last month Thames said that it had hit its leakage reduction target, which is set by the industry regulator Ofwat, for the first time since 2000.

But Macquarie’s takeover has also caused controversy over its corporate structure. The bank created a board made up exclusively of nonexecutive directors. The Consumer Council for Water warned this could hamper the company’s ability to act in emergencies.

Last year’s hosepipe ban lasted for ten months until this January, when there was heavy rain.

However, Thames Water also boasts the lowest average bill following price rises in the spring, with customers paying an average £275 a year. This compares with South West Water bills of £483.

The costs of extra investment to combat leakage showed up in Thames’s most recent profits. Last month it reported a fall of 22 per cent to £270 million in the year to March 31 as it replaced 323 kilometres of ageing pipes. Thames now plans to increase investment to nearly £1 billion a year.

Times Recommends

• Gazprom brands Ukraine 'a barbarian' in gas row
• Services sector raises fears over UK jobless
• Retailers surge as profits survive sales plunge