Water: Bills and Executive Remuneration

Baroness Jones of Whitchurch Excerpts

Tuesday 3rd July 2018 Lords Chamber

Asked by

[Baroness Jones of Whitchurch]

To ask Her Majesty's Government what assessment they have made of increases in customer water bills and levels of remuneration paid to water company executives.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Gardiner of Kimble) (Con)]

My Lords, average water and sewerage bills fell in real terms from £420 in 2009-10 to £395 in 2017-18. Bills will continue to fall. Ofwat expects a further average reduction of 5% in 2020-25. The Government support Ofwat’s action to increase transparency of executive pay and bonuses, which must be based on better services for customers.

[Baroness Jones of Whitchurch (Lab)]

I thank the Minister for his reply, but he will know that water bills have risen by 40% above inflation since privatisation and nearly 2 million will need help to pay their water bills by 2020. Despite poor levels of customer service, water company bosses are paying themselves huge salaries and bonuses, with CEO pay averaging £1.2 million. Some of them are paid twice that amount. At the same time, water companies are hiding behind complex financial structures and offshore havens to avoid paying taxes. The Secretary of State has been critical of the water companies, but what is he actually doing on the ground to make sure that profits are focused on better preparation for weather extremes, not just paying excessive bonuses to the few?

[Lord Gardiner of Kimble]

My Lords, the noble Baroness’s question is extremely timely. Only today, Ofwat published a summary of the changes to the upcoming price review process, which were discussed with my right honourable friend the Secretary of State, who agrees entirely with Ofwat’s actions. It will require companies to share the benefits of high levels of debt finance with customers, ensure that performance-related executive pay rewards genuinely stretching performance —which benefits customers—and be transparent about dividends and explain how they relate to costs and service delivery to customers. If necessary, we will go further.