Pay rise for water chief despite further losses

Richard Flint, chief executive of Yorkshire Water and Kelda Group

Richard Flint, chief executive of Yorkshire Water and Kelda Group

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Yorkshire Water’s chief executive received a £12,000 pay increase last year despite escalating losses and the devastating Boxing Day Floods.

Richard Flint, who has been at the head of the utility and its parent company Kelda Eurobond since 2010, saw his basic salary rise from £388,000 to £400,000 as pre-tax losses at Kelda deepened to £369m, down from £330m the year before.

Mr Flint’s total pay packet, including bonuses and pension benefits, came to £1.2m in the year to March 31 2016, down from £1.47m the year before, including a £240,000 bonus for meeting targets.

A Kelda spokesman said: “Our directors salaries are set by an independent remuneration committee and are comparable within the industry.”

According to accounts filed at Companies House, the losses stemmed from a £394m interest bill on £5.9bn of debt put on the company by its owners - a consortium including Prudential, Deutsche Bank and Singapore’s GIC.

Last year, Moody’s downgraded the utility’s credit rating over worries about its portfolio of financial derivatives.

Moody’s said Yorkshire Water’s credit quality continues to be pressured by the sizeable portfolio and the deterioration in its mark-to-market value.

The huge interest bill on the debt wiped out profits and meant Kelda paid no corporation tax.

In a statement, Kelda pointed out that the business paid £119m in other taxes this year such as business rates, carbon taxes and National Insurance contributions.

A spokesman said: “Kelda invests over £1m a day across the UK’s water infrastructure. Rather than asking customers to fund this investment up front through their bills, Kelda has borrowed the money to fund a large proportion of this investment.

“This has helped to keep customer bills lower, whilst maintaining vital investment to modernise and maintain water infrastructure.”

Tax law states that interest costs on these borrowings are tax deductible.

The company has been heavily criticised by MPs in the past for paying no corporation tax. However, it says its position is in full compliance with the letter and spirit of UK tax law.

Over 10,000 homes and businesses across Yorkshire were flooded during the heavy rainfall over the Christmas 2015 period with the floods in Leeds described by MPs as the worst to hit the city since 1866.

Kelda said in its accounts that the event had caused ‘significant damage to Yorkshire Water’s assets, although it added that it worked hard to ensure there was no disruption to water supplies during the extreme weather’.

It added: “We have instigated a major recovery programme and expect the total cost to run into the tens of millions on our assets.

“We continue to value the cost of repairs and are working with our insurers to recover these costs. As a consequence of this, and other recent claims, we have seen an increase in our insurance premiums and excess.”

A spokesman said yesterday that the event had had a devastating impact on communities across Yorkshire. “We fully recognise the responsibility for all agencies involved in flood management, such as the Environment Agency, local authorities and ourselves, to work together to devise innovative solutions to reduce the risk of this ever happening again,” he said.

He added: “At Yorkshire Water, which forms part of Kelda, we had 500 staff and service partners who helped with the big clean-up operation that was required after the Boxing Day floods - cleaning out the sewers and also clearing any surface water in the most affected Yorkshire communities.”

The Kelda group paid dividends during the year to its parent company of £10.6m, compared to nothing the previous year.

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