We play a vital role in economy of region, says Yorkshire Water

Richard Flint, head of the Bradford-based utility firm, said that for every £1 spent on infrastructure, a further 93p is generated in economic activity.

Yorkshire Water, alongside Northumbrian Water, Northern Gas Networks and Northern Power Grid, invest more than £2bn a year and employ more than 8,000 people, he added.

Mr Flint was speaking after the four firms launched a joint report in Westminster to highlight their economic contribution to Yorkshire and the North East.

The report, Infrastructure North, claims that the total value of combined investment will be more than £21.5bn over the next five years.

“In a time of economic challenge for so many people, having that background expenditure in the region with a multiplier effect on top of that is an important contribution to ensuring economic recovery is aided in the region,” said Mr Flint.

He said the Infrastructure North report gives four large utilities in the North the opportunity to “tell the story” of their work, why they are doing it and the future as they see it.

Mr Flint said: “There are going to be three key dynamics we have to focus on. We have climate change happening. We have population growth taking place. We have economic austerity. Finding our way through that is very important.”

Water companies have faced criticism from industry regulator Ofwat for excessive returns at a time of austerity.

“I am surprised that companies have not taken more steps to recognise customers’ pain as bills go up,” said Jonson Cox, the chairman of Ofwat.

Yorkshire Water’s results for the year to the end of March 2012 show operating profits dipped 3.3 per cent to £303.3m, weighed down by higher costs. But dividends surged 35 per cent on a year earlier to £63.4m. Turnover increased three per cent to £893.6m, while bills rose by 3.4 per cent.

The average Yorkshire Water bill rose by 5.1 per cent this year, but the utility said it expects dividends to be “significantly lower” between now and 2015.

Mr Flint said the long-term capital structure of an organisation, its investment programme and changes in the operating environment help to create dividends.

Yorkshire Water was bought in 2008 for £3bn by a consortium of companies which includes Citi, the government of Singapore, Infracapital (part of M&G) and Reef Asset Management.

Mr Flint said: “Investors in UK water are generally global. They are people who have the option to invest their money anywhere in the world at any given time so there is always this dynamic between making sure the sector is attractive to investors but also balances the needs of customers in these straitened economic conditions.

“There’s a day-to-day expectation of the service that’s provided, the drinking water, the responsiveness of the organisation when something doesn’t go according to plan but there’s also the affordability of bills.”

Yorkshire Water is developing its spending plans for the period 2015-2020. It is working closely with the regulator to look at more innovative solutions to managing the region’s water supply. Water companies have traditionally been reliant on capital-intensive heavy engineering work.

Income for the firm has fallen because of the economic conditions, said Mr Flint.

He said: “That leads you to a position where you have to look closely at your own operating model and expenditure, but also to look realistically at the future.

“We are in a double-dip recession. If there’s a recovery then that’s great.

“Realistically, you have to plan for these conditions to continue because even if there is a recovery I think it is going to be slow and cautious because people don’t want to get caught out in the way they were in 2007-08.”

Nevertheless, he is expecting the Yorkshire population to grow by one million over the next 20 years. Alongside population growth is climate change, he added.

“We are going to need to continue to invest in order to create a resilient infrastructure. That is going to mean we need to raise money to do it with.”