Yorkshire Water CEO defends company’s decision to hand out bonuses following criticism

In July, Nicola Shaw received a performance bonus worth £371,000 and a salary pension package worth £657,000.

Earlier this month, Ms Shaw told BBC Politics North that she would not repay the bonus, stressing that the money comes “from shareholders and not from customers”.

Following her comments, Harrogate and Knaresboroughs MP, Tom Gordon, called for a ban on water bosses bonuses until infrastructure was upgraded, and said Ms Shaw’s refusal to hand back her bonus was “tone deaf”.

Speaking to The Yorkshire Post, Ms Shaw said that the company had “a lot of work to do” to improve the business and its outcomes.

She added: “Our board sets targets not just for me, but the whole organisation, for everyone who works here and delivers for people day in and day out. They want to make sure that we deliver across everything.

“We’re on track to deliver a 15 per cent reduction in leakage from our clean water network over the last five years, and we’ve been working very hard to ensure the safety of the workforce at Yorkshire Water. Those are indicators that the board thinks are really important as building blocks for the rest of the business. Those are the things that I was measured against.

“The bonus is paid for by shareholders, not by customers, and it's important that the organisation as a whole is all focussed together to deliver.

“This is difficult, people are finding a lot of criticism. It's not an easy thing to do, for everybody that works at Yorkshire Water, and so I want to make sure that I continue to help the business move in the right direction.”

In September, the Government set out new legislation to “crack down on water bosses polluting Britain’s rivers, lakes and seas”.

The Water Special Measures bill will also ban the payment of bonuses to water bosses if they “fail to meet high standards to protect the environment, their consumers and their company’s finances”.

Ms Shaw’s comments come as Yorkshire Water is set to increase average bills for customers by just over £100 next year, after water regulator Ofwat gave the company the green light on its latest plans.

The move will see Yorkshire Water customer bills increase by 41 per cent over the next five years, rising from an average of £430 this year to £531 next year, before rising to around £607 by 2030.

The increase equates to a rise of around £177 per household by the end of the five year period.

Ms Shaw said that bills had previously been kept lower than was needed for the company to make necessary investments to improve its infrastructure.

She said: “Bills have been kept artificially low in my view, and that's why it feels like a very big increase now, because we need to do more work to meet the standards that people want us to deliver.”

The company has announced upgrades across the region as part of a major investment plan on the back of the increases. These include a £1.5bn programme to improve 400 of Yorkshire Water’s 2,100 combined sewer overflows – the parts of its system which allow for a release of sewage materials during heavy rainfall.

In August, Ofwat proposed a fine of £47m against Yorkshire Water after an investigation into how the company manages its sewage treatment works and sewer network.

Bills are also set to increase across England and Wales as part of Ofwat’s latest announcement. The average household bill will increase by £31 a year over the next five years, rising by an average of £157 by 2030.

The increase in bills has been met with criticism from a number of campaign groups.

Becky Malby, chair of Ilkley Clean River Group, said: "We are shocked that, even though we are already paying bills on a par with the most expensive places in Europe, whilst getting one of the worst services that is polluting our waterways and overseeing a crumbling sewage infrastructure; Ofwat has decided we must send good money after bad and pay more”

Ofwat said the increase would pay for a £104 billion upgrade of the water sector to deliver “substantial, lasting, improvements for customers and the environment”.

The regulator said that on average, its final decision on the bill increases means that bills are £8 per year lower than what companies had previously proposed

Ms Shaw said that Yorkshire Water had trialled its plans with customers before submitting them, adding that 80 per cent "recognised that their package was appropriate, but did so only on the basis that they wanted it to be fair as well”.

The company has announced a £55m increase in investment to “support vulnerable customers”, particularly those in low income households.

Ms Shaw added: “We are also planning improvements in our rivers and bathing waters. We’ve already been making big investments on the coast, and we’ve done some work in Ilkley. We’re going to do another £60m worth of work at Ilkley, as well as work in Knaesborough and Wetherby.

“We’re also going to invest in clean water networks, replacing more of our clean water mains. We’re also improving the quality of our drinking water, particularly in East Yorkshire, and putting in new clean water plants in Bradford and near York.”