Under-fire Yorkshire Water unveils ‘fair deal’ price rises

AVERAGE water bills should rise by just £6 after Yorkshire Water heeded criticism and announced lower bills than expected.
Richard Flint, Chief Executive of Yorkshire WaterRichard Flint, Chief Executive of Yorkshire Water
Richard Flint, Chief Executive of Yorkshire Water

Prices are agreed every five years by industry regulator Ofwat and a 1.6 per cent rise in addition to inflation was originally scheduled.

But the company has now agreed an inflation-only increase of 2.65 per cent, which will see household bills rise an average £6, rather than £12.

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The firm, which was last year accused of tax avoidance, is proposing that bills rise with inflation only for the next five years.

The move was welcomed by Ofwat which had called on water companies to consider scaling back increases, amid an income squeeze on consumers.

The average household bill in Yorkshire from this April will be £373, compared to the UK average of £393.

Cathryn Ross, Ofwat Chief Executive, said: “It’s our job to make sure customers are getting a fair deal.

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“We know that customers are having a tough time. In the last five years bills have risen with inflation, yet we are well aware customers’ incomes haven’t.

“We are pleased that a number of companies have heard our call, listened to their customers, and taken action. Ten million households will now benefit from lower than expected bills this April.

“We are now focused on getting the best deal for customers over the next five years.”

Ofwat will announce its verdict on the water companies’ proposals later this year.

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Richard Flint, YW’s chief executive, said: “Customers in Yorkshire already pay some of the lowest average bills in the country but we’ve heard the message that we need to continue to deliver a great service while keeping bills as low as possible.

“We know many customers are feeling the pinch and have taken action by limiting the price rise for this coming financial year.

“We’ve also gone a step further in our proposals for the next five years by suggesting that bills move only with inflation up to 2020.”

The Bradford-based utility, which is owned by a consortium of international investors, uses companies incorporated in the Cayman Islands.

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Politicians last year accused foreign-owned water companies of using debt interest schemes to avoid tax at a cost of £1bn to the taxpayer over the previous three years.

Tax lawyer turned Tory MP Charlie Elphicke singled out YW as an “especially egregious” example of companies abusing the interest deduction system.

The firm, which made operating profits of £331.5m last year, said yesterday it was “moving to a position where we expect to pay tax in 2014-2015.”

A statement added: “We will pay tax when it is due in accordance with the law and continue to abide by both the letter and the spirit of the law.”

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Yorkshire Water comes midway in a list of 10 major water and sewerage companies, with Thames Water imposing the highest average bill increase of 3.4 per cent, compared to YW’s 1.5 per cent.

The company is investing £239.5m in projects across the region, including a £2.7m overhaul for Eccup reservoir in Leeds. It is spending nearly £3m in Scotton near Knaresborough to reduce the chances of people’s houses being flooded with sewage and another £4.8m improving bathing water quality in Scarborough.

Pamela Taylor, chief executive of Water UK, which represents water firms, said: “Water companies are in touch with their customers and have made significant efforts to keep customers’ bills as low as possible.

“At the same time, companies will invest around £5bn in the next 12 months to ensure our drinking water quality will remain amongst the best in the world and our rivers and beaches become even cleaner.

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“This investment also maintains well over 120,000 jobs in the UK and helps support regional economies.

“Companies will also continue to allocate millions of pounds to give struggling households money off their water bills as well as offering a range of extra support and advice measures.”