Want to tackle waste and inefficiency here in the UK? Start with the bonuses of water company bosses - David Behrens
By any rational measure, Yorkshire Water is not a company that can be said to be doing well. Reviled by its customers, roasted by the regulator and laden with debt, it shows every sign of drowning in the sea of sewage it continues to pump into our rivers.
Its executives were hauled before a committee of MPs this week and tossed off platitudes from a manual of corporate jargon they thought might make them sound contrite: they were “working really hard” to address the issues; and “aligning the culture” to “deliver better”.
But the facts spoke for themselves. The CEO Nicola Shaw could not argue with the reality that her new £1.02m pay package had been calculated with no thought to what her customers could afford. Shareholders just wanted to make sure she was “kept incentivised”, she said.
Was she not incentivised by the £657,000 she was earning already, wondered one of the MPs.
Apparently not; specific incentives had to be targeted, said Ms Shaw. “That’s often how remuneration works in organisations like ours.”
And therein lies the problem, because the only industries like hers are the other privatised public utilities and each of them is an insult to economics. In no other sector would anyone tolerate the boss pocketing a £371,000 bonus while simultaneously pleading corporate poverty and putting up prices by nearly a third.
It was a rare and probably unintentional moment of revelation from a company whose false sense of security fools no-one but itself. Another came when Ms Shaw was asked to describe an average day for discharging raw sewage in Yorkshire and replied without irony that it was “one of those occasions when numbers are not always your friend”.
You’re telling me. But for the record, those numbers remind us all that in 2023 untreated wastewater was released into the region’s rivers for seven hours a day. The Wharfe at Ilkley was the filthiest in the UK.
Grilling errant executives in an oak-panelled room in Westminster is a very British form of humiliation. Admonition is dispensed with tea and Hobnobs and afterwards a report is written and forgotten about until someone complains about something else and the process starts all over again.
It’s very different now in the US, where executives and minions alike are summarily dismissed unless they can prove to a hit squad of time-and-motion people that they have justified their existence since lunchtime. The climate of fear this practice has induced is said to be Stalinesque.
It is the work of Elon Musk, the Trump donor and social media sociopath who promised to take a chainsaw to governmental inefficiency and went so far as to brandish one over his head at a conservative conference last week. His Department of Government Efficiency fired thousands of federal employees last month alone and threatened to lay off many more, arguing that public services were awash with excess and that paying fewer people meant less money wasted.
It sounds like a uniquely Trumpian equation until you realise that the proposition is not so very different to that expounded in Downing Street in 2019 by Dominic Cummings. He too wanted to cut through the red tape and sloth that runs through public services and renders them inert – and were it not for the other character flaws that laid him low he may well have succeeded.
It could still happen. Just this week councillors in North and West Yorkshire were calling for a new department to slash spending and, as one put it, “gut” the local authorities in the way Musk was doing.
And there are undeniably savings to be had. Public bodies are wasteful the world over and in my own brief time in the cocooned corridors of the Department for Transport I could have identified perhaps three-quarters of my colleagues as being surplus to genuine requirements.
But ultimately you can’t cure institutional malaise just by taking it out on those at the bottom. The culture of bonuses and uncompetitive contracts is what makes public bodies inefficient and it flows down from the executive dining room, not upwards from the staff canteen.
There isn’t the will to change that in the US; Trump and Musk are products of that very culture. We on the other hand have one of the increasingly few left-leaning governments and if the administration is to be true to its principles it’s in that direction it ought to be firing warning shots, not at the softer targets of farmers and freezing pensioners.
Yorkshire Water would be a good place to start and there’s an immediate saving of £1.02m staring it in the face. A drop in the ocean it may be but the thought of change finally coming might just make some of the other drips choke on their Hobnobs.