Labour attacks United spending

Opposition angered as utilities splash out on expensive London offices and award themselves transport perks

Directors of United Utilities, the company formed by the pounds 1.8bn takeover of Norweb by North West Water last year, came under a new "fat cat" offensive from Labour yesterday, this time over its impending move to fashionable London offices.

Labour staged a demonstration outside 43 Grosvenor Street, Mayfair, where United will move its London base in September. The company currently occupies just "two or three" rooms near the Houses of Parliament, but according to a spokesman, "London is the centre of the business market and we need appropriate premises."

The attack on the excesses of the privatised utilities, pursued by Labour's Frank Dobson, was stepped up by Ian McCartney, the party's employment spokesman, who claimed the building, leased from the Duke of Westmister's Grosvenor Estate, would cost pounds 376,000 a year to rent. Pointing to signs of an on-going refurbishment, he said: "There's a mini Buckingham Palace being created behind the door. Expense is no object." Ironically, the offices will partly be used for United's lobbying activities, which include attempting to avert Labour's planned windfall tax.

This is the latest embarrassment United's harassed executives as they continue to face a storm of criticism at a new long-term pay and bonus scheme. The Chairman, Sir Desmond Pitcher, received a 21 per cent pay rise this year, to pounds 310,000, with share bonuses and a controversial long term incentive on top.

The seven floor, 9,400 square feet offices, which are based near the US Embassy, were still being advertised in the current edition of the London Office Guide, an exclusive commercial property magazine. One estate agent, who did not want to be named said, "It is undoubtedly one of the most desirable parts of Mayfair." He said that the lease was likely to run for 15 years.

United refused to give details of the contract to lease the building, but said it "did not recognise" the figure labour quoted by Labour. However, estate agents said it sounded accurate. An average rent would be around pounds 30 per square foot, plus pounds 15 for rates, making an annual total of pounds 425,000. The reburbishment could cost a further pounds 200,000.

Mr McCartney questioned why the company needed a London base at all. He added: "It's their job if they've got international connections to bring them to the North. I know of no other company which is ashamed to bring international connections to the North West."