Labour fires at Hyder profits

Hyder, the combined utility group formed by the takeover of Swalec by Welsh Water, said yesterday it would cut 900 jobs and save pounds 100m a year in costs by 2000. The news, which surprised and pleased analysts, was condemned by the Labour Party, which confirmed its pledge to impose a windfall tax on water companies.

Frank Dobson, shadow environment secretary, said: "Profits and dividends for the Welsh Water monopoly remain scandalously high. They are further damning evidence of the scandal of water privatisation.

"Welsh Water has put profits before customers. The bosses at Welsh Water should be spending their time solving the problem of leakage instead of squeezing profits out of the consumer and being distracted by mergers and company restructuring."

The continuing row between the water industry and Labour blew up as Hyder reported a 14 per cent increase in its annual dividend for the year to March to 33.9p.

It promised continued, above-inflation increases in the payout but disappointed analysts by refusing to give any firmer details on the dividend.

Turnover in the year rose 25 per cent to pounds 651.6m, after including a two-month contribution from Swalec which was acquired in January. Profit before interest and an exceptional charge of pounds 55m to cover the acquisition and a reorganisation of Welsh Water was pounds 183.6m, up 17 per cent.

Welsh Water bought Swalec for pounds 900m, two months after North West Water bought Norweb in the first multi-utility deal. Two other electricity companies are bidding for Southern Water, convinced of the cost cuts and competitive advantages of offering more than one service.

"Swalec was a sound acquisition, creating substantial benefits and delivering enhanced shareholder value which provides a platform for enhanced real dividend growth," said chairman Iain Evans. The shares closed 5p higher at 723p.

Paul Twamley, finance director, said half the savings would come from job cuts, the rest from reducing overheads through integrating services such as billing, information technology, procurement and customer services. "If you do that once instead of twice you save a fortune,'' he added.

Hyder said it was reviewing the future of Swalec's non-core businesses, which include a 40 per cent stake in a cable company, a stake in a Teesside power station and property investments.

As part of its restructuring following the takeover of Swalec, Hyder has set up a new combined facilities management company. Hyder Services currently employs 1,700 staff from which the company has promised cuts of 450 over the next three years.