Water chief's 45% rise renews pay controversy

The Labour Party renewed its attack on boardroom pay rises following the revelation that Bill Fraser, managing director of South West Water, had a 45 per cent increase in his total package to pounds 217,000 last year, including pounds 63,000 in pension contributions.

Ian McCartney, the shadow employment minister, said the rise was another example of privatised utility chiefs "going for greed" and amounted to "another slap in the face" for consumers and employees.

The row comes as the government-backed Greenbury committee finalises its report on boardroom pay, which is expected to form a blueprint for British companies.

There is a view that Greenbury will not recommend stringent enough guidelines to satisfy those who believe that remuneration packages have become too generous.

Mr McCartney said: "With the Greenbury committee expected to simply tinker about the edges, privatised utility bosses have been given the green light to go for gold and go for greed - with consumers and staff paying the price.

Referring to job losses at South West Water - said by Labour to be at least 195 since privatisation in 1989 - he went on: "Cutbacks seem to stop at the door to the boardroom.

"It is a disgrace that fat cat executives are lining their pockets and enjoying bumper pay increases while millions of low-paid people struggle to make ends meet.

He called on the Government to stop defending executive excess and to introduce minimum wage protection for the low-paid.

South West Water's annual report also shows that Mr Fraser was awarded 10,000 share options during the year and that other directors were awarded a total of 41,000 options. This compares with some electricity and water companies that decided against any new share options the year. In some cases, companies have said they intend to scrap the schemes in favour of longer-term share programmes related to performance but many firms are awaiting the outcome of Greenbury.

News of the pay rise follows the drying up of some taps during the recent hot water, and requests that customers not use hoses and sprinklers.

The company is said to have average annual bills of pounds 322 a household, the most expensive in the country.

The attack on South West comes as it awaits publication of a Monopolies and Mergers Commission report on its prices. The issue was referred to the MMC after South West rejected new controls on charges proposed by the regulator Ofwat. The report is complete and has been sent to Ofwat, but it may not be published for some weeks.

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