Government insiders yesterday made clear their anger at the decision of Yorkshire Water to ignore pleas from Gordon Brown, the Chancellor, for wage restraint.
"The Chancellor has made it clear on numerous occasions the need for wage responsibility in the private as well as the public sector," a Treasury spokesman said.
Yorkshire Water first outraged its 2.5 million customers by failing to maintain supplies in a 15-month "drought" in 1995. It later warned customers they faced being cut off if they had a bath.
But the just-published annual report claims standards have improved significantly and directors are being rewarded as a result.
Kevin Bond, the 47-year-old chief executive, has been awarded an extra pounds 55,000 on top of his basic salary of pounds 185,000. He also received benefits worth pounds 58,000, making a total package of pounds 298,000.
The managing director, Jonson Cox, received a bonus of pounds 41,000 in addition to his pounds 135,000 salary and pounds 16,000 benefits. The finance director, James Newman, who only joined on 5 January this year, was given a pounds 10,000 bonus for his work to 31 March. Staff have been awarded pounds 432 profit-related pay.
But Yorkshire's 2.5 million customers have been less lucky. In February, the company announced price increases of 8.1 per cent for unmetered homes and 6.1 per cent for those with meters.
Prices for the last year were kept at inflation rate by the water regulator Ofwat as a penalty for the previous "drought".
The directors' bonuses announced by Yorkshire Water come amid growing concern about inflationary pay rises.
High wage rises in the private sector was one of the factors specified by the Bank of England for the recent interest rate rises. And a Treasury spokesman said the Chancellor's view was clear: "This month's pay rise is next month's mortgage rate rise."
But a Yorkshire Water spokesman said their policy on directors' remuneration packages was set after a detailed review. It was the market average for equivalent jobs in the sector.
"It is important that the company attracts and retains the right calibre of director," he said. "This is in the best interests of both customers and the standard of service they receive and of shareholders in relation to returns that they receive." Standards had improved, he said. Although Yorkshire Water received more than 8,000 complaints in the year to March, this was a reduction from 13,000 in 1996-7.
However, more people are complaining directly to Ofwat, which will next week report a 12 per cent increase in the numbers of Yorkshire Water problems it has been asked to investigate.
A Department of Trade and Industry spokesman said they were examining the possibility of a clampdown on salaries in the privatised industries.
The Green Paper on the utilities published earlier in the year suggested ministers might want to investigate linking the pay of the boards of the privatised utilities more closely with customer standards.Reuse content