Pay bonanza for privatised utilities' bosses

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The Independent Online
The salary bill for Britain's privatised boardrooms has risen by pounds 25m since the companies left the public sector.

New research reveals the huge pay bonanza enjoyed by the directors of the privatised companies, reopening the row about "fat-cat" salaries.

The new study extends far wider than a few chairmen and chief executives and takes in the pay of all utility directors, including non-executives. This shows the wage bills of the utility boards have risen from a total of pounds 5.2m when they were nationalised to pounds 30.5m post-privatisation.

This compares with a rise in average earnings over the past decade, from pounds 184.70 in 1986 to pounds 352 today. While average pay has not even doubled, utility boardroom salary bills have climbed six-fold over, in some cases, a far shorter period.

In all, 215 directors are sharing the pounds 30.5m, giving them average remuneration of around pounds 150,000.

The research shows that the biggest gains are not confined to those companies which have attracted "fat-cat" headlines in the past year. Among those heading the charge is Yorkshire Electricity, where the directors' pay packet has soared from pounds 167,000 before privatisation to pounds 1.1m after.

Likewise, Eastern Electricity directors are paid a total of pounds 1.2m more than before their company was privatised.

The figures do not include share options, but they cover salary, taxable benefits, performance bonuses and pension contributions. When options are added in, they would be even higher.

In a league of their own are the two giants, British Telecom and British Gas. When they were state-owned their boardrooms each cost less than pounds 500,000. Today, their boards earn millions of pounds. BT directors have seen their total remuneration go up from pounds 489,000 to pounds 3.4m, while at British Gas their pay has increased by a similar proportion, from pounds 495,000 to pounds 3.4m.

The study, which was carried out by Labour, will provide further ammunition for the party's argument for a utility windfall tax. Alan Milburn,Labour's Treasury spokesman, said: "The Tories have failed to stamp out boardroom excess in the privatised utilities. Abuse in the privatised boardrooms is a modern form of highway robbery, taking from the many to finance the excesses of the few. The windfall gains made by a few fat cats show the utilities can well afford a levy to help the minority."

Mr Milburn added: "Consumers are paying the price of abuse in the form of higher bills and poorer service. These latest figures show that voluntary self-regulation agreed after the Greensbury Committee report is simply not working."

Directors' remuneration in the privatised utilities

No. directors Board pre-privatisation Board 1996

British Telecom 13 pounds 489,000 pounds 3,487,000

British Gas 12 pounds 495,000 pounds 3,413,000

Regional Water Companies:

Anglian 11 pounds 345,000 pounds 814,000

Severn Trent 10 pounds 397,000 pounds 1,249,900

Southern 9 n/a pounds 857,000

South West 11 pounds 106,000 pounds 947,000

Thames 9 pounds 103,000 pounds 1,051,000

Wessex 10 pounds 159,000 pounds 682,000

Yorkshire 11 pounds 214,000 pounds 874,000

Total 71 pounds 1,324,000 pounds 6,474,900

Regional Electricity Companies:

East Midlands 8 pounds 185,000 pounds 1,297,971

Eastern 11 pounds 422,000 pounds 1,620,971

London 10 pounds 228,000 pounds 1,055,000

Midlands 9 pounds 200,000 pounds 982,000

Northern 8 pounds 200,000 pounds 1,336,000

Norweb(united Utilities) 10 pounds 250,000 pounds 920,000

South Wales (Hyder) 10 pounds 476,000 pounds 1,005,000

Southern 8 pounds 185,000 pounds 1,100,000

Yorkshire 11 pounds 167,000 pounds 1,111,300

Total 85 pounds 2,313,000 pounds 10,427,271

National Power 14 pounds 646,000 pounds 3,088,807

Powergen 11 n/a pounds 2,015,901

National Grid 9 n/a pounds 1,688,000

Utilities Total 215 pounds 5,267,000 pounds 30,594,879

Remuneration includes salary, taxable benefits, performance bonuses & pension contributions. Not options