Water boss 'mistaken' to keep £1.3m payment secret

Yorkshire Water boss Nicola Shaw said "not being transparent" about receiving payments worth £1.3m from the firm's parent company was a "mistake" but the amounts were "not for me to decide".

Ms Shaw received two previously undisclosed payments of £660,000 from Kelda Holdings in 2023-24 and 2024-25, for her role as an executive director.

The shareholder-funded payments came on top of her Yorkshire Water salary, which totalled £1.7m across the same period.

Asked whether she would reconsider accepting substantial extra payments in future, she said: "I get paid what the board decide I ought to be paid and I think that's right; it shouldn't be for me to decide what that is."

The payments came to light in August, two months after Yorkshire Water and five other water companies were banned from paying "unfair" bonuses to some of their senior executives.

When asked by the BBC if she could understand why the extra payments from Kelda might be seen as "a bit murky", Ms Shaw replied: "I can absolutely understand it feels like it's a lot of money [but] running big organisations, that's what people get paid and that's what the board has been thinking about and what they think is important.

"I do understand that we need to be transparent because we're providing the water and taking away the wastewater for people in Yorkshire and they need to trust us."

She said Kelda had not wanted Yorkshire Water's customers to foot the bill to give her "Kelda level" pay so it approved shareholder-funded payments instead.

She added that extra payments from Kelda would be reported in Yorkshire Water's accounts in future.

In September, the government asked water regulator Ofwat to carry out an urgent review into the two payments.

Environment Secretary Steve Reed told the House of Commons he ordered the inquiry to find out the facts, saying customers were "outraged".

"I will not tolerate any company attempting to circumvent this government's ban on unfair bonuses," he said.

In November, Ofwat stated the payments were outside of its bonus ban as they were classed as parent group payments rather than direct annual performance bonuses.

However, it said it was considering plans to force water firms to report pay received from parent companies.

Ms Shaw had declined a bonus in 2023, before the legislation was introduced, saying it would "not be appropriate" to accept it given Yorkshire Water's pollution record.

The firm had discharged untreated wastewater into rivers for an average of seven hours a day in 2023, with nearly half its storm overflows breaching regulations, according to an Ofwat investigation.

The company was later ordered to pay £40m to address the "serious failures".

But in December 2024, as plans were announced to increase water bills by 41%, Ms Shaw accepted a bonus of £371,000 from the company.

She said the money came from shareholders rather than customers, and the price hike would pay for supply upgrades, reducing sewage discharges and storm overflows.

From January to early September this year, reservoir levels in Yorkshire dropped by nearly two thirds, leading to a second hosepipe ban in three years.

The situation raised questions about water storage, given three of the wettest autumns on record in South Yorkshire have been since 2020.

Ms Shaw said: "Do we need to have a look again to see whether we might need a reservoir? I think yes, so we're about to start that process.

"We need to look at all of our forecasts again because, as you say, things are changing, and it's not just they're changing; it's they're less predictable."

However, she said a new reservoir would not "sort short-term problems", adding that they take enormous" planning and can be "very costly", noting Anglian Water's two new reservoirs would cost more than £4bn.

The last reservoir built in Yorkshire was Grimwith in 1983. Since then, the population relying on Yorkshire Water's supply has risen by about 750,000.

Ms Shaw said water was easier to transport now which, combined with other water sources like boreholes, "makes a huge difference to our resilience".

More boreholes were in the process of being built, she said, and the company was considering alternative storage options like old coal mines.

"We are working really closely with the local authorities in all areas, to try and make sure we have the water and the wastewater services that people need," she said.

Earlier this year, Yorkshire Water said the fees paid to her by Kelda reflected the "critical importance of the work during this period that was led by Nicola in securing long-term investment".

It said her work for the parent company included "investor engagement, financial oversight, and management".

Cat Hobbs, director of public ownership campaign group We Own It, described Ms Shaw's pay as an "absurd level of salary" and called the Kelda Holdings payments as "disgraceful".

"It is time for water companies to work for households and the environment instead of a handful of shareholders and overpaid bosses," she said.

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