Watergate

WATERGATE

THE GREAT EASTERN REGION WATER CON

i ) EXECUTIVE SUMM ARY

ii ) THE PRO BLEM

i ii ) WHAT I S THE SI TUATIO N I N HARLOW – WATER SUPPLY?

i v) WHAT I S THE SI TUATIO N I N HARLOW – SEWAG E REMO VAL?

v) WHAT I S THE SI TUATIO N I N THE EAST O F ENG LAND?

vi) CO NCLUSIO NS

vii ) RECOMM ENDATIO NS TO GO VERNM ENT

viii ) SO URCES AND APPEN DI X

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EXECUTI VE SUMM ARY

For the last five years, water customers in the Eastern Region have been victims to the great water company rip off:

Directors pay and bonuses are UP. Water bills are UP. Water leakages remain TOO HIGH. Companies are alleged to be AVOIDING TAX.

In this report, Robert Halfon MP reveals that water companies have continued to pay huge bonuses to directors, but bills have continued to increase above inflation.

Anglian Water have seen their profits fall by 5%, increased the average water bill by 15.5%, has a turnover of £1.4 billion and only paid £125 million in tax, but have increased director’s salaries and bonuses by 45%.

Cambridge Water have increased pay outs to directors by 116%, but put up the bills of hardworking families by 14%

Thames Water has increased the average bill by 33% and has put up director’s pay by 33%, despite asking for Government subsidy for their Thames super sewer project.

Customers are unable to choose who their water provider is, and so this problem urgently needs addressing.

Robert Halfon makes a series of recommendations in this report:

1. There should be an immediate inquiry by the EFRA Select Committee into the role of OFWAT, how to increase transparency, and steps that can be taken to reduce how much water companies are charging the consumer.

2. OFWAT must impose tougher targets on water companies so that they are incentivised to reduce leakage, and they must be reviewed more regularly. There must be serious penalties for companies who breach these targets. Ofwat must also push for greater transparency.

3. A windfall tax must be imposed on water companies who consistently raise prices above inflation, without water level leakage decreasing. The money raised must go back to consumers through lower prices.

4. Every customer’s bill must clearly state how much profit a company is making, how much they are reinvesting in infrastructure, the level of their water leakage, how much directors are paid, and what the average bill has increased by across the period.

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INTRODUCT I O N – THE P RO B L E M .

Nationwide, water bills have increased by 12.5% in nominal terms since 20101, and since privatisation of the water

companies in 1989, water bills have increased by 50%.2 Of course, at the time, privatisation was essential. After chronic underinvestment throughout the 1970s and 80s which threatened to make water unsafe, it allowed water

companies to raise the £108 billion that they needed for reinvestment.3 However since then, prices are continuing to rise, there have been allegations of water companies avoiding tax, and company directors are still receiving big bonuses. This has led to strong public feeling, and they are demanding action. Not least can this be seen by a recent change.org petition where 35,000 British people have signed demanding a parliamentary

inquiry into the water companies.4

This report has identified a number of areas where change needs to happen regarding affordability, leakage, pay and tax affairs. Whilst some of this lies specifically outside of the regulator’s remit (for example, Ofwat has no power over how much companies pay their directors), Ofwat still has an important role to play in this. It does appear that since the arrival of Ofwat’s new chairman Jonson Cox 8 months ago that things are changing, with Ofwat saying that they “want water companies to listen to their customers and come up with plans that show how they will meet the challenges facing the sector, such as affordability and long-term sustainability. The changes we

are making to how we regulate will be good for customers, good for the environment and good for the economy”.5

It is important that any future decisions they make takes the following into account:

Afforda b i l i ty

We know that water bills are continuing to increase at a time when people’s wages haven’t risen in real terms since2003.6 Of course, there are some justifiable reasons for these increases, not least a need to invest in infrastructure, but despite bills increasing in some areas above inflation, less water is being supplied and profits are travelling straight to directors’ pockets.7 Customers were also forced to pay for unresolved leakages and flooded houses, and as a result, in some areas, water bills have increased vastly.8

L e a ka g e

This dossier has uncovered that a shocking total of 3.4 billion litres of water is leaking from the system every day;almost a quarter of the initial supply9. Ofwat, the water regulator, despite beginning to make some encouraging

1Jonson Cox, Chairman of OFWAT: h t tp : / / w w w .o f w a t .go v . u k/m e d ia c e n tre / s p e e c he s / p r s _ sp e 201 3 0 305jcr a e . pd f 2 h t tp : / / w w w . p arlia m e n t. u k/ b ri ef i n g - p a p e r s /SN06 5 96 3

George Turner, ‘Money down the drain: getting a better deal for consumers from the water industry’, Centreforum,2013, p. 114 h t tp : / / w w w .c h a n g e .or g / e n -G B/petiti on s / e n d - t h e - gr e a t -w a ter - ri p - o f f A ccessed 19 July 20135 Ofwat, July 20136 h t tp : / / w w w .r e s ol u ti on f o und a t io n .org/ pub lica t io n s /tren d s -w a g e s - a nd - i n co m e s - 2 00 3 - 2 0 08/ 7 Affinity Water personal communication - 21 June 20138 Appendix 29

h t tp : / / w w w . d ail y m ail.c o . u k / n ew s /ar t icl e - 2 1 410 5 9/H os e p i pe - b a n -w o r s t - d r ou g ht- 25 - y e a r s - -w a t e r - c o m p a n i e s - t o l d - n e w- crac kd o w n - l e a k s- t ill - 201 5 . h t m l

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noises under their new chairman, Jonson Cox, has so far done little to incentivise companies to reduce leakages, by keeping water leakage targets largely static.

Thames Water, which supplies Harlow’s sewage removal, leaks 646 million litres of water on a daily basis10, and it has been alleged that they are avoiding cooperate tax.11 Affinity Water’s central region supplies Harlow’s water directly lost 173 million litres daily in 2012/201312 – the most of any water only company according to the Guardian13. However Affinity Water contest these figures (please see Appendix 1). They only intend to reduce this by 20 million litres by 202014.

The statistics for the East of England through Essex and Suffolk Water, Anglian Water and Cambridge Water Plc as a whole are equally as shocking. Although water leakage is reducing, bills are soaring and director’s wages continue to increase.

Furthermore, Ofwat is failing to hold water companies to account regarding leakage levels. Some companies have consistently failed to meet their targets, and it has been reported that more than half of the companies (11 out of21) do not have to reduce leaks at all over the next three

years.15 Where water companies have taken action to improve leakage levels, these are often modest. I am pleased that Ofwat seems to recognise that change needs to happen, and I hope that when the targets are reviewed next year, that they will become a lot tougher.

Director’s P a y

At a time when people are struggling to afford their essentials, the issue of director’s pay and bonuses for those in the water industry have become a hot topic in the press. It is easy to see why: in 2012 alone, Thames Water

directors were paid an astonishing £2,681,000.16 More worryingly, Citizens are paying for the wages of directors even though they fail to do their job properly – an example being Anglian Water, whose profits fell by 5% since 2008, yet their company director’s wages have increased by an astonishing 45%. In fact, the situation has become so bad that Sir Ian Byatt, a former head of Ofwat, has said that shareholder returns are so high that some

companies can no longer afford to fund vital projects.17 Millions of hardworking families across the country have topay for this through increased bills.

10 h t tp : / / w w w .t h am es w a t e r.co . u k/ t w /co m m o n / d o w n lo ad s / a b o u t u s -f i n a n cial/a nnu a l - p e r f o rma n c e - r e p or t - 201 2 - 13.p d f - p.22.11 h t tp : / / n ews . s k y .co m / s t o r y / 1 101 6 7 5 /t h am e s - w a t e r - a v oi d s - p a y i n g - cor p orati o n - tax 12 Affinity Water personal communication - 21 June 201313 h t tp : / / w w w .g u ar d ia n .co. u k/ n ew s / d a t a b log/201 2 / m a y /0 8 / w a t e r - compa n i e s - l e a k s- t a r g et - d r ou g h t 14 Affinity Water personal communication - 21 June 201315 h t tp : / / w w w .t e l e gra ph .co. u k / e art h / d r ou g h t/92509 9 0/H a l f -o f-w a t e r - compa n i e s - n o t- r e q u ir e d - t o- c ut - l e a k s - f igu re s - s h o w . h tml 16 Appendix 2

17 h t tp : / / w w w .i nd e p e nd e n t.co . u k/ n ews / u k/ p olit i c s / w a t e r - c o m p a n i e s - t o l d - t o- s t op- s i ph o n i ng - o f f - c a s h - t o- f or e i g n -

owners-8711796.html

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Due to the nature of our water network, water companies have a monopoly over an essential resource and customers cannot choose who their provider is (although the Water Bill that was presented to parliament following the Queen’s Speech in 2013 will bring more choice and competition for business customers). It is Ofwat who isgiven the task of keeping prices low by setting price limits, but unfortunately prices continue to go up, at a time when customer’s income has been squeezed. As a regulated utility, there is no excuse for high bills, higher wages and higher still levels of water leakage.

Tax Af f a i r s

Like director’s pay, another issue that has been constantly in the public eye is water companies’ tax affairs, allegedly by using corporate borrowing as a way to avoid paying tax. This has had the unfortunate consequence of weakening their credit worthiness. Although the companies involved have denied this, claiming that it is specific Government incentives to encourage them to reinvest in infrastructure, there is clearly a moral dilemma. Is it right that Anglian Water, whose turnover topped £1.4 billion, only pays tax of£125 million?18

Recent comments by the head of Ofwat are revealing. The new Chairman of Ofwat, has emphasized that

customers should be mindful of customer’s perceptions of their financial affairs.19 It is worrying that it almost seems to have become an accepted fact that companies can get away with such actions, particularly ones who offer a vital public service that the customer has no choice but to access. It is now urgent that an inquiry takes place to examine, and ultimately put a stop, to such practices.

WHAT THI S M EANS FOR HARLOW :

WATER SUPPLY

Harlow receives its water supplies from Affinity Water, formerly Veolia Water Central, a subdivision of Veolia which is the largest water-only supplier in the UK with over 3 million customers.

Since 2009 the average water bill from Affinity Water has increased by 16%, from £150 to £174 today (it is worth noting that Affinity Water contests this – please see Appendix 1).

18 w w w . d ail y m ail.c o . u k/ new s / a rticle - 235 0 686 / w a t e r - p o w e r-f ir m s - a v o i d - 1 b illio n - tax - t o r y- m p - d em a nd s - r e b a t e - h ar d - pressed-customers.html19

h t tp : / / w w w .t e l e gra ph .co. u k / f i n a n c e / ne ws bys e ct o r/ u tilit i e s /1 0 109 1 4 0/Wate r - gia n t s - p r o f it s - a nd - ta x- m orall y - questionable-says-Ofwat-boss.html

21 House of Commons Library personal communication - 24 June 2013

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At the same time, the average leak in Affinity Water owned pipes is 173 million litres per day, enough to supply21% of their customers.22 When questioned on this, they argued that whilst they have many future plans in place;

“Approximately one third of total leakage is on the customer side of the stop tap, which is the customers’responsibility.”23

This is the highest leakage level for any water-only company in the country.

As regulator, Ofwat sets leakage reduction targets, these are set at a continuous rate. They were last set by Ofwat in 2009, when they believed that this was the level that leaks could most efficiently be dealt with. For 2011, Affinity’s pre and post assessment of leakage targets differed by just 0.4 million litres per day. They stated:

“We achieved the annual leakage target of 185 Ml/d. Our pre MLE assessment of totalleakage for JR11 was 181.8 Ml/d and the post MLE reported leakage is 181.4 Ml/d.”24

Unfortunately, Ofwat will not review the target again until next year.

The overarching issue here is not high bills, but lenient leak reduction targets set by Ofwat, which does not encourage water companies to reduce their leakage levels. Leakage targets are reviewed by Ofwat every five years, and so there will be no shift until 2015. Surely, these figures should be reviewed more regularly, potentially every two years. Furthermore, Ofwat has identified governance as a key issue in the water industry, and have identified a need to look into water companies’ tax arrangements. I applaud the new leadership of

Ofwat’s tough words on this issue25 – but we need to see action being taken.

WHAT THI S M EANS FOR HARLOW – SEWAG E REMO VAL

Thames Water provides sewage removal for Harlow, and on examining the average sewage bill, an aggressively

steep increase of 33% since 2008 can be seen – from £110 to £14726. The total wages and bonuses package for

Directors has increased more than this – by 32.43% over 4 years to £2,681,00027. Thames Water also tops Ofwat’s chart for worst customer service, and has been at the forefront of allegations about tax avoidance in the media – and have asked for Government funding to support their building of a much needed super sewer in London.

It must be recognised that despite having one of the highest water leakage rates nationally, they have been working to reduce it and are slowly achieving this. Since 2008 their leakage level has decreased by 9.40% from 713

to 646 million litres per day28 – well below their leakage targets from Ofwat29. Furthermore, remunerationpackages are now decreasing; they peaked in 2010 at £3,888,000, an increase of 67.44% in 2 years30.

22 Affinity Water personal communication - 21 June 201323 Affinity Water personal communication - 21 June 201324 h t tp s : / / w ww . a ff i n it y w a t e r.c o . u k/ d oc s /j un e - r e t u r n - 20 1 1. pd f p 12.

25 h t tp : / / w w w .t e l e gra ph .co. u k / f i n a n c e /c o m m e n t/10 1 090 3 3 / Dich o t o m y - b e t w e e n - w a t e r - p r o f it s - a n d - p ric e s- ra i s e s - moral-questions.html

26 h t tp s : / / w ww . o fw a t .g o v . u k/ c o n s u me r i s s u e s /charg e s b il l s / h o u se h ol d / 27 h t tp : / / w w w .t h am es w a t e r.co . u k/ t w /co m m o n / d o w n lo ad s / a b o u t u s -f i n a n cial/a nnu a l - p e r f o rma n c e - r e p or t - 201 2 - 13.p d f 28 h t tp s : / / w ww . o fw a t .g o v . u k/ c o n s u me r i s s u e s /charg e s b il l s / h o u se h ol d /

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In the past two years however, Ofwat has maintained their high leakage targets for Thames Water giving no incentive for further reduction, and as a result in 2012-2013 leakage levels have risen by 9 million litres per day

again31.

As with Affinity Water, it is Ofwat’s targets which need to be examined here in relation to leakage levels, as they appear weak and too lenient year on year. It is good that Ofwat recently conducted their ‘Review of the calculation of sustainable economic level of leakage and its integration with water resource management planning’, but we need action to be taken sooner.

WHAT I S THE SI TUATIO N I N THE EAST O F ENG LAND – WATER SUPPLY?

The East of England as a whole is supplied by several water companies; Thames and Affinity Water as discussed, as well as Essex and Suffolk Water, Anglian Water and Cambridge Water Plc.

In terms of leakage levels, Essex and Suffolk, Anglian and Cambridge Water have made notable progress in reducing their levels. Anglian Water has reduced leakage by 4.78% over 4 years32, Cambridge Water by 10.79%33

and Essex and Suffolk by 13.25%34. One could argue that perhaps this goes some way to explaining the 15% rise in average water bills for Anglian and Cambridge Water customers, but it is difficult to see how it can account for the37%35 rise in water bills for the Essex and Suffolk Water customer over 5 years.

It does seem that Cambridge Water is self-regulating their leakage levels and for this they should be praised. They have not allowed levels to go above the unchanging target set by Ofwat and have decreased leakage by 10.8%

since 2008.36

The same cannot be said for Anglian, Essex and Suffolk Water. In 2010 and 2011 both companies respectively failed their Ofwat targets, Anglian Water quite substantially so. But it should be acknowledged that both have managed to significantly cut water leakage since then. Yet, what is most noticeable about this achievement is how inflexible Ofwat’s water targets are – they did not make the leakage target levels tighter at all; and in the case of AnglianWater, they actually weakened their requirement.

29 h t tp s : / / w ww . o fw a t .g o v . u k/ c o n s u me r i s s u e s /charg e s b il l s / h o u se h ol d / 30 h t tp : / / w w w .t h am es w a t e r.co . u k/ t w /co m m o n / d o w n lo ad s / a b o u t u s -f i n a n cial/a nnu a l - p e r f o rma n c e - r e p or t - 201 2 - 13.p d f 31 See Appendix 232 Anglian Water personal communication: 8th July33 h t tp : / / w w w .o f w a t .go v . u k/ r e g u la t i n g/r e p orti n g/ f or separate annual reports to Ofwat34 Provided by response to written parliamentary question to DEFA: 9th July35 Records from 2008 – 2013: https:// w w w .o f w a t .go v . u k / co nsu me r i ss ue s /char g e s b ill s / h o u s e h ol d / 36 Appendix 4

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As a regulator it is Ofwat’s responsibility to challenge high water leakage rates, and whilst it does this if the level is greater than the target, this report insists that the targets set are not leading to a significant decrease of water leakage levels in the East of England.

In all three companies there has been no tightening of the target levels set as a challenge to leakage levels from Ofwat since they were last reviewed. As previously discussed, this provides no incentive for the water companies to decrease their levels. Ofwat needs to be putting pressure on companies to reduce this, so the customer will no longer need to supplement this in their ever increasing bills.

Furthermore, the vast increase in director’s remuneration packages cannot be ignored: Anglian Water for example has had a 5.1% reduction in profit since 2008, but yet a 45% pay rise for their board of directors to what now is£2.1 million.37 Split between their 8 directors, 6 of whom have been on the board for several years, this wouldequate to a rise from £181,250 in 2008 to £263,375 in 2012, all salaries being equal. We also know that AnglianWater paid no corporation tax on its regulated water business in 2011/12, despite making an operating profit of£492 million.38 Even if this is legal, it certainly raises moral questions, that must be explored.

Similarly in 2010 for Thames Water, the Board of Directors was at its smallest number in 5 years with 11 members,

but incidentally also had its highest remuneration figures, of £3,888,00040 – a 67% increase in wage in two years shared amongst a smaller number of people.

Most interestingly however was Essex and Suffolk Water; between 2008 and 2012 the directors remuneration increased by 34.8%. In the same period, the average water bill for the customer increased from £161 to £217 – that is 34.8%. The implications of this statistic speak for itself.

One must ask what Ofwat has been doing throughout this - although they have no direct responsibility for saying how much directors should be paid, they should continue pushing for further transparency to ensure that the customer is getting value for money.

CO NCLUSIO NS

As the evidence highlights, the leakage levels across the region could be improved, as are all of thedirector’s remuneration packages and price increases across the region.

37 h t tp : / / w w w . an glia n w a te r.co . u k/ ab o u t - u s /a nnu a l - r e p orts/ 38 w w w .g u ar d ia n .co. u k/ bu s i n e s s /2 0 12/n o v / 10 / w a t e r - comp a n i es /t a x

39 h t tp s : / / s t a ke h ol d e r . a ff i n it y w a t e r.co. u k/re p ort s - pub lica t i o n s . a s p x 40 h t tp s : / / w ww .t h a m e sw a t e r . c o. u k/ ab o u t - u s /13 8 7 4 . h tm

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Little is being done to resolve these issues at corporate or regulatory level, with Ofwat setting relaxed leakage reduction targets which are far above many companies’ actual leakage rates. Whilst penalties have been implemented, this is only in the most severe cases and has not affected Affinity Water.

Indeed, the target for reducing leaks for Affinity Water is increasing each year at an even higher rate than the rise in leakages. Ofwat’s targets for Thames Water have at least attempted to minimise leakage over the past 5 years, and have encouraged Thames Water to do so. Ofwat have provided absolutely no incentive for Affinity Water to

reduce their leakage levels and they are consequentially increasing41.

Water and sewage prices for the customer are soaring for the average consumer – with an increase of 16% since2008 for water and of 29% rise in the same period for sewage. These figures raise serious concerns for the consumer and cannot be ignored.

Whilst of course a percentage of this price increases will be invested back into the company, one must still

question any increase in director’s pay, such as Thames Water’s huge 32.43% increase appear minimal.42

£250Ea s t of E ngla n d W a t er a n d S ewage Pr i c es

£200Affinity Water

£150Thames Water

Anglian Water

£100

£50

Essex and Suffolk Water CambridgeWater Plc

£02008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

Most damning perhaps is Essex and Suffolk Water, between 2008 and 2012 both bill prices and directors remuneration increased by 34.8%

Add to this high profit (much of which is driven by cheap interest levels on corporate debt) and excessive bonuses for the directors of both companies, and indeed across the sector, one is left asking what more should be done?

41 See Appendixes 1 & 242 See Appendix 2

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The new Chairman of Ofwat has made some admirable recommendations which would hand back some of the profit to the consumer, and I would hope that these can be examined further and taken up by more companies.

Another favourable idea has been put forward by Ian Byatt, who suggested that payments of dividends above those assumed by Ofwat when setting price limits must be accompanied by reductions in customer bills.43

RECOMM ENDATIO NS TO GO VERNM ENT

I have spoken to Ofwat, and I do recognise that they are trying to make changes. But we must go further, which is why I recommend that the Government do the following:

1. Ofwat should explore how they can encourage prices to be lower, and make this an explicit target at the next price review

2. Customer bills should display on them clearly how much profit a company is making, what their leakagelevels are, how much the average bill has increased or decreased by, and how much they are paying directors to increase transparency.

3. Ofwat should encourage companies to be more transparent when explaining price increases to customers,showing exactly how much they are reinvesting in infrastructure

4. Inquiry into:i. Water companies’ tax affairs, particularly those who are receiving Government investment for

infrastructure projects, e.g. Thames Waterii. Weak leakage targets set by Ofwat, and whether more can be done so that they can be

reviewed more ofteniii. Although Ofwat cannot set director’s pay, look at how they can encourage it to be lower, e.g.

transparencyiv. Look at seeing if a mechanism can be created that will safeguard customers’ interests, and

may be able to return profits to the consumer, particularly when companies are offering big returns to directors and shareholders.

v. Look at how water companies can become more transparent, for example by having mandatory customer representation at board meetings

5. If Ofwat does not impose heavier penalties for companies who perform poorly and pay their directors excessive wages, we recommend that the Government creates a Windfall Tax on such water companies, with profits going towards lowering prices for the consumer.

43 Ian Byatt in CentreForum paper ‘Money Down the Drain’, by George Turner

1

Tot a l D i r e c tors W a g es + B o n us p / a

P r i c e o f a v er a ge wat e r b i l l / £

L e a k a g e l e v el / m i l li o ns of l i tres p e r d a y

L e a k a g e l e v el targ e t as s et by O fwat

2008 £2,322,000 110 713 7552009 £2,128,000 115 698 7152010 £3,888,000 119 670 6852011 £3,227,000 118 665 6742012 £2,681,000 126 637 6732013 - 147 646 673

T o t al i ncrease 3 2 . 4 3 % 3 3 . 6 3 % - 9.4 0 % - 1 0 . 8 6 %

SO URCES AND APPEN DI CES

APPENDI X 1

Affinity Water (Veolia Central Water)Tot a l D i r e c tors W a g es

+ B o n us p/a P r i c e o f a v er a ge

wat e r b i l l / £ L e a k a g e l e v el / m i l li o ns L

of l i tres p e r d a y eakage level target as s et by O fwat

2008 £1,437,000 150 142 1452009 £1,205,000 155 142 1402010 £1,682,000 156 143 1852011 £2,005,000 169 181 :21% of total supply 1852012 £2,829,000 174 158 :19% of total supply 1852013 - 174 173 :21% of total supply 185

T o t al i ncrease 9 6 . 8 8 % 16% 2 1 . 8 3 % 2 7 . 5 6 % Source: House of Commons Library 21 June

NOTE: AFFINITY WATER CONTESTS ALL THE FIGURES ABOVE. They say the figures are:

Year

Total Directors renumeration

Affinity Water Central Region average household bill[1}

Actual leakage Central Region Ml/d Ofwat target Ml/d

2007/08 £982,000 £174 142 145

2008/09 £752,000 £173 142 145

2009/10 £943,000 £179 143 140

2010/11 £477,000 £176 181 (21% of total supply) 185

2011/12 £530,000 £176 158 (19% of total supply) 185

2012/13 £442,000 £173 178 * (22% of total supply) 185

[1] Average household bills are based on data from audited annual returns. Figures are calculated based on appointed turnover and households billed for water. All bills are shown in 2012/2013 prices with RPI financial year average applied. Figure for 2012/13 is for Affinity Water Limited (all regions) following unification of the company in 2012.

* Please note: this figure is different from the 173 million litres per day (Ml/d) previously advised and has been adjusted to reflect the performance report for the year 2012-13.

APPENDI X 2

Thames Water

Source: E-mail from Thames Water, 18/19th July 2013

Tot a l D i r e c tors W a g es + B o n u s

P r of i t f o r f i n a n c i a l y e a r

P r i c e o f a v er a ge wat e r b i l l / £

L e a k a g e l e v el millions of litres per day

L e a k a g e l e v el targ e t as s et by O fwat

2008 £1,100,400.00 125.3 mil 161 68 66

2009 £996,600,00 129.3 mil 168 67 66

2010 £1,172,600.00 143.0 mil 183 67 - failed ofwat target 66

2011 £1,370,700.00 152.7 mil 204 65 66

2012 £1,483,800.00 143.1 mil 217 59 66

2013 - - 221 53 66

Tot a l i n cr e a s e 3 4 . 8 4% 1 4 . 2 1% 3 7 . 2 7% - 13.24% 0.00%

Tot a l D i r e c tors W a g es + B o n u s p / a

to t a l s ta t u tory prof i t a f t er tax

P r i c e o f a v er a ge wat e r b i l l / £

L e a k a g e l e v el illions of litres per d

L e a k a g e l e v el targ e t as s et by O fwat

2008 £1,450,000.00 £311,700,000.00 168 209 210

2009 £1,537,000.00 £317,300,000.00 174 210 210

2010 £1,986,000.00 £345,100,000.00 168 210 212

2011 £2,052,000.00 £266,500,000.00 177 230 - failedofwat target

212

2012 £2,107,000.00 £260,400,000.00 189 199 211

2013 - £295,800,000.00 194 - 211

Tot a l i n cr e a s e 4 5 . 3 1% - 5.10% 1 5 . 4 8% - 4.78 0.48%

Tot a l D i r e c tors W a g es + B o n us p/a

P r i c e o f a v er a ge wat e r b i l l / £

L e a k a g e l e v el /m i l l i o n s of l i tres p er day

L e a k a g e l e v el targ e t as s et b y O fwat

2008 £192,000 114 13.9 - BBC 14

2009 £215,000 116 14 14

2010 £220,000 113 14.2 14

2011 £228,000 118 13.7 14

2012 £415,000 127 12.4 14

2013 £520,000 130 12.4 14

Tot a l i n cr e a s e 1 7 0 . 8 3 % 1 4 . 0 4% - 10.79% 0.00%

APPENDI X 3

Essex and Suffolk Water as Northumbrian Water

Source: Leakage figures confirmed by Parliamentary Written Question 9th

July 2013

APPENDI X 4

Anglian Water

Source: Leakage figures confirmed by Parliamentary Written Question 9th

July 2013

APPENDI X 5

Cambridge Water Plc

Source: E-mail from Cambridge Water, 17th

July 2013

AFFI NI TY WATER PERSO NAL COMM UNI CATIO N 27 JUNE

Leakage data for Affinity Water Central region

“Please note: approximately one third of total leakage is on the customer side of the stop tap, which is the customers‟ responsibility.

Y e a r 2012 - 13 Affinity Water‟s leakage level was around 173 million litres per day, approximately 6% below our leakagetarget and the Ofwat permitted level.This was about 21% of the 816 million litres of water supplied each day.

Y e a r 2 0 11 - 12 Affinity Water‟s leakage level was around 158 million litres per day, approximately 15% below the Ofwat permitted level.This was about 19% of the 831 million litres of water supplied each day.

Y e a r 2 0 1 0 / 1 1 Affinity Water‟s leakage level was around 181 million litres per day, approximately 2% below our leakage target and the Ofwat permitted level.This was about 21% of the 833 million litres of water supplied each day.Please note: there was a change in agreed change in methodology with Ofwat for calculating leakage targets between these years (2010/11 and 2009/10) but the actual leakage was the same.

Y e a r 2 0 0 9 / 1 0 Affinity Water‟s leakage level was around 143 million litres per day, approximately 2% above our leakagetarget and the Ofwat permitted level.This was about 17% of the 829 million litres of water supplied each day.

Y e a r 2 0 0 8 / 9 Affinity Water‟s (Central Region) leakage level was around 142 million litres per day, approximately 2%below our leakage target and the Ofwat permitted level.This was about 17% of the 825 million litres of water supplied each day.”

Affinity Water network investment

“Between 2010 and 2015 Affinity Water will have spent over £370 million maintaining its network toprevent failure and secure supply in its Central region. This is equivalent to over £74 million a year.This £370 million expenditure on maintaining the network represents approximately 39% of total capitaland operational expenditure.”

“O ptions being put f orward in t he Dr af t W at er Resour ces Manag em ent Plan include:

• A drive to reduce leakage significantly, saving 20 million litres per day by 2020

• Major capital investment in water resources, water treatment plants and the distribution network in the five years 2015-2020

• Compulsory metering of all Central Region domestic customers by 2020, following the successfulintroduction of compulsory metering in the company‟s Southeast Region

• Water efficiency initiatives allowing customers to save money on both water and energy bills

• Upgrades allowing the company to deal more effectively with droughts

• Working more closely with other water companies to maximise the use of scarce water resources

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• Catchment management, working with community partners to reduce pollution.

Wr itt en Parli amentary Q uesti on 9 th Jul y 2013

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SO URCES

Affinity Water: Annual Report and Financial Statements 2011:htt ps: // centr al. veolia water. co. uk / docs/ annual -r eport -f inancial- st at ement s2011. pdf

Affinity Water: 2011 return ht t p s : / / ww w . af f i n i t y w ate r. co. u k / d o cs / j u n e - r et u r n - 2 0 1 1.p d f

Affinity Water: 2012 Statement ht t p s : / / ww w . af f i n i t y w ate r. co. u k / d o cs / Ri s k _ a n d _ C o m p li a n ce _S t at e m e n t _ 2 0 1 2 . p d f

Affinity Water personal communication - 21 June 2013

Anglian Water: Anglian Water director remuneration ht t p : / / ww w . a n g li a n w ate r. co. u k / _ a sset s / m e di a/a n g li a n - w ate r- annua l -r e p o r t - 2007 - 8.p d f

Anglian Water: Links to all reports ht t p : / / ww w . a n g li a n w ate r. co. u k / a b o u t - u s / a n n u a l - r e p o rt s /

BBC: Thames Water cooperate tax article ht t p : / / ww w . b b c . co. u k / n ew s / b u s i n e s s - 22844952

Cambridge Water: links to all reports ht t p : / / ww w . camb r i d g e- w ate r . co. u k / h o m e/o u r - p e r f or m a n ce

Charlie Elphicke Articleht t p : / / ce nt r a ll o b b y . p oli t i csh o m e . co m / l ate s t n e w s / ar t i c l e - d e t a il / n e w sar t i c l e/ c h a r li e- e l p hi c k e - m p - w ate r - pr o f i t s - e v ery w h e r e - and - n o t- a - drop - o f-t a x /

Change Petitionhtt p: // www. chang e.org / en-G B/ pet it ions/ end -t he-great- water-r ip- of f

Daily Mail: Leaksht t p : / / ww w . d a i l y m a il . co.uk / n e w s / ar t i c l e- 2 1 4 1 0 5 9 /H os e p i p e - ban - w ors t- d r o u g h t - 2 5 - y e a r s -- w ate r - compan i es - t o l d - ne w - c r a c k d o w n - l e a k s - t ill - 2 0 1 5 . h t m l

Essex and Suffolk Water: Two national awards for leading leakage reduction ht t p : / / ww w . es w ate r. co. u k /m e di a - c e n t r e/319 0 _ 3 8 9 0.aspx

Essex and Suffolk Water: links to all reports ht t p : / / ww w . es w ate r. co. u k / y o u r - h o m e / o ur - p e r f o r m a nc e . as p x

FAME database

George Turner, „Money down the drain: getting a better deal for consumers from the water industry‟,Centreforum, 2013

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Guardian: Levels of water leakage across the sector ht t p : / / ww w . g u a r d i a n . c o. u k / n e w s / d a t a bl o g / 2 0 1 2 / m a y / 0 8 / w ate r - compan i e s - l e a k s -t a r g e t - dro u g h t

Guardian: Water companies not required to cut leaks ht t p : / / ww w . g u a r d i a n . c o. u k / e n v i r o n m e nt / 2 0 1 2/ m a y / 0 7 / w ate r - compan i e s - cu t - l e a k s - 2015 - d r o u g h t

Guardian: Water companies pay little or no tax on huge profits ww w . g u a r d i a n . co. u k / b u s i n e ss / 2 0 1 2 / n o v / 1 0 / w ate r - compan i es / t ax

House of Commons Library personal communication - 24 June 2013

Infracaptial: Consortium buys Veolia Water ht t p : / / ww w . i n f r ac a p i t a l . c o . u k / i n fr ac a p i t a l / n e w s / V e o li a. j sp

Northumbrian Water Group: 2011 annual report ht t p : / / ww w . n w g . c o . u k / N W G _ AR 1 1 . p d f

Ofwat: Average household bills 200-13 https:// ww w . o f w at . g o v . u k / co n s u m eriss u e s / ch a r g e sb ill s / h o us e h ol d/

Ofwat: Acquisition of Northumbrian Water ht t p : / / ww w . o f w at . g o v . u k / i n d ust r y s t r uct u r e/o w n e r s h i p/pap _ co n 2 0 1 1 1 1 1 1 n e su k w ate r . p d f ? d o w n l o a d= D o w n l oad

Ofwat: Links to all reports ht t p : / / ww w . o f w at . g o v . u k / r e g u l ati n g/ r e p o rt i n g/

Ofwat 2008-09: performance of the water companies ht t p : / / ww w . o f w at . g o v . u k / r e g u l ati n g/ r e p o rt i n g/ r p t _ l os _ 2 0 0 8 - 0 9 . p d f

Ofwat 2009-10: performance of the water companies ht t p : / / ww w . o f w at . g o v . u k / r e g u l ati n g/ r e p o rt i n g/ r p t _ l os _ 2 0 0 9 - 10.p d f

Ofwat 2010-12: performance of the water companies ht t p : / / ww w . o f w at . g o v . u k / r e g u l ati n g/ r e p o rt i n g/ r p t _ l os 2 0 1 1 - 1 2 a d dre li a bili t y # d a t a

Ofwat: Performance of water companies in 2009 summary ht t p : / / ww w . o f w at . g o v . u k / p u b li cati o ns/l o s /r p t _ l os _ 2 0 0 9 - 10

Ofwat: Water companies annual June returns, table 10 line 25 Total Leakage ht t p : / / ww w . o f w at . g o v . u k / r e g u l ati n g / j u n er e t ur n /

The Telegraph: Water companies not required to cut leaks ht t p : / / ww w .t e l e g r a p h . c o . uk/ea r t h/ d r o u g h t / 9 2 5 0 9 9 0/H a l f - o f- w ate r- c o m p a n i es - no t -r e q u i r e d -t o - c u t- l e a k s - f i g u r es - s h o w . ht m l

The Telegraph: Water Giants Profits and Tax are Morally Reprehensible says Ofwat Boss

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ht t p : / / ww w .t e l e g r a p h . c o . uk / f i n a nc e / n e w sb y secto r/ uti li t i es/101 0 9 1 4 0 / W a t e r- g i a n t s - p r o f i ts- an d -t a x - m ora ll y - q u e s t i o n a bl e- sa y s - O f w a t - b o ss . h t m l

Thames Water: Financial Report 2012-13ht t p : / / ww w .t h a m es w ate r . co. u k / t w / co m m o n / d o w n l o a ds/abo u t u s - f i n a nc i a l / a n n u al - p e r f o rm a n c e-r e p o r t- 201 2 - 13. pdf

Thames Water: links to performance records ht t p s : / / ww w .t h a m es w ate r. c o . u k / a b o u t - u s / 1 3 8 7 4 . h t m

World Bank: Rates of Inflation ht t p : / / d a t a . w orl d b a n k . o r g/i n d i c ato r / F P . CPI. T O T L . ZG

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