Committee publication · Correspondence · 18 June 2025
Correspondence from Heidi Mottram, CEO, Northumbrian Water regarding Reforming the water sector inquiry, dated 9 June 2025
From: Environment, Food and Rural Affairs Committee
Inquiry: Reforming the water sector
Summary
Heidi Mottram, CEO of Northumbrian Water, responds to the Environment, Food and Rural Affairs Committee's inquiry into water-sector reform. The letter addresses remuneration policy, advertising and legal expenditure, asset replacement funding, water poverty initiatives, and data transparency. Mottram defends the company's practices while acknowledging systemic issues around asset replacement rates and calling for increased regulatory focus on asset health.
Key findings
- Northumbrian Water was the only water company not to receive adjustment in Ofwat's annual review of executive performance-related pay and was highlighted for best practice in target setting and transparency.
- The company spent £872,000 on advertising in 2024/25, primarily on public interest messages; legal costs of circa £600,000 related to a civil emergency appeal (Storm Arwen) between 2021–2024.
- Current asset replacement rates allow replacement of less than 1% of 26,000 km of water mains and 0.5% of 30,000 km of sewers annually, implying unrealistic asset lives of over 600 years for water and 1,000 years for sewers.
- Ofwat's PR24 Final Determination prescriptively requires 38% of water capital maintenance allowances be spent on replacing water mains, which the company argues conflicts with risk-based asset management best practice.
- Water poverty measure reduced from 15.27% (2022/23) to 13.78% (2024/25); company is increasing support for struggling customers four-fold in 2025–2030 period with £20m shareholder contribution.
Tone
ProceduralTopics
Key actors
Heidi Mottram, Northumbrian Water Group Limited, Alistair Carmichael MP, Environment, Food and Rural Affairs Committee, Ofwat, Competition & Markets Authority, Environment Agency, National Audit Office, Defra
Notable line
“… replacement rates for assets may not be sufficiently high, and we agree with that assessment.”
Key Quotes
“… we were the only water company not to receive any adjustment in Ofwat's annual review of executive performance-related pay last year and were highlighted by Ofwat for our best practice”
“These renewal rates imply unrealistic and unsustainable asset lives of over 600 years for water assets and over 1000 years for sewers.”
“Ofwat's approach forces companies to undertake certain volumes of replacement for very specific asset groups even if that is not in customers interests.”
“… our approach for the 2025-30 period includes a four-fold increase in the level of support for customers struggling to pay their bills and a direct £20m contribution from our shareholders”
“Northumbrian Water is committed to transparency and to playing its part in rebuilding public trust in the sector.”
Source · parliament.uk record ↗