Committee publication · Correspondence · 10 June 2025

Correspondence from Nicola Shaw, CEO, Yorkshire Water, regarding Reforming the water sector inquiry, dated 3 June 2025

From: Environment, Food and Rural Affairs Committee

Summary

Yorkshire Water CEO Nicola Shaw responds to parliamentary inquiries on remuneration, dividend policies, asset replacement rates, water poverty, and data transparency. The letter details remuneration committee governance, dividend alignment with regulatory condition P30, £4.3m advertising spend over five years, asset replacement strategies for AMP8, water poverty forecasts of 13.6–16.8%, and participation in open data initiatives.

Key findings

Remuneration Committee comprises independent non-executive directors excluding executive directors; policy includes fixed pay, short-term variable bonuses, and three-year long-term incentive schemes aligned with UK Corporate Governance Code.
Dividend policy tied to regulatory condition P30, requiring Board review of company performance, service delivery, and financial resilience before declarations; policy evolved over five years to respond to Ofwat guidance.
Yorkshire Water spent £4.3m on advertising over five years (major costs from COVID-19 and 2022–23 drought response); no legal action taken against Ofwat, Environment Agency, or Drinking Water Inspectorate.
Water poverty in Yorkshire region forecast at 13.6% (313,000 households) in FY26 and 16.8% (386,000 households) by FY30; company increasing bill support to £375m in AMP8 (vs £115m in AMP7) and targeting 50,000 low-income households for meter conversion.
Company leads Stream open data initiative, publishing drinking water quality, reservoir levels, and storm overflow maps; participates in WaterUK open data strategy with near-live sewer discharge monitoring.

Tone

Procedural

Topics

water-sector-governanceexecutive-remunerationwater-povertyasset-managementdata-transparency

Key actors

Nicola Shaw (CEO, Yorkshire Water), Alistair Carmichael MP (Chair, EFRA Committee), Wendy Barnes (Chair, Remuneration Committee), Vanda Murray (Independent Chair, Yorkshire Water), Ofwat, Environment Agency, Frontier Economics, Stream (water data initiative)

Notable line

“… continuous performance improvements cannot be efficiently and sustainably achieved through a continuation of historic asset management approaches.”

Key Quotes

“The membership of our Remuneration Committee is made up of non-executive directors, who are selected by our Nomination Committee. The executive directors on the Board (Chief Executive and Chief Finance Officer) do not have a say in the membership or decision-making of the Remuneration Committee.”
— Nicola Shaw · Explaining governance of remuneration committee structure

“Our policies for paying dividends align with the principles of condition P30 in our Instrument of Appointment. These principles are that: • Dividends declared or paid will not impair our ability to finance the business …”
— Nicola Shaw · Outlining dividend policy principles

“For clarity, we have not advertised against Ofwat, the EA or the DWI over the last five years.”
— Nicola Shaw · Clarifying company position on controversial advertising spend

“We are concerned that the level of expenditure required to meet environmental objectives is limiting the expenditure that Ofwat is allowing water companies to increase asset replacement rates through base maintenance expenditure.”
— Nicola Shaw · Expressing concern about AMP8 funding constraints for asset replacement

“In 2025, using the above calculation, they forecasted the level of water poverty in FY26 at 13.6% (313,000 households) and 16.8% (386,000 households) by FY30”
— Nicola Shaw · Reporting water poverty projections for Yorkshire Water region

“In the next 5 years we are significantly increasing the level of help to customers to the value of over £375m worth of water bill support”
— Nicola Shaw · Describing expansion of customer bill support in AMP8

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Source · parliament.uk record ↗