Committee publication · Correspondence · 10 June 2025
Correspondence from Louise Beardmore, CEO, United Utilities, regarding Reforming the water sector inquiry, dated 3 June 2025
From: Environment, Food and Rural Affairs Committee
Inquiry: Reforming the water sector
Summary
Louise Beardmore, CEO of United Utilities, responds to the Environment, Food and Rural Affairs Committee's inquiry into reforming the water sector. She addresses remuneration and dividend policies, asset management, water poverty, legal disputes, advertising spend, and data transparency. United Utilities emphasizes governance compliance, shareholder-funded performance pay, asset stewardship balancing replacement with operational optimization, and £525 million in affordability support (2025-30) to help customers in water poverty.
Key findings
- Executive performance pay is 69% performance-related and 52% long-term; 75% of annual bonuses and 50% of long-term incentives are linked to customer and environmental delivery; all performance-related pay is funded by shareholders, not customers.
- Dividend policy complies with Ofwat licence condition P; the board did not pay dividends in 2020/21 during COVID-19; base policy is 4% nominal return on shadow RCV equity, with outperformance distributions capped at 21% of outperformance earned.
- United Utilities has not brought legal action against Ofwat, Environment Agency, or Drinking Water Inspectorate in the past five years; spent approximately £1.8 million per annum on advertising over five years, primarily on local TV and radio to promote water efficiency and bill support schemes.
- During AMP7 (2020-25), asset replacement was balanced with operational interventions and rehabilitation; major investments included £200m+ on aqueducts, £86m on dynamic network monitoring, and £500m+ on water and wastewater treatment works; AMP8 (2025-30) will increase asset replacement, especially targeting 2% of water network and 245km of sewer rehabilitation.
- Currently supporting 380,000 customers (1 in 9) with water bill assistance; aims to reach 1 in 6 by 2030 through £525m total support package (£200m from shareholders); in 2024, schemes lifted 34,000 households out of water poverty; acknowledges full elimination of water poverty unlikely without broader social tariff reform and government data-sharing on low-income households.
Tone
FactualTopics
Key actors
Louise Beardmore, United Utilities Water Limited, Alistair Carmichael MP, Ofwat, Environment Agency, Drinking Water Inspectorate, Information Commissioner's Office, Customer Council for Water
Notable line
“… all performance related pay outcomes must be paid for by shareholders, rather than by customers.”
Key Quotes
“It is central to our approach that overall performance for these key stakeholder groups substantially influences executive performance related pay outcomes.”
“We are very conscious that performance related pay and bonuses in the water sector are facing growing scrutiny from the public and media. As a result, as well as ensuring we set robust and stretching targets each year, we have also taken the decision that all performance related pay outcomes must be paid for by shareholders, rather than by customers.”
“Our board has an established dividend policy 7 , which complies with or exceeds Ofwat's updated licence condition P requirements and historic Ofwat guidance.”
“United Utilities has not brought any legal action against Ofwat, the EA or DWI in the last 5 years and nor has it appealed Ofwat's price reviews.”
“… we acknowledge that the scale of support we can offer is not sufficient to fully address the root causes of water poverty in the North West. Fundamentally, this is driven by the extent of poverty and deprivation in the region.”
“In 2024, we projected that without our affordability schemes, 274,000 households would spend more than 5% of their disposable income on water. Our support efforts directly resulted in 34,000 households being lifted out of water poverty entirely.”
“We have long advocated for broader reform of social tariffs. The industry needs large scale social tariff reform that goes beyond innovation around existing tariffs.”
Source · parliament.uk record ↗