Ofwat examines £1.3m paid to Yorkshire Water boss via offshore parent company

The Guardian

6 days ago

The water regulator is scrutinising payments worth £1.3m made to the boss of Yorkshire Water via an offshore parent company, after the Guardian revealed the existence of the extra money.
A government spokesperson said that Ofwat, the watchdog for England and Wales, would 'assess' the payments to the utility's chief executive, Nicola Shaw, to ensure they complied with rules banning bonuses for water company bosses.
Shaw received pay of £1.3m from Yorkshire Water's parent company, the Jersey-incorporated Kelda Holdings, between April 2023 and March 2025. The company only revealed the size of the pay packets after the Guardian raised questions about the ability of MPs and billpayers to scrutinise the sums awarded.
A Yorkshire Water spokesperson said it complied fully with Ofwat's requirements on pay disclosure and bonus payments, and that the extra payments relating to work for Kelda Holdings were paid by shareholders, not billpayers.
Executive pay at water companies has come under close scrutiny in recent years amid widespread public anger over sewage overflows into Britain's rivers and seas. That prompted the government to first ban water companies from using money from customer bills to pay bonuses, and then to ban bonuses for the chief executives and finance bosses of companies responsible for serious environmental pollution.
Yorkshire Water, which was allowed to raise average annual household bills by 41% to £607, was one of the six companies banned from paying bonuses. However, the extra money paid by Kelda Group meant that Shaw still made more than £1.3m during the 2024-25 financial year – nearly double the salary reported by Yorkshire Water Services, the subsidiary regulated by Ofwat.
The Department for the Environment, Food and Rural Affairs said: 'We are aware of these payments, which Ofwat are currently assessing as a matter of urgency.
'Undeserved bonuses for water company bosses have now been banned as part of the government's plan to clean up our rivers, lakes and seas for good. Any instances of companies trying to circumvent the new rules are completely unacceptable.
'The government will leave no stone unturned in clawing back any payments if found to be against the rules.'
However, a person with knowledge of Ofwat's thinking has suggested that the payments are not likely to contravene rules that are narrowly focused on 'performance-related' pay – meaning remuneration that does not change from year to year would not be banned.
Ofwat has previously raised concerns about the use of offshore corporate structures by water companies, pushing for several of them to close subsidiaries in the Cayman Islands jurisdiction. Ofwat's bonus rules would ban performance-related pay even from offshore parent companies, but non-variable fees are not likely to be covered.
Yorkshire Water declined to provide the accounts for Kelda Holdings, which are not publicly available, so it is unclear how the payments were explained.
A spokesperson for the utility previously said the fees of £660,000 a year had been 'introduced from 1 April 2023 and have remained the same for both years'.
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The spokesperson added that the fees were in recognition of 'work for the benefit of the Kelda Group', including 'promoting long-term financial investment in the Yorkshire Water business as well as investor engagement, financial oversight, oversight of the Kelda group as a whole and regulatory compliance'.
The revelation of Shaw's extra pay has provoked anger from campaigners. The Ilkley Clean River Campaign has written to Vanda Murray, the chair of Kelda Holdings and Yorkshire Water, suggesting that the extra payments from Kelda Holdings undermined a gesture made by Shaw when she publicly turned down a bonus in May 2023 – a month after the offshore payments had been quietly introduced.
In June 2023 Shaw said she would forgo a bonus of between £600,000 and £800,000, saying, 'I get why people are angry – seeing sewage in our rivers and seas isn't right.'
Shaw joined Yorkshire Water in May 2022, after a senior job at the National Grid and as chief executive of the High Speed 1 railway line. Including the offshore company payments, she has been awarded £3.8m in total pay over three years.
Ilkley is a picturesque Yorkshire spa town whose river, the Wharfe, was granted bathing water status in 2020, although persistent pollution has threatened that designation. The campaigners, led by Prof Becky Malby, wrote: 'It appears that the payments from Kelda Holdings bring Ms Shaw's salary to the level she would expect if she had taken her bonuses.'
'To the customer the additional payments to Ms Shaw look like a way of 'working around' the fact that bonuses were causing public outrage and subsequently banned by government. There is in effect no change to eye-watering salaries at the top of Yorkshire Water.'
Yorkshire Water declined to comment further.