On 1 March I set out the need for water companies to respond to public concerns over executive pay and a number of other practices. The Government fully support Ofwat’s reforms that require water companies to ensure that executive pay is linked to customer service.
The chief executive of Severn Trent earned £2.45 million last year. As a Wrexham customer I have to contribute to that salary, following the hostile takeover of our local water company. Does the Secretary of State, in his new progressive form, agree that Severn Trent should follow the example of the John Lewis Partnership and link the pay of its highest paid chief executives to those within the business who are lower paid?
It will not surprise the hon. Gentleman to know that I am a huge fan of the John Lewis Partnership and the leadership that its executives have shown. This Government and this DEFRA team have taken stronger action than previous Governments and previous teams have done in order to ensure that water companies smarten up their act, that they deal not just with executive pay, but with some of the byzantine financial structures that have not worked in consumer interests in the past, and that they invest more in improving the environment and keeping bills low.
Far too much water in this country is wasted by it leaking out of water pipes. Why on earth can we not link the pay of senior water company executives to their achievement of leakage reduction targets?
Ofwat, the regulator, has been stringent in the steps that it has taken in order to ensure that performance will be linked to pay in the future.
Mr Speaker, may I first join you and others in welcoming back the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Suffolk Coastal (Dr Coffey), to her rightful place at the Dispatch Box?
I am afraid that prior to the “beast from the east” Ofwat made it perfectly clear that it had no interest in taking direct action on executive pay, tax structures or dividends. May I say how delighted Labour Members are that, after months of raising this very issue, Ofwat has finally U-turned on its position? Will the Secretary of State explain why it has taken Ofwat so long to take this action and tighten up the weak regulation that has let customers down so badly?
I am so glad that the hon. Lady welcomes the action that Ofwat is taking. Ofwat has superb leadership and I am four-square behind that leadership in ensuring that we get a better deal from water companies.