22.10.96

Utility bosses' pay rises three times faster than average

By Jon Hibbs, Political Correspondent

LABOUR fuelled the controversy over the remuneration of privatised utility bosses yesterday by releasing a survey showing that executive pay packages rose three times faster than average earnings last year.

The biggest increase went to Keith Henry, the chairman of National Power, the value of whose salary package rose by 74 per cent to £782,555.

Appointed on a basic salary of £325,000 in February 1995 with no previous experience of the industry, he has received a performance-related bonus of £110,000, benefits worth £12,855 and pension contributions of £334,000 in the past year.

Other big rises were taken by Brian Staples, the chief executive of United Utilities, whose remuneration package rose by 58 per cent to £404,900, Mike Hughes, the chief executive of Midlands Electricity, who had a 20 per cent increase, and John Collier, chairman of Nuclear Electric, whose pay rose by 18 per cent.

The figures, taken from company annual reports, include taxable benefits, performance bonuses and pension contributions as well as salary. Labour said they showed that the Conservatives had failed to tackle executive excess, and self-regulation by the industry had not curbed abuse.

However the survey does indicate some examples of corporate restraint with a handful of senior executives taking a pay cut in 1996. The biggest reduction was felt by M J Kersey, chief executive of London Electricity, who saw the value of his pay package plummet by 20 per cent to £220,000.

Sir Iain Vallance, chief executive of British Telecom took only a one per cent increase last year. However, Labour pointed out that his new salary of £703,539 still represented an increase of more than 730 per cent on the pre-privatisation equivalent.

Cedric Brown, the chief executive of British Gas, whose remuneration sparked the original row over so-called "fat -cats " in the privatised utilities, enjoyed a four per cent increase.

The survey shows that top salaries in the 21 utility companies rose by 10 per cent overall last year, compared with a 3.3 per cent rise in average earnings.

Labour intends to step up its campaign against excess in the privatised utilities to demonstrate that they can afford the party's proposed windfall tax.

Alan Milbourn, a shadow Treasury spokesman, said: "The windfall gains made by a few show that the utilities can afford a windfall levy that will help the many."