Richard Ackroyd

Introduction

The Current Chief Executive of Scottish Water, "Richard Ackroyd was appointed as Chief Executive on 25 March 2008 and has twenty years experience in the water industry. Prior to joining Scottish Water Richard had been Director of Regulation and Investment at Yorkshire Water since 1996 with, amongst other issues, responsibility for regulatory matters and investment programmes. Richard was also Chairman of Water UK from 2006 to 2008. He is a solicitor by profession and has previously been Head of Legal Services for Yorkshire Water following a period in private practice" .

It is said that Richard Ackroyd's style of management is less conducive to partnership working with the employees of Scottish Water than that of his predecessor, Jon Hargreaves. On November 27th 2008 Scottish Water staff took industrial action for the first time in a number of years. The workers justified their action by the forced imposition of a pay offer and the resultant wihdrawal of Scottish Water from the ongoing pay negotiations. The offer itself was a 2.4% increase, whilst inflation is currently running at nearer 5%, this alongside the manner of the offer was unacceptable to the the members of the three Unions in the water industry.

Its apparent that this unrest mark a new phase in the short 6 year history of Scottish Water. Richard Ackroyd is apprently 'regretful but unperturbed' . Mr Ackroyd's remaining unperturbed is rather perturbing for the Scottish Public and indeed the workers. Especially since the early stages of Mr Ackroyd's reign as Chief Executive seem to have corresponded with an end to partnership working and industrial unrest. In addition industrial action could lead to Scottish Water failing or sliding down the table of Overall Performance Assessment (OPA) scores (the arbitariliy set of performance indicators set by the Water Industry Commission for Scotland). If they did so this would undoubtedly lead to louder calls for a change in the ownership model of Scottish Water; more than likely the calls would be for mutualisation. This, at least, is an issue familiar to Mr Ackroyd, see below.

Executive Pay

Richard Ackroyd himself earns £260,000 per annum, before bonuses. He is entitled to a 40% bonus, which would taker him nearer to an annual pay packet of £400,000. Even before bonuses this makes Richard Ackroyd the highest paid public servant in Scotland. As a body Scottish Water pays more, to it executive directors, than any other public body. The other three Directors in question, Geoff Aitkenhead, Chris Banks and Douglas Millican earned £243,000, £229,000 and £261,000 respectively in 2007/08 .

The Non-exec Chairman of Scottish Water Ronnie Mercer defended these large salaries to the Transport, Infrastructure and Climate Change Committee of the Scottish Parliament. He said,

"Scottish Water's board does not set the salary levels for its directors; the salaries are set by the Scottish Government. In 2006, the Scottish Government went through an exercise to look at comparators, benchmarking and so on. At the end of that year, it made decisions about the salary levels and bonuses. We got notice from it saying, "Here is what you can do," and that is exactly what has been done. Since then, everyone in the company has been under the public sector pay guidelines. Before that, they were also under them. They are set by the Scottish Government.

At that time, I was interim chairman, and the non-execs on the board and I were very pleased that the Government had done that, because it let us keep some people whom it was vital to keep and to recruit where we need to recruit. We had already lost half the board at that point. I did not know that I was going to be carrying on as chairman but, when the decision about salary levels was made, I welcomed it. I would rather have criticism of what the executive directors earn and have them here doing the job that you can see is being done than have no criticism and not have the people to do that job. The levels are set by the Scottish Government. You can follow the audit trail and see the benchmarking that was done. Ministers made the decision and then notified us, and it was carried out to the letter" .

Mr Mercer himself earns £90,000 per annum. He works 2 days per week for his salary .

Background and experience

Richard Ackroyd served as Director of Capital Investment and Regulation at Yorkshire Water Services. The experience gained there could prove invaluable at Scottish Water. The Mutualisation of Scottish Water is, and has, persistently been mooted by various parties, as an ownership model that should be considered seriously for Scottish Water. Richard Ackroyd was very involved in preparing the (doomed) Kelda plan to mutualise Yorkshire Water, which they owned. In short, he has previous experience in preparing a utility for mutualisation. So much so, he was to become the Managing Director of the Mutual company, had it successfully mutualised.

According to David Hall and Emmanuelle Lobina in 2001 "Kelda would realise £2.4bn – more than five times the 1989 purchase price – from the sale of the water business’s assets built up by generations of taxpayers and consumers. This would have enabled Kelda to pay back YW’s existing debt and that of the other subsidiaries, and return up to £1bn to shareholders. This is more than twice the value of their original investment, and comes on top of the £350m paid out in dividends thus far. And this would still have left enough cash for further acquisitions. Free of the regulated business, Kelda could pursue its declared objective of ‘focusing aggressively on shareholder value’”. They go on to write how "Local reaction was hostile.... The local Yorkshire newspaper, the Northern Echo, said in a leader: "Yorkshire Water has amassed colossal debts, the core water supply business is struggling to make profit and the share price is depressed. The directors' answer to the mess they have created is to give the business back to the public. Having milked it dry with excessive dividends and excessive wages and share options for themselves, they are walking away. And even then they have the nerve to want to continue to run the company - no doubt at a profit - saddling the public with the pounds 1.4bn debts they have left behind. The effrontery of these directors beggars belief. As one union leader put it yesterday: "The time has obviously come when the pigs have had their feed at the trough and there is nothing left." The Government must not allow Yorkshire Water's proposals to go ahead as outlined yesterday. While the concept of public ownership of a vital economic resource is laudable, the prospect of Yorkshire Water profiting from its catalogue of failures is not."

The proposal was rejected by the regulator. Ofwat explained the decision was due to the fact that Kelda's plans failed to: "set out clearly how customers would benefit from the change in ownership" (by contrast, shareholders would certainly gain); "properly inform Yorkshire Water's customers about the proposals and consult with them" (eg inform customers about the financial consequences of the proposal); "ensure that the Drinking Water Inspectorate and Environment Agency are able to enforce the required quality standards" (there would be a risk "of confusing liability for environmental damage and asset failures"); "demonstrate clear independence between the proposed mutual and Kelda .

For the plan of Kelda's to mutualise Yorkshire Water see reference below

Links and Affilliations

Richard Ackroyd is due to speak at a so-called 'influencers dinner' hosted by the Scottish Council for Development and Industry (SCDI) and co-sponsored by Morrison Construction at Inverness in January 2009 .

Scottish Water, through Water UK is a member of the National Joint Utilities Group (NJUG).