ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2010

Business review

Employees

United Utilities recognises that its business is only as strong as its employees and their collective commitment to achieving business goals. In light of this, the group aims to create a rewarding place to work, with a focus on health and safety, providing employees with a work-life balance and the chance to make a contribution to the communities in which they live and work.

Health and safety

In 2009/10 United Utilities further consolidated the health and safety management framework throughout the business. During the year the group appointed a director of health, safety, risk and security to drive further improvements and to lead the integration of these key risk areas in the business.

The reported accident incidence rate per 100,000 employees (injuries causing an absence of greater than one day) increased from 778 to 801. The marginal rise in ‘lost time’ accidents was partly as a result of the extreme winter weather in December and January. Although the rate is below the industry sector rate published by the Health and Safety Executive, the group has plans to halve this number during the next five years. The reported accident incidence rate per 100,000 employees for the group’s contractors is 1,247.

United Utilities received a number of Royal Society for the Prevention of Accidents (ROSPA) awards for occupational health and safety in both the regulated water and non-regulated utility outsourcing businesses. The annual ROSPA awards recognise the significant improvements made during the last 12 months in establishing effective safety management systems and improving accident performance. Parts of the non-regulated business have followed the lead of the regulated business by gaining accreditation to the OHSAS 18001 H&S Management Standard.

The health of the group’s employees is vital. United Utilities offers a number of employee benefits related to health including lifestyle health assessments, health surveillance and counselling services. The group appointed a new occupational health provider during the year to help improve these services and believes that its wellbeing programme supports the current Health and Safety Executive strategy.

Employee engagement

The group places a strong emphasis on increasing employees’ engagement. This is measured annually and then acted upon to improve how employees feel about United Utilities and strengthen their understanding of its direction. Improving engagement is a key personal objective for leaders. In terms of its engagement index, although the company is scoring above the UK average in six of the 13 key categories, overall engagement fell by nine per cent. Targeted action plans will be put in place to make improvements in key areas.

Workplace environment

Team and personal objectives are linked to the group’s vision, strategy and company objectives, allowing employees to recognise their contribution towards achieving business goals. Monthly performance updates, briefings and team talks enable employees to hear and discuss how the business is performing. A talent and skills development programme helps create a flexible and skilled workforce, which is critical to the group’s ability to deliver improved services.

The group’s policies on maternity, paternity, adoption and annual leave go beyond its legal obligations as an employer and play an important part in encouraging motivation and building loyalty to the company. The business principles make it clear that United Utilities seeks to act with integrity and fairness and observe legal requirements. Any employee with concerns that the company may not be adhering to these principles is encouraged to speak up via their manager or by calling a special telephone number in confidence. Key policies, which employees need to be aware of, are available on the intranet and promoted through new employee induction sessions. Managers benefit from an advice and guidance service which seeks to ensure they manage their employees in line with the correct procedures.

The company is committed to fulfilling its obligations in accordance with the Disability Discrimination Act 1995 and best practice. As an equal opportunities employer, equal consideration is given to applicants with disabilities in the employment criteria. The business will modify equipment and practices wherever it is safe and practical to do so. Evidence of this is reflected in the retention of the ‘double tick’ positive disabled people award.

More than 92 per cent of employees are members of company pension schemes, which include defined benefit (now closed to new members) and defined contribution schemes. United Utilities also operates an open flexible benefits scheme, allowing employees to choose benefits which suit their personal needs through salary sacrifice.

United Utilities and its trade unions work together under an employee relations framework to ensure positive working relationships. Throughout 2009/10, that approach was used to positive effect in terms of consultation around the pay review and changes made to the defined benefit pension scheme.

In February 2009, United Utilities brought a number of outsourced activities back in-house. The full impact of this is reflected in the higher average headcount for 2009/10.

Number of employees (full-time equivalent including directors)
   Average 2009/10  Average 2008/09  31 March 2010  31 March 2009
 Regulated activities  4,257 3,925  4,211  4,212 
 Non-regulated activities  4,428 4,364  4,398  4,476 
 All other segments  680 677  623  726