A water watchdog has accused Kelda of trading its assets like children swapping Pokemon cards in its plans to hive off Yorkshire Water.

The company is seeking to turn it into a mutual company - owned, in effect, by its customers.

But national watchdog WaterWatch campaigns officer Peter Bowler claimed: "Kelda is admitting that it has fooled the water regulator Ofwat and milked the customers for ten years since privatisation.

"Now that the regulator has finally caught up with them and forced them to reduce prices, they claim they cannot make a profit so want to sell it back to the customers. It is bare-faced cheek."

Mr Bowler said the group had taken Yorkshire Water "to the point of bankruptcy, increasing its debt in order to pay unsustainable dividends to shareholders. Now that the company cannot be milked any more, they want to get rid of it," he alleged.

Kelda said mutuality would be a more cost-effective way of financing the business and protect it from predators.

Shareholders will receive bumper payouts as YW is hived off into a Registered Community Asset Mutual, which will pay £2.4 billion to Kelda.

In the long run, the deal could mean cheaper bills for customers.

And in Bradford city centre shoppers gave the thumbs up to the idea.

Most of the people who took part in a straw poll said they were happy that Kelda was putting Yorkshire Water in the hands of the customers and that it was likely the new firm's headquarters would be based in Buttershaw, Bradford.

The favourable response came after Kelda announced it was planning to consult its shareholders and Ofwat about a major shake-up. Kelda plans to scrap YW's private status and turn it into a mutual firm with its customers as its members.

David Clapham, 46, of Eccleshill, Bradford, said: "It all sounds very good and laudable but I wonder what the catch is. I like the idea of becoming a mutual as it goes against the current trend. If Yorkshire Water makes its headquarters in Bradford it will be a good idea."

Geoffrey Holmes, 55, of Chellow Dene, Bradford, said he thought it was a good idea provided the new company was run efficiently.

The Stock Market received the news well. Shares in Kelda jumped ahead following the announcement. They rose almost 20 per cent - up 63p to 396p - making it the biggest riser in the FTSE-250 in mid-trading yesterday.

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