Reduction of Capital

United Utilities Group PLC                           

 Recommended proposals relating to the introduction of United Utilities Group  
   PLC as the holding company of United Utilities PLC and for the Return of    
             Capital of approximately £1.5 billion to Shareholders             

                             Reduction of Capital                              

                                                                   31 July 2008

United Utilities Group PLC (the "Company") announces that the reduction of
capital, approved by the High Court on 30 July 2008, has become effective. The
nominal value of each United Utilities Group Ordinary Share has been reduced
from 500 pence to five pence; all the issued and unissued Class A Shares have
been cancelled; and both of the Subscriber Ordinary Shares have been cancelled.

Expected Timetable of Key Events

8 August 2008 Payment of the United Utilities Final Dividend                   
                                                                               
By 19 August  Despatch of cheques or crediting of CREST/mandated bank accounts 
2008          in relation to B Share Dividend and Initial B Share Redemption   
                                                                               
14 April 2009 Final B Share Redemption                                         

This timetable is based on the Board's expectations and may be subject to
change.

For Further Information

Equiniti Limited, United Utilities' registrars     0871 384 2898/[phone]   
                                                   0269                        
                                                                               
 Tim Weller, Chief Financial Officer, United       [phone]         
Utilities                                                                      
                                                                               
 Gaynor Kenyon, Communications Director, United    [phone]         
Utilities                                                                      
                                                                               
 Darren Jameson, Head of Investor Relations,       [phone]         
United Utilities                                                               
                                                                               
 Dominic Fry/Tom Murray, Tulchan Communications    [phone]        

Notes

 1. Terms used but not defined in this announcement have the meanings given to
    them in the scheme circular sent by United Utilities PLC to its
    shareholders dated 6 June 2008.
   
 2. No United Utilities Group Ordinary Shares or B Shares have been marketed
    to, nor are any available for purchase by, the public in the United Kingdom
    or elsewhere in connection with the Admission. This announcement does not
    constitute an offer or form part of any offer or invitation to purchase,
    subscribe for, sell or issue, or a solicitation of any offer to purchase,
    subscribe for, sell or issue United Utilities Group Ordinary Shares, B
    Shares or any other securities in United Utilities or United Utilities
    Group. This announcement does not constitute a prospectus equivalent
    document.
   
 3. Overseas Shareholders may be affected by the laws of other jurisdictions in
    relation to the Proposals or the distribution of this announcement. Persons
    into whose possession this announcement comes should inform themselves
    about and observe any applicable restrictions and legal, exchange control
    or regulatory requirements in relation to the Proposals, the distribution
    of this announcement and the Prospectus. Any failure to comply with such
    restrictions or requirements may constitute a violation of the securities
    laws of any such jurisdiction.
   
INFORMATION FOR US SHAREHOLDERS

 4. Neither the United Utilities Group Ordinary Shares nor the B Shares will
    be, and are not required to be, registered with the US Securities and
    Exchange Commission under the US Securities Act of 1933, as amended, in
    reliance of the exemption from registration provided by Section 3(a)(10)
    thereof. Neither the SEC nor any other US federal or state securities
    commission or regulatory authority has approved or disapproved the United
    Utilities Group Ordinary Shares or the B Shares or passed an opinion on the
    adequacy of this announcement. Any representation to the contrary is a
    criminal offence in the United States.
   
This announcement is not an offer of securities for sale in the United States.
Neither the United Utilities Group Ordinary Shares nor the B Shares to be
issued to Shareholders in connection with the Scheme have been, will be, nor
are required to be, registered with the SEC under the US Securities Act, in
reliance upon the exemption from the registration requirements of the US
Securities Act provided by Section 3(a)(10) of that act. For the purpose of
qualifying for the exemption from the registration requirements of the US
Securities Act provided by Section 3(a)(10) of that act with respect to the
United Utilities Group Ordinary Shares and the B Shares issued pursuant to the
Scheme, United Utilities will advise the Court that it will rely on Section 3
(a)(10) exemption based on the Court's sanctioning of the Scheme, which will be
relied upon by United Utilities as an approval of the Scheme following a
hearing on its fairness to Shareholders at which hearing all such Shareholders
will be entitled to attend in person or through counsel to support or oppose
the sanctioning of the Scheme and with respect to which notification has been
or will be given to all such Shareholders.

 5. United Utilities PLC has received advice in relation to the Proposals from
    Deutsche Bank AG, London Branch and JPMorgan Cazenove Limited. Deutsche
    Bank, which is authorised under German Banking Law (competent authority:
    BaFin-Federal Financial Supervising Authority) and with respect to UK
    commodity derivatives business by the Financial Services Authority and
    regulated by the Financial Services Authority for the conduct of UK
    business and JPMorgan Cazenove, which is authorised and regulated by the
    Financial Services Authority in the United Kingdom, are jointly acting as
    sponsors and financial advisers for United Utilities and United Utilities
    Group and no-one else in connection with the Proposals and will not be
    responsible to anyone other than United Utilities and United Utilities
    Group for providing protections afforded to clients of Deutsche Bank and
    JPMorgan Cazenove respectively or providing advice in relation to the
    Proposals or any other matters described in this announcement.