Michael Gove to speak at Water UK conference

Environment secretary Michael Gove is expected to be among the speakers at Water UK’s main annual event, the City Conference in London today (1 March).

Jonson Cox, chairman of Ofwat is also a speaker at the event, while Water UK’s chief executive Michael Roberts will be giving a keynote industry speech.

Roberts will address some of the challenges and criticisms facing the sector.

During his speech, he is expected to say: “Water is fundamental to all of our lives and companies fully understand their clear responsibility to act in the public interest. That boils down to doing the right thing in the right way, and tackling issues where they arise, because we want to maintain the high levels of trust our customers have for us.

“We know that they trust us, because more than eight out of ten of them say so in our private polling. We should not lose sight of that as we address some of the issues that critics have raised. The industry is working for water, and that works for our customers.”

Gove has been one of the critics of the sector and recently signalled a crackdown on executive pay and offshore financial arrangements to address the “concerning” behaviour of water companies.

In a letter to Ofwat’s chairman, Cox on 31 January, the environment secretary said the government was prepared to give the regulator more powers to tackle poor practices in the industry.

He wrote: “The water sector has rightly come under even closer scrutiny in recent months with growing concern about the behaviour of water companies. The use by some companies of opaque financial structures based in tax havens and high gearing is deeply concerning. I also share your concern that some water companies have for many years been making excessive profits.”

He acknowledged Ofwat has been “pursuing companies” to increase the transparency of the sector and the trust customers can have in it.

But he stressed there is “more to be done” and listed behaviours which undermine trust, including offshore financial arrangements; securitisation; highly geared structures; high levels of executive pay and high dividend payments.

In his response, Cox described it as an “immense privilege” for a company to hold a monopoly public service licence and said it “must not be taken lightly”.

Ofwat said it will investigate the matters and report back to Gove with its “findings and recommendations” by early April.

In an interview with Utility Week towards the end of January, Roberts said there is a “good degree of trust” in water companies, despite recent criticism.

He said: “That’s not to say there isn’t more that we can do. Although I feel pretty confident in saying every chief executive in the water sector is passionate about not just sustaining but improving the level of trust that their company has with their own customer base.

“We start from a good position, but yes, we can do better.”

Roberts added: “In the face of critics, we should be hearing about what the sector has achieved and the contribution it has made in the past 30 years. We can’t just gloss over that, but we recognise we do have a model that needs to evolve and continue moving.”

The City Conference will be chaired by Ian McAulay, chief executive of Southern Water. As well as industry, regulatory and government keynote talks, the event will also include a panel discussion.

Water UK is the trade body representing water and wastewater companies in England, Wales, Scotland and Northern Ireland.