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Severn Trent (ST) is to become the next water company to embed social purpose into its constitution.
Chief executive Liv Garfield told Utility Week that the company’s commitment to its community and willingness to invest in the future were a strong argument in defence of privatisation.
ST recently applied to Ofwat to add a condition which embeds social purpose in its constitution. Today (21 November), alongside its interim results, it launched its Sustainable Finance Framework, which aims to strengthen the ties between the way the business is funded and its environmental and social programmes.
Garfield said the group had also been reinvesting its totex outperformance fund of £100 million in projects to strengthen services. This has included the introduction of a new network response team. The unit is set up as a quick reaction unit, with the dedicated trunk mains repair team focussing on longer term projects.
She insisted that this sort of targeted investment would be difficult to replicate if the industry was renationalised.
She said: “I’m a strong believer in the privatised model overseen by a strong regulator and serving a broad range of stakeholders and I think we’ve proven that we genuinely are delivering. Our customers have low bills and those are getting lower. We have shown that we can dramatically improve service. We are really socially responsible.
“The challenge if we weren’t in the set-up we are now is that we would end up in a debate about should water get this or should it go to hospitals or schools. That ability to prioritise becomes tricky. Look at the situation in Northern Ireland, where they only get two-thirds of the investment they need from government.”
Her view is echoed by her industry peers who spoke to Utility Week for our H3O series marking three decades of water privatisation.
ST’s results for the six months to 30 September show underlying profit before tax and interest falling 4.3 per cent to £286.3 million on a turnover of £910 million (up 3.2 per cent). The fall in PBIT was due to property sales in the previous year, increased investment and deferral of customer ODIs.
The group reported that it had hit its leakage target for the eighth time in nine years. Garfield said that over the AMP leakage had fallen 6 per cent – supported by the introduction of 30,000 monitors across the network and the use of satellites.
Supply interruptions have fallen 40 per cent this year while there has been a 25 per cent reduction in water quality complaints over the AMP.
On water consumption, Garfield said ST continued to outperform its peers with an average rate of 118 litres per head per day (compared to an industry average of 141) with a target of getting to 118. She said the company was investing in free home efficiency checks and in water efficiency education programmes at primary schools in its area.
The company also announced this morning that it had become the third FTSE 100 business to secure the Fair Tax Mark.
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