Gove stresses green action as companies told to rework their business plans

Restoring peatland and planting trees were just two of the areas Michael Gove stressed he expects to see more on from water companies, when they resubmit their business plans in April.

In a letter to the industry, sent to Water UK chair Brian Bender as Ofwat published its assessment of business plans on Thursday, Gove (pictured) congratulated fast tracked firms Severn Trent, South West Water and United Utilities, and expressed disappointment at the positions of ‘significant scrutiny’ companies Thames Water, Southern Water and Affinity Water, “not least as these operate in the most water-stressed regions”.

He then went on to emphasise all water companies they must be “responsible custodians of the environment” and listed a series of actions he wanted to see on this front, including peatland restoration, woodland creation, more on catchment management and long term resource planning; priority for flood reduction and drought mitigation; and continuing to act on the leaks, particularly “companies with the highest leakage rates, such as Thames, and those who have not committed to a 15% reduction, namely South East”.

The environment secretary hinted: “I look forward to forthcoming announcements from the sector on the further action they will take to protect the environment” and summoned them to a round table for further discussions.

In a gentle reminder to Ofwat, Gove said: “Given the significant investment needed to improve longer term resilience and environmental and operational performance, it is vital that the sector continues to attract low cost finance. I am confident that Ofwat will meet its duty to ensure that efficiently-financed companies can continue to finance their regulated functions.”

Elsewhere in the letter, the environment secretary reminded firms they had a “privileged commercial advantage” as monopolies and must work “harder in the public interest, not just in the interest of shareholders”. He singled two companies out for criticism on this front: “On the issue of gearing, I am disappointed to see that Thames Water and Yorkshire Water have not yet accepted Ofwat’s default mechanism to share financial benefits of high gearing.”