Michael Gove threatens water company bosses with major crackdown
2 min read
Michael Gove has paved the way for a major crackdown on water company bosses who use tax havens and pocket bumper salaries while bills continue to soar.
The Environment Secretary said if regulators did not have the powers to rein in bad corporate behaviour the Government could step in.
It comes after Labour leader Jeremy Corbyn vowed to renationalise water ahead of the snap general election in June.
After the party won huge support at the polls, the Conservatives have been playing catch-up by trying to outgun their opponents on their environmental and anti-fat cat credentials.
In a letter to energy regulator Ofwat, Mr Gove said public trust in water companies would be further undermined if something was not done to turn the tide on corporate greed.
"The water sector has rightly come under even closer scrutiny in recent months with growing concern about the behaviour of water companies,” he said.
“The use by some water 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.
“Concern about water companies' behaviour will only deepen if the dry weather experienced in the Autumn means that some water companies bring in hosepipe bans or other restrictions on customer use.”
He added: "Certain behaviour undermined trusts, such as offshore financial arrangements, securitisation, highly-geared structures, high-levels of executive pay, high dividend payments.
“If the current regulatory framework does not provide Ofwat with the powers necessary to tackle these kinds of behaviour properly, then the Government will consider what changes could be made."
The four biggest water companies all used offshore tax havens in 2016/17. Meanwhile, household bills for water and sewage are set to rise by 2% over the coming year to reach an average of £405.
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