Utility Week

10 | 15TH - 21ST JUNE 2018 | UTILITY WEEK Policy & Regulation Analysis I n an era of dramatic political somer- saults, few have been quite as surprising as the reinvention of Michael Gove as an eco-warrior over the past year. When he turned up at the Green Alli- ance summer party nearly a year ago, soon aer being appointed environment secretary, Gove encountered an audience whose suspi- cions were motivated by his track record as a leader of the Brexit campaign. Ex-energy and climate secretary of state Sir Ed Davey had memorably just likened giving his erstwhile Cabinet colleague the environment portfolio to "putting the fox in charge of the chicken coop". In his first public outing with the great and good of the green world, the newly appointed Gove proclaimed his passion for the environment. He le his audience, if not wooed, at least questioning their initial assessment of him. The subsequent months have seen the former Times journalist follow up these warm words with a flurry of eco-friendly announcements. These included a proposal in last summer's dra air pollution strategy that the sale of internal combustion engine cars and vans should be banned by 2040, which would lead to dramatic ramifications for electricity supply. For Richard Black, director of the Energy and Climate Intelligence Unit, Gove has been a breath of fresh air. "It's been very refreshing to see an environment secretary being very energetic and proactive, because the past few occupants of that post haven't been," he says. Tim Yeo, a former shadow environment secretary when the Conservatives were in opposition, is also impressed. "He's taken to the green agenda very strongly: it's a pretty good start and completely welcome." There is no inherent contradiction between being a Tory and a green, he adds: "The natural Conservative agenda is a very green one. A lot of supporters rate these issues very highly." Gove, says Black, has "given voice to what a lot of Tory backbenchers have been think- ing for a number of years". He continues: "His approach to water companies is clas- sic Gove, casting himself as the champion of consumers versus vested interests. An ex- journalist, Gove knows how to grab head- lines with populist attacks on pay levels, unpaid tax and high bills. "He will also have an eye on the Labour party's nationalisation policy and will not want to be seen as a defender of the status quo, instead presenting a Conservative alter- native of reform." Gove wrote to Ofwat chairman Johnson Cox highlighting his concerns about the use by water companies of offshore tax arrange- ments and executive pay. Water companies' corporate structures are "designed to favour investors rather than citizens", he said this month in a wide-ranging speech presented at centre-right think-tank the Policy Exchange, the central thesis of which was that capital- ism "is no longer delivering". But while Gove's statements have been music to the ears of the green lobby and water consumers, practical policy detail has been thinner on the ground. For example, progress on phasing out pet- rol and diesel vehicles has become entangled in intra-departmental Whitehall wrangling. And the past few weeks have seen Gove's green halo slip aer the publication of the government's proposals for a new agency to take over the EU's environmental remit aer Brexit. Green groups' main concerns are its lack of competence on climate change and absence of powers to sue the government if it breached environmental standards. The threat of court proceedings by the EU has boosted the Environment Agency's ability to take legal action over issues like So far, so Gove No-one said it was going to be quiet, but were utilities ready for the new environment secretary? David Blackman looks at the highlights of Michael Gove's first year. "Both in the country and parliament there has been a majority in favour of progress on climate change. It's just been fairly quiet." Of course, there is a good measure of political calculation in Gove's hitherto unad- vertised passion for environmental causes. "The Conservative leadership have become very aware that the environment is quite an important issue for young people," says Black. A poll carried out last year by progres- sive think-tank Bright Blue showed climate change was the most important single issue for 18 to 24-year-olds, who have deserted the party in droves since 2010. A particular worry for the Brexit cham- pions like Gove is that support for the UK's withdrawal from the EU could be tarnished by concerns that it will lead to a dilution of environmental protections. "Michael Gove has played this extremely well. His objective was always to neutralise environment in the Brexit debate," says one observer. While wooing environmentally minded voters, Gove has been taking pot shots at the water companies since the turn of the year. The regionally monopolistic nature of the household water supply was always likely to stick in the throat of a politician who cut his ideological teeth in the late eighties heyday of Thatcherism. Andy Sawford, chair of public affairs firm Connect, which organises the All-Party Parliamentary Group on Water, says: "Gove has taken the same approach at Defra [the Department for Environment, Food and Rural Affairs] as when he ran the education and justice departments. Closure of Cayman Islands subsidiaries On 5 June, Anglian Water completed the removal of its Cayman Islands subsidiary from its financial structure. The company had announced plans to "speed up" the removal in March, as part of a wider transparency overhaul. The water firm is the first to remove its Cayman Islands company aer Ofwat chairman Jonson Cox and environment secretary Michael Gove laid down challenges to the sector earlier this year. Yorkshire Water, Thames Water and South- ern Water are all in the process of closing their Cayman Islands subsidiaries.

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