Severn Trent’s choice of an outsider looks shrewd

While most of the coverage marking Liv Garfield’s appointment as chief executive of Severn Trent has focused on her being a woman (shock, horror), the more significant departure is that she joins the industry from outside its ranks. The vast majority of water sector leaders are lifers, and at a time when the industry needs to change its culture, that can be a drawback. Coming from the cut-throat world of telecoms and with a foothold in retail (Garfield is a non-executive director of Tesco), she will be well placed to steer Severn Trent through the introduction of competition and the advent of a more customer-centric approach.

She will also be charged by the company’s board with securing its financial future. Shares in Severn Trent have slumped since the company saw off a hostile approach from Borealis Infrastructure Management earlier this year; a move that is now beginning to look like hubris. M&A is effectively shut down in the water sector for the next few months while PR14 settlements are hammered out. Once that’s resolved and Garfield is settled in post, she will need to either restore the company’s share value or steer it through a deal that satisfies the same board members who rejected £22 a share this summer.
Meanwhile, it’s unsurprising that energy suppliers’ results reported this week received far less attention than headline-­grabbing pledges to freeze energy prices (p19). There’s an old saying – “never let the facts stand in the way of a good story” – that sums up the approach of politicians and the national media to the fact that suppliers’ retail profit margins are flat or falling. A full Competition Commission inquiry is necessary to establish the facts independently of media spin and political agendas. The competition audit that the prime minister announced doesn’t go far enough – it is too close to politicians, and too limited in its remit. However, the first audit may spark a full investigation – and the energy industry should continue to work towards this.