Yorkshire Water heads for last chance saloon

Is Yorkshire Water just accident-prone or is there something seriously wrong? Its latest missive to business customers is certainly indicative of a company with a very substantial public relations problem - considerably worse than any of the other water companies - and, even for a utility, a quite breath-taking ability for putting its foot in it. But it is not clear that this demands the changes at senior management level that some are beginning to talk of in the City.

Good public relations is a very substantial part of the management task for a privatised utility. Few of them have shown much aptitude for it. Yorkshire's performance in this field has been particularly poor; investors with an interest in the company's long-term future cannot but take notice of the present shenanigans, for a company not at ease with its customers - even with monopoly privilege - will ultimately fail.

The irony of Yorkshire's position is that when it comes to charges, quality of service and number of complaints, it is no worse than any of the other water companies and, in a great many respects, it is better. Led by the gentlemanly figure of Sir Gordon Jones, its management is also, for a utility, of the relatively enlightened variety; it has been at the forefront of moves to pre-empt the regulator with discretionary investment programmes and customer rebates over and above those demanded by the rules. It is therefore something of a puzzle that management should have got itself into such a lamentable position.

In part, the problem was created for it by Ian Byatt's refusal to renew Diana Scott's contract as head of the local Ofwat customer services committee. Subsequently, she became the focal point for all those with a complaint. She was vocal, articulate, some would say vindictive in her approach, and the company's faults gained a profile far higher than others, with perhaps more cause to worry about its customer relations. Yorkshire has done little to help itself, however. With Mrs Scott, its approach, though possibly justified, was dogmatic and stuffy. Its handling of the drought has been similarly insensitive and unnecessary, culminating in its appallingly timed letter to business customers, urging them to relocate production if possible to non-drought hit areas.

As far as investors are concerned, none of this yet justifies seeking an executive scalp; they have little reason to be unhappy with financial performance, after all. Yorkshire's executives are nonetheless perilously close to last chance saloon.