Chairman since 1983, and a leading "fat cat" beneficiary of privatisation, he had faced a barrage of criticism in the past six months as the county's reservoirs virtually dried up.
His company became so unpopular among its 2.5 million customers in Yorkshire that staff were told they need not wear their uniforms in public.
Frank Dobson, the Labour environment spokesman, greeted the news with satisfaction yesterday: "This is an extra cause for celebration in Yorkshire this Christmas. It will be difficult for anybody to do a worse job."
A firm of head-hunters has been engaged to find a new chairman, and water industry insiders said the job had been offered to Ken Harvey, managing director of Norweb, the North-west electricity company, until its takeover by North West Water, and to John Roberts, managing director of Manweb until its takeover by National Power. Both are said to have declined. "They can't find anyone to do the job," said a water industry source.
Sir Gordon has had a rough ride in recent months. Last September he was summoned to a 45-minute meeting with the Secretary of State for Environment, John Gummer, to account for the company's handling of the drought. This followed a report by the National Rivers Authority lambasting the company for its high rate of leakage from pipes.
And the company's difficulties are not over. An application to impose 24-hour rota water cuts in Halifax, parts of Bradford and Calderdale is awaiting approval by Mr Gummer next month.
Sir Gordon, who was not available for comment yesterday, indicated a readiness to stand down before his 70th birthday in February 1997 to the company's annual general meeting in July. But the fact that a London firm of head-hunters, Norman Broadbent, was already approaching possible successors in the "fat cats" club had been kept secret.
Margaret Stewart, the company's newly appointed pounds 80,000- a-year public relations chief, insisted yesterday there was nothing unusual about the search for a new chairman.
"The policy of the company is that directors must retire by the age of 70. Mr Jones will be 70 in 1997 so quite naturally we have started the process to find another chairman which takes some time. We will continue it for as long as it takes. I am not prepared to comment on whom we have approached or what the process is."
Labour's Mr Dobson said he hoped the company would range widely in its search for a successor to Sir Gordon. "They should be looking wider than the fat cats' club. The last qualification they should be looking for is somebody who is already, or has just ceased to be, a privatised utility boss.
"Yorkshire people will be hoping that the company recruits somebody who can guarantee water supplies for Yorkshire, rather than just guarantee a pile of pay and perks for himself."
Sir Gordon is unlikely to be short of money in his retirement. Since privatisation in 1990, his salary has virtually quadrupled from pounds 54,825 to pounds 189,000.
Yorkshire Water posted profits of pounds 142m in the year to March and recently unveiled record interim profits. The company shed 560 jobs last year and plans to cut its workforce by a further 500 jobs over the next two or three years.
Some relief from the drought was in sight yesterday, for it has rained virtually non-stop in the west of Yorkshire for the past two days. There are flood alerts on roads in the Dales, and the River Wharfe, from which the company is extracting millions of extra gallons a day, was in spate.
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