Two (of many) privatised water scandals


“A water firm has been slammed for handing more money to its owners than it spent on upgrading equipment.

South West Water paid a £213.1million dividend to its parent group Pennon last year, while investing £190million in drinking and wastewater operations.

Research group Corporate Watch said that over past ten years, it has paid £1.7billion to its owner and banks, and invested £1.4billion on upgrades.
Last December the firm was fined £1.7million by the regulator Ofwat for missing pollution targets.

Its minor spills increased from 222 to 252 during 2016, according to is latest annual report. The firm says 82m litres of water leak a day, within its target of 84m litres. …


Enough has been written about a Conservative government that knows its electoral success depends on Britain remaining a property-owning democracy, yet offers nothing beyond token gestures to stop the young being priced out of home ownership. Enough, too, has been said about graduates being overcharged, pensioners soaking up the largesse of the tax and benefit systems, the failure to upgrade infrastructure, the obesity crisis, and all the other problems that can’t be tackled because of half-thought-through Tory prejudices.

Allow me instead to concentrate on the scandal of the privatised water industry. Journalists and academics have been banging on for what feels like an age about an ‘organised rip-off’, to use the words of the usually sedate Financial Times. Few took notice, and that should not surprise you. Causes can appear marginal for years. Politicians see no need to address them. Then, with no warning to those who haven’t been paying attention, they explode.

Last week Michael Robinson of the BBC presented a superb documentary on what Thames Water had done to London and the southeast. Most infamously, the company poured 1.4 billion litres of sewage into the Thames near Marlow alone, destroying fish and fouling the home lives of river-side residents. The residents were also its customers. Not that Thames Water seemed to care. Water is a private monopoly. Why should it bother itself about the feelings of people who had nowhere else to go? After hearing how managers ignored warnings from workers about persistent equipment failures, Judge Francis Sheridan encapsulated their attitude when he said that the company had presided over ‘a shocking and disgraceful state of affairs’.

As shocking is the way that the former owners of Thames, the Australian bank Macquarie, was able to pass its costs on to the public. Macquarie took on £2.8 billion of debt to buy the company; it then loaded £2 billion of Cayman Islands debt on to Thames Water and its customers, despite giving assurances to the water regulator Ofwat that it would do no such thing. Macquarie has taken its profits. According to Martin Blaiklock, an infrastructure consultant, its investors received returns of 15 to 19 per cent over 11 years — twice the expected level. All it has left behind is a £2 billion debt and a very bad smell.

Now Thames Water is owned by a Kuwaiti investment fund and a Canadian pension fund. Its managers talk the soothing language of customer service and corporate responsibility. But when pressed by the BBC to say that they would not seek to imitate Macquarie and extract rapacious returns from a captive market, they refused to answer the question.

What interest do Kuwaiti and Canadian investment funds, Australian banks and Cayman Islands financiers have in ensuring the quality and affordability of our water? The hopeless regulators have no answers. Since Margaret Thatcher privatised English water companies in 1989, six out of the nine have pulled themselves off the stock market, meaning they do not have to release to their shareholders information that the regulators can scrutinise.

They promised to bring efficiency. Instead they have brought unsustainable levels of debt that, one way or another, the public will have to redeem. Researchers at Greenwich University say that in the past decade, the nine companies have made £18.8 billion of post-tax profits. Far from using the money to make the water system better, they have paid out £18.1 billion in dividends, and financed investment through loading £42 billion of debt on to consumers.

The university estimates the English are paying £2.3 billion more a year in water and sewerage bills than if the utility companies had remained in state ownership. These costs might have been bearable in good times, but as the Brexit-induced fall in the pound pushes real wages back down again, the prices of water, gas and electricity are bound to be political issues. Customers may not be overly keen to subsidise shareholders and lavishly overpaid managers.

I am not surprised that the Conservatives haven’t joined Labour in demanding the renationalisation of the water industry. It would cost about £70 billion, and in any case, Tories don’t nationalise. But why, after the Macquarie shambles, aren’t ministers and the regulators saying that secretive private equity and Middle East funds should not be allowed to control utilities? Why have they allowed Macquarie to move to the National Grid’s gas division? Ofwat is huffing that it has got tough, but it imposes no penalties on managers who break their commitments. After loading Thames Water with debt and flooding the Thames Valley with excrement, its then boss, the unimprovably named Martin Baggs, bagged a 60 per cent pay rise in 2015.

Conservatives claim to believe in the free market. If they did, they would view monopolies as Adam Smith viewed them — as conspiracies against the public interest. They would not care whether the monopolies were public or private. Both give consumers no choice. Both can put their customers’ interests last. But to the Tory mind, a distinction without a difference makes all the difference.

Because water companies are private monopolies, politicians and regulators back away from confronting them with the necessary anger and vigour. If a nationalised industry behaved as Thames Water has, they would be outraged. As it is, the mere fact that the monopolies are private is enough to persuade politicians to stand aside and let a scandal grow. No one will be more surprised than them when it explodes.”

Developers want government to force landowners to sell to them

“The Government should prove it is serious about boosting homebuilding by forcing landowners to sell up, a top housing association boss has told MPs.

Public land should also be used for construction to bypass the sluggish system for buying and building on private space, said David Orr, chief executive of the National Housing Federation, which represents non-profit associations.

“If we are going to build 300,000 homes a year we need quite muscular government action on land, on the compulsory purchase of land in the way that we did in the 50s and 60s for the new towns and the peripheral estate urban extensions that were built in those years,” Mr Orr told the Treasury Select Committee.

“And I certainly think that we need a much much more vigorous approach to the use of publicly-owned land.

“If we are to make a transformative change in the level of supply, if you are going to build houses, you need access to land.”

Philip Hammond, the Chancellor, used last week’s Budget to set out plans to boost construction by offering funds and guarantees to builders as well as scrapping stamp duty for most first-time buyers.

Bur Mr Orr was unimpressed with the effort, noting that the Office for Budget Responsibility did not change its forecast for construction levels despite the Budget’s measures.

He said that extra guarantees beyond the £8bn offered last week would also be a substantial help.

Brian Berry at the Federation of Master Builders, which represents smaller construction firms, said those solutions from the Chancellor do little to address the supply shortfall.”

“Theresa May’s Extra £2billion For Affordable Homes Funded By Cuts To Other Housing Schemes”

“… HuffPost UK has discovered that tucked away in the Office for Budget Responsibility’s analysis of the Chancellor’s Budget last week is the truth about where that £2billion money is coming from.

It is not new money, and is instead being raised “by reducing spending on ‘accelerated construction’ and ‘starter homes’ across the four years from 2017-18 to 2020-21. …

… The OBR claimed his policy of scrapping stamp duty for first-time buyers on the first £300,000 of a home would actually drive up prices – although this was disputed by the Chancellor.

Housebuilding figures released today by the Government show 199 homes for social rent were completed between April and September this year, compared to 10,597 completed over the same period in 2009.”

CEO and Head of Audit suspended after irregularities in voting at General Election

Here in East Devon there were numerous mistakes made by our election officers but, so far, they have avoided examination or censure.

Nothing will change till electoral officers have to legally submit budgets of exactly how much money they spent (or did not spend), how much extra they were paid to do the job (average £10-20,000 per election, some got much more) AND they come under the Freedom of Information spotlight (they are currently exempted).

“Almost 1,500 voters were unable to take part in a general election contest which was won by just 30 votes, an independent inquiry has concluded.

Two senior officials in Newcastle-under-Lyme were suspended today following damning investigation into the June 8 election.

Newcastle Borough Council chief executive John Sellgren and Elizabeth Dodd, head of audit and elections, have been criticised for a number of issues by the Association of Electoral Administrators.

It found 500 postal voters were disenfranchised, nearly 1,000 potential electors were not included on the voting register and two people were able to vote who were not eligible to.

Labour’s Paul Farrelly held off a charge from Tory Owen Meredith to hold Newcastle-under-Lyme with a reduced majority.

The election cannot be re-run because complaints about the running of a poll must be made within 21 days.

But the probe concluded the result could have been different if the wrongly excluded voters had been allowed to take part.

The investigators it was ‘impossible not to question the result’ and detailed a ‘complex picture of administrative mistakes around registration and postal voting processes’.

There was an ‘inadequate performance by inexperienced and under-resourced elections office staff’, the report found.

Mr Farrelly described the election arrangements as a ‘shambles’ in the aftermath of the poll.

Mr Meredith said today: ‘It is vital lessons are learnt from this experience and that the recommendations of the report are implemented in full.
‘Urgent action must be taken by Newcastle Borough Council to ensure the credibility of upcoming council by-elections in December and the all-out elections in May.

‘Voters will be rightly horrified by the details of the report’s findings and trust in the democratic process in Newcastle-under-Lyme has been badly undermined. Urgent action is needed to restore that trust.

‘Voters have been truly let down by the Council officers and leadership and those involved must consider their positions.’

Council leader Elizabeth Shenton, said: ‘I sincerely apologise on behalf of the council for that situation but we can’t turn the clock back and right any wrong that occurred at that time.’

An Electoral Commission spokesman said: ‘Good planning and open communication are vital to ensure voters can receive the quality of service they deserve.

‘Both our guidance and this independent report recognise these factors.
‘We will now consider this report’s findings as part of our assessment of how Returning Officers performed at June’s election.

‘The Commission will continue to support and challenge the performance of the electoral services department at Newcastle-under-Lyme Borough Council to ensure forthcoming elections are well-run.”

Unable to rent or buy …

Guardian letter:

“Why does nobody address crippling private rent (Nils Pratley, 21 November)? Why is it OK for my daughter and boyfriend to pay someone else’s mortgage by renting and having to share with several other people, only living in a room, sharing a bathroom and small kitchen and no communal area, not being able to afford to rent a place of their own or to get a mortgage, despite both working. If people can afford to pay rent they should be able to get an affordable mortgage. My daughter could never afford a property over £250,000, so a new allowance for properties up to £300,000 is an irrelevance.

My husband and I both work more than full time. I work two jobs and we only scrape by; we could not afford a mortgage now if we were first-time buyers. I am guessing that the young people who can afford £300,000 on a house are young professionals on a very high wage or are from a wealthy background where they have help? My daughter and her boyfriend both have degrees and have been saddled with debt. Sadly, we, like many parents, are not in a position to be able to help. The government needs to look at more social housing, charging people who own more than one property extra tax for each additional property, and ensure rents are capped.

Stephanie Lovatt

Pockets of deprivation in affluent areas – coastal and rural communities have problems

“Children from deprived backgrounds face the worst prospects in some of the richest parts of the country, according to a damning new study that lays bare deep geographical divisions across Britain.

An annual report by the government’s own social mobility watchdog warns that while London and its suburbs are pulling away, rural, coastal and former industrial areas are being left behind.

The State of the Nation report finds that some of the wealthiest areas in England – including west Berkshire, the Cotswolds and Crawley, deliver worse outcomes for their disadvantaged children than places that are much poorer, such as Sunderland and Tower Hamlets. …

… Other findings include that:

51% of children on free school meals in London achieve A* to C grades in English and maths GCSE compared with a 36% average in all other regions.

There is a gulf between the highest figures of 63% in Westminster and the lowest, 27% on the Isle of the Wight

Meanwhile in Kensington and Chelsea, 50% of disadvantaged youngsters make it to university compared with just 10% in Hastings, Barnsley and Eastbourne

Some of the worst performing areas, such as Weymouth and Portland, and Allerdale, are rural not urban

In fact, in 71, largely rural areas, more than 30% of the people earn below the voluntary living wage – with average wages in west Somerset just £312 a week, less than half of the best performing areas

In Bolsover just 17% of residents are in jobs that are professional and managerial positions compared with 51% in Oxford

The study says that a critical factor in the best performing councils is the quality of teachers available, with secondary teachers 70% more likely to leave the profession in deprived areas.

Although richer parts of Britain do tend to outperform more deprived areas overall in the social mobility index designed by researchers, that isn’t always true. Some of the most affluent areas do worse for the poor kids than some of the least well off.

Coastal areas are a focus of the report, with warnings about schools being isolated. Recommendations include more collaboration between schools and subsidised travel for disadvantaged young people in isolated areas. The commission also calls for central government to fund a push for schools in rural and coastal areas to work together.

They also say that the government should rebalance the national transport budget to help tackle regional disparities. …

…. The report calls for the Department for Education’s £72m funding for opportunity areas to be matched by the Department for Business, Innovation and Skills in order to link up schooling and workplace opportunities.”