We paid off the debt before privatisation.
We have paid ££££ millions subsequently.
Why have the water companies failed to invest?
We are being ripped off! – Owl
Water companies are drawing up plans to increase household bills by up to 40 per cent to pay for the cost of tackling the sewage crisis and the consequences of climate change.
Oliver Wright, Adam Vaughan www.thetimes.co.uk
In a move that has alarmed ministers, England’s privatised utilities said that they needed the extra money to meet strict pollution targets.
The rises are due to be announced next year and could result in annual bills increasing from an average of about £450 to £680, plus inflation, in parts of the country.
Jeremy Hunt, the chancellor, is due to raise the matter at a meeting on Wednesday with the water regulator Ofwat. Water prices rose in April by up to 11 per cent in some areas.
Under a process being run by Ofwat, England’s water companies have been asked to submit investment plans by October to fulfil commitments to tackle pollution from sewage. These include improving storm overflows discharging in or near designated bathing spots and improving 75 per cent of overflows discharging to high-priority nature sites.
Public consultation documents seen by The Times show that, to pay for the work, most companies are asking the regulator to approve real-terms price increases of, on average, 25 per cent between 2025 and 2030.
Among the biggest rises are those being proposed by Southern Water, which in 2021 was fined a record £90 million for dumping raw sewage into rivers and coastal waters. It admitted almost 7,000 illegal discharges from 16 treatment works between 2010 and 2015, including several sites in the Southampton area.
It proposes to increase its charges to customers from £432 to a minimum of £677 by 2030, although it suggests the figure could be as high as £793. This, the company says, would allow it to invest an additional £4 billion.
South East Water, which has just imposed a hosepipe ban on two million homes in Kent and Sussex, is planning to increase its bills by as much as 39 per cent by 2030.
Thames Water is proposing rises of 20 per cent while Wessex Water wants to put up its prices by 30 per cent.
Ofwat will scrutinise the plans before deciding whether to approve them next year. The fear in government is that the final price rise could be announced around the time of the next election.
A government source said that Hunt wanted to use the meeting with Ofwat and other consumer regulators to “understand the issues going on in the industry”.
Hunt is also concerned about price rises in other regulated industries such as telecoms and energy, which ministers fear are fuelling inflation.
Water UK, which represents the sector, recently apologised for sewage spills and said that it would spend £10 billion between now and 2030 to curb discharges into rivers and seas. That proposal alone is expected to add about £12 a year to water bills by 2030, according to government estimates.
The Times Clean It Up campaign has been calling for greater investment to tackle water pollution, acknowledging that water bills may have to rise but that the neediest customers should be protected.
A cross-party group of peers said in March that bills would probably have to increase after being flat or falling in real terms for 15 years. The Lords industry and regulators committee said that Ofwat had failed to make water companies spend enough in the past decade, “choosing to keep bills low at the expense of investment”.
Mike Keil, senior director at the Consumer Council for Water, said that while investment was needed, nearly a quarter of households were struggling to pay their water bills during the cost of living crisis. “Customers support the need for investment in enhancing the environment and the resilience of our water and sewerage services but we know that could lead to some substantial bill rises,” he said.
“Investment on the scale being proposed must come with a strong safety net to protect households that cannot afford their bill.”
Katy Taylor, Southern Water’s chief customer officer, said the company shared “everyone’s concerns about rising payments” during a cost of living crisis. But she added: “Our region poses a unique and specific set of challenges, which require significant investment moving forward. Meanwhile, we continue to support customers who need help to pay their bills, with a minimum 45 per cent discount offered to around 125,000 households.”
A spokesman for Water UK said: “There is an urgent need for investment to transform our rivers and seas, radically reduce leakage and protect future water resources. While it is clear bills will need to rise, the exact level is not yet known.
“Increases would be distributed across several years to make this more manageable for customers, and industry will take action to ensure that those who are less well-off are protected as much as possible.”
Ofwat said that it could not comment before the companies submitted their plans in October.
East Devon Watch 
Privatised companies have a single overall goal – to maximise profits and dividends, and they do this by maximising revenues (by increasing prices as much as they possibly can) and minimising costs (by avoiding investments).
Since water companies are effectively regional monopolies, both revenues and water quality (both piped water and sewage discharge) are supposed to be controlled by the government regulator, but in order to make the shares attractive to investors when water companies were privatised part of the unspoken deal was an “understanding” that post-privatisation regulation would be favourable (which is Tory-speak for weak or effectively non-existent).
I know from personal experience fighting with a water company just how literally non-existent genuine regulation is – the water company I have been in dispute with for 4 years has a water supply license condition to “treat customers fairly” but having been treated unfairly and followed the entire so-called regulatory regime, I was eventually told by Ofwat themselves that they “were not responsible for regulating customer service”. Legally that is an out-and-out lie, but from a practical perspective it is undoubtedly true.
And, thus it came to pass and the shareholders saw that it was good. Profits have been up, up, up every year, and so have dividends.
(Indeed, whilst I haven’t calculated it, I am prepared to bet that the total of dividends issued to shareholders and salary increases given to senior management will have outweighed the amount received by the treasury several times over by now – or in other words, if the government had kept the water companies in private ownership and treated customers and the environment in the same way, the treasury would be several times better off. P.S. That is almost certainly also true for electricity and gas privatisation – and for the exact same reasons. In other words, the entire Tory privatisation dogma is bad for consumers even if it has been a windfall for the Tory Party donors and other already obscenely rich who ended up being the major shareholders.)
Of course for the rest of us, it has proven to be an unmitigated disaster. The price we pay for a fundamental basic necessity (or indeed most utilities which are fundamental basic necessities) has gone through the roof, whilst the quality of sewerage discharges has dropped off the bottom of the scale.
As with housing, we could well say “Welcome back to the feudal era – when 95% of housing was owned by the 1% richest, and where sewerage was simply fed into the local rivers.” (Ironically, the Tories accused Corbyn’s labour of wanting to take the country back to the 1970s. Even if that were true – which it wasn’t – it would still be better than the Tories taking us back to the 1620s.)
LikeLike
P.S. The way the so-called regulation works is that they are allowed to cream off a % of their revenues.
So having reduced investment to boost profits, and paid out huge sums as dividends and executive salaries, when they now claim that consumers need to pay for the additional investment to fix the sewerage under-investment, a significant part of that price increase will also be creamed off as even yet more profit / dividends / executive bonuses and not be used to actually fix the sewerage scandal.
This is a brilliant gravy train if you are a shareholder or executive, just not quite so good if you are a consumer who is already being hit by energy, food, rent greed-flation as well as the mortgage increases all from the same pay packet due to the ongoing decade++ wage stagnation.
TORIES – FOR THE FEW NOT THE MANY
LikeLike