05/08/2013
The
Observer is
going big on a story of how the most persistent and frequent polluters of England's rivers and beaches are the nation's 10 biggest water companies.
They have been found guilty of causing more than 1,000 incidents in the past nine years, with sewage spills cited as causing particular distress. Yet, despite huge profits, they have faced "pitiful" fines, fined a total of only £3.5 million.
Pollution incidents, which have included sewage illegally pouring into a harbour for more than a year, and managers destroying records, show no sign of declining, according to data obtained from the Environment Agency (EA) under freedom of information rules. Only a third of the 1,000 incidents led to a fine (of an average of just £10,800); the rest resulted in cautions.
This was from a water industry that was paid £10.5 billion by customers in 2010-11, while making pre-tax profits of £1.7 billion and paying dividends of £2.2 billion, a 42 percent year-on-year rise. In 2013-14, water bills are rising by 3.5 percent - above both inflation and average pay rises.
The report gives rise to an opinion piece by
Nick Cohen, who does not mince words. His headline is "The water companies and the foul stench of exploitation", with the sub-head: "The privatisation of water is a story of greed, incompetence and fleecing the public".
Reference is made to a
recent report by George Turner for the think tank Centre Forum. "Since 2005," he concludes, "prices for water have been too high, more than required to run a decent service for customers whilst providing a reasonable return for investors".
Instead, Turner writes, "Investors have taken an unreasonable return ⦠So unreasonable, indeed, that as well as making the public pay through inflated prices and the taxes they dodge, the water companies are looking for direct taxpayer support".
One example of how the public is being fleeced is Yorkshire. In 2006, it whacked up its gearing. Dividends followed suit. Despite spending more than it received from customers, it still paid out £886.8 million in dividends â a return for debt and equity investors of 24.1 percent. Overall, the costs to its customers of paying such inflated returns was £139 extra every year on the average water bill between 2005 and 2010.
The water industry is like the banks: too important to fail. As with the banks, writes Cohen, it is run by reckless and greedy men. One day, they will need other's people's money to save a business that is not only stinking but sinking too.
And there lies an interesting contrast with Norway. There, the water supply and sewerage is owned by the municipalities. Attempts to privatise the system have met with stiff political resistance and get no further than the letting out of a few management contracts.
It is unlikely to be a coincidence that, in a country where the average wage (£52,000) is twice that of the UK, charges â assessed on a full cost-recovery basis â are roughly eighty percent of the average for England and Wales.
Norwegians are a people who value democracy and insist on democratic control, and for that reason resisted the privatisation of their water. We, it seems, are paying the price for a weak democracy, and our compliant nature. I cannot see the Norwegians tolerating what we have permitted.
If you want to see a democratic deficit, therefore, look at your water bill.
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