ANDREW FISHER on the contradictions, ironies and utter inadequacy of the government’s approach to the water company polluters; plus even more Council Tax rip-offs coming our way
At the end of January, the government passed the Water (Special Measures) Bill through Parliament. Labour claims it heralds “tough penalties for law breaking water bosses”, “new powers to ban bonuses for rogue water execs”, “severe fines for water companies” and “more investment into our water system that works for you”.
Let off the hook: Thames Water is about to hit households with a inflation-busting price hike
Sounds like a long overdue rebalancing that stops the water companies getting away with murder?
Don’t believe it.
The bitter irony is that the Bill steered through the Commons by Streatham and Croydon North MP Steve Reed, the Environemtn Secretary, has been watered down.
In October, Reed’s team was briefing The Guardian that, “water companies in England could be banned from making a profit under plans for a complete overhaul of the system”.
Watered down: MP Steve Reed claimed he was getting tough on the privatised water companies
But the day after Reed posed with his ministerial team holding an “I’m voting to clean up Britain’s rivers, lakes and seas” board, the water companies hiked bills by as much as 47%.
Our water bills will rise by an average of £123 on April 1.
This is the biggest increase since the privatisation of the water industry 36 years ago.
Bills are rising by an average of 25%. But two of the most polluting, sewage-dumping companies are putting their charges to households up even more: Southern Water is hiking bills by an eye-watering 47%, while Thames Water is imposing a 31% increase.
So much for Steve Reed getting tough on the water companies!
Despite the smoke and mirrors of the tough rhetoric, this Bill is impotent. It puts its faith in the water companies, allowing them to put right the mess they have created, while taking record amounts of our money.
Steve Reed insists that the government will “ban bonuses if water company executives fail to meet high standards”. During the parliamentary passage of his Bill, Thames Water stated that it will simply increase the basic pay of company directors.
The Bill has already been exposed as a paper tiger. Reed could have responded by amending the Bill to cap total pay or to ban dividends. But the Bill is designed to look tough, not actually be tough.
If the government and regulator, Ofwat, really did get tough with the failing water companies, the companies would collapse – and the government would have to take them into public ownership. That’s something Reed appears ideologically resistant to doing.
The Labour peer Prem Sikka, a professor of accountancy, recently pointed out that water companies “have paid over £85billion in dividends since privatisation in 1989, and run up debts of over £70billion. Around 35p in every pound of customer bills goes on [debt] interest and shareholder dividends”.
Doing the sums: Prem Sikka
Clive Lewis, a Labour MP, is presenting a Private Members’ Bill to Parliament to move water back towards public ownership. This will be debated on March 28.
You can urge your MP to attend and vote for the Bill using this tool: https://actionnetwork.org/letters/ask-your-mp-to-attend-my-water-bill-debate?source=twitter
Lewis said: “There’s clear public outrage about how our water is being mismanaged. There’s also a clear public consensus that the current system does not work. If government fails to act, this will further undermine people’s faith in democracy.
“We have to stop water mismanagement, and that can only be done through systemic change. The answers do not lie in failed regulators or tinkering.”
Ever since Thatcher’s privatisation of the water industry in 1989, the companies that bought assets on the cheap have hiked our bills well above the rate of inflation, paid tens of billions of pounds in dividends to shareholders and failed to invest in the infrastructure they inherited. Faced with a climate crisis and water shortages, in more than 35 years, the private water companies have not built a single new reservoir.
Ever since privatisation, polling has shown the public steadfastly in favour of bringing water back into public ownership. Even a majority of Conservative voters back public ownership of water. Yet there’s a real blockage in the system: the Westminster consensus is to keep water privatised.
This week, Thames Water is in court, pleading to be allowed an emergency cash lifeline, without which the company says it will go bust. With the extra loan, Thames Water will increase its debt interest and therefore our bills face further rises. We should hope the judges turn them down and end this privatised incompetence.
There’s a petition calling for Thames Water to be taken back into public ownership. So far, 35,000 people have signed it. You can add your name by clicking here.
More of England about to face Council Tax rip-off
Tax burden: protestors outside the Town Hall in 2023. Labour councillors abstained to allow the tax hike to go through
“No to 15%!” “Pay More. Get Less”.
This campaigning website was quick off the mark when Croydon Council proposed to hike Council Tax by 15% in 2023.
A massive petition, a large protest on the steps of Croydon Town Hall and national news coverage didn’t stop the tax hike going through – something not helped by Labour’s capitulating councillors. But that protest has probably stopped the council coming back for more, larger increases.
Other parts of England, though, are now facing similar impositions. This April, Council Tax will increase by 10% in Bradford, by 9% in Newham and in Windsor and Maidenhead, and by 7.5% in Birmingham, Somerset and Trafford.
In Birmingham, Council Tax went up by 10% last year as well, and another round of cuts to services and sell-offs of public assets is planned.
To give the new Labour government some credit, they are increasing overall council funding by 6.8% this year. But that comes after years of real terms cuts and rising demand from an ageing population (social care), an unregulated housing market (emergency accommodation), and from increasing poverty (social services).
As Local Government Association chair Louise Gittins said, council finances remain “extremely challenging” and the government’s extra money “still falls short of what is desperately needed.”
The crisis in council finances is far from over. At best it may be getting worse at a slower rate.
- As well as his column, Andrew is also conducting regular podcast interviews, in-depth and informed with specialists and national figures, sharing their expertise with Croydon, and available on Inside Croydon’s Spotify channel
Listen to his latest informed and in-depth interview, with former shadow Chancellor John McDonnell MP, by clicking here (subscription required)- From 2015 to 2019, Andrew Fisher was the Labour Party’s Director of Policy under Jeremy Corbyn. Fisher is also the author of The Failed Experiment – and how to build an economy that works, and now writes columns for InsideCroydon, the i newspaper and is a regular pundit on BBC and Sky News programmes
Andrew Fisher’s recent columns:
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So the politicians won’t do anything about the water industry?
Our only hope now is Feargal Sharkey…….!?!
There are politicians who do want to bring the water industry back into public hands (along with other failing public services) – the Green Party
Nationalisation f**** up our water industry. We all know the Victorians created it, through private investment, and then it got nationalised in 1973 and left to wither. By 1980, investment was one-third of what it had been in 1970.
Maggie’s privatisation, in 1989, kickstarted a resurgence of investment – £50 billion by 2004. But we all know that the regulators subsequently blocked sensible increases in bills. Amazingly bills decreased in real terms nearly every year since 2010. That tells me we’ve been getting water on the cheap.
So, how did the water companies invest? They borrowed. And they started paying exorbitant salaries and dividends. All this under the gaze of politicians and OFWAT. It’s like Brick by Brick on steroids.
My sources include OFWAT https://www.water.org.uk/news-views-publications/views/real-terms-story-historic-water-bills and the unchallengeable Wikipedia.
So, no to nationalisation – we all feel better under the illusion of public ownership but it always ends in tears.
Over to you, Croydon…
Myers’s source is “Water UK”. Who they? Some impartial objective organisation with no conflicts of interest? No.
They say “we represent water companies to ensure that customers receive high quality tap water at a reasonable price and that our environment is protected and improved.”
Think about that when your bill goes up by 31% and you see turds in the Thames.
Water UK’s claim that “water bills have in fact decreased in real terms nearly every year since 2010” is at odds with research published by Moth et al, “Towards inclusive service delivery through social investment in England”.
In 2018 they noted that “Over the last 10 years water charges have increased faster than both earned incomes and inflation leading to many people struggling to make ends meet as their pay is stagnant and their living costs go up.
This squeeze on living standards is not necessarily because of economic recession but the lack of competition
means consumers are at risk of being exploited by highly profitable companies.
In the last 10 years water bills have risen by 64 per cent compared with a 28 per cent increase in average earnings bills meaning that water bills are now some 20 per cent higher in real terms than 10 years ago.”
Myers’ faith in Thatcher is misplaced. His “unchallengeable Wikipedia” says her government, “which had been elected in 1979, had curtailed the Regional Water Authorities’ ability to borrow money they deemed necessary for capital projects.
Dr Daniel Okun said: “Before, they could borrow money everywhere easily. They could get money at very good rates. Restrictions on external borrowing prevented the RWAs from getting capital. They were considered ineffective because they could not borrow money. Thatcher prevented them from borrowing and then blamed them for not building.”
To quote Noam Chomsky, “That’s the standard technique of privatization: defund, make sure things don’t work, people get angry, you hand it over to private capital.”
In December the Grauniad revealed that Thames Water intentionally diverted millions of pounds pledged for environmental clean-ups towards other costs including bonuses and dividends.
Privatisation of the water supply means, despite Labour’s Steve Reed cosying up to Feargal Sharkey before the election, our environment is still being polluted unnecessarily and, we’re still being ripped off, with no end in sight
Oh dear. Where to even begin…
Water was publicly owned by councils from the late 19th / early 20th century, and these were merged into the regional water authorities in the 1970s. Investment was cut massively by Thatcher (from 1979) to justify privatisation.
Since 1989, the water companies have not built a single new reservoir, despite the population increasing significantly in that time.
Nationalisation was serving us well until a) the Thatcher govt cut funding; and then b) privatised it. It ended by unpopular political decision.
Even Reform support renationalising the water industry. Apparently a bunch of libertarians are more socialist than whatever this Labour Party is.
Reform aka UKIP are probably not that reliable on public policy – those who support them are being sold a lie.