Posts Tagged ‘Yorkshire Water’

From 25 Years Ago: Private Eye on the Failings of the Privatised Water Companies

July 13, 2020

A few days ago I put up a piece about a report in the I that stated MPs had criticized the regulatory authorities for their failure to ensure that the water supply is adequately maintained. According to the I, the supply is in such a terrible state that within 20 years England may run out of water.

This isn’t exactly surprising, as environmental scientists, ecological activists and archaeologists have been warning about the terrible possibility of a global drought as the world runs out of supplies of drinking for over two decades. And in the 1980s the SF author Alfred Bester set his last book, Golem 100, in the ‘Guf’, a sprawling metropolis covering America’s eastern seaboard somewhat like Judge Dredd’s Megacity 1. Society in the Guf was decaying, with different areas controlled by various gangs and terrorist groups. Crime was rampant, and in addition to the social and political decline and fragmentation the huge megacity also suffered from a shortage of drinking water.

The regulatory authorities aren’t solely to blame for the deleterious state of England’s water. The industry is also responsible, and particularly its privatization in the 1980s and ’90s by the Tories. This was supposed to bring new investment. This hasn’t materialized in the privatized utilities, either here or in the US. In this country, these industries owners are foreign companies, which put the minimum into maintaining them while taking the profits out of the country.

Private Eye was a sharp critic of the Tories privatizations when they were being pushed through by Maggie Thatcher and then John Major. And one of their criticisms at the time was that the Tories appointed as heads of the new regulators, such as Ofwat and the Environment Agency in the case of water, people from the private sector, who shared the Tories view that government should leave industry to regulate itself. This was the beginning of the corporatist system, in which private industry is entwined with government to the point where it dictates official policy. This became notorious under Tony Blair, with leading industrialists like David Sainsbury of the supermarket company given posts on government bodies, that Guardian hack George Monbiot wrote an entire book attacking it, Captive State.

I found three reports of some of the antics of the privatized water companies in the ‘Privatisation Round-Up’ column in an old copy Private Eye from 25 years ago, Friday, 16th June 1995. They were as follows:

It’s tough at the top of a water company – especially if you are William Courtney, chairman of Southern Water, and all you hear are grips about your salary, your £250,000 share options (cashed) and the increasing cost of water in your area.

The public probably doesn’t realise how hard Mr Courtney works. In his capacity as director of Waterline Insurance, for example, a major subsidiary of Southern Water, he recently had to attend a long conference. As did his long-suffering wife Margaret; his diligent finance director at Southern Water, Ray King; and Ray’s long-suffering wife Sandra.

The relevance of the conference – on “international risk management” – may not be immediately obvious to Southern Water consumers, who will ultimately foot the bill; but the surroundings were relevant. Hard-working Mr Courtney and Mr King and their spouses attended the five-day conference at the luxury Marriott’s Castle Harbour Hotel in Bermuda – and as everyone knows Bermuda is surrounded by, er, water.

OFWAT, the water regulator, likes ot boast of its own successes, but the residents of Clyst St George in Devon are not convinced. Their case has been sitting in OFWAT’s tray for three years.

Their argument began when the National Rivers Authority ordered a clean-up of local ditches which acted as open sewers for septic tanks. The bill for householders could have run into the thousands. When the case finally ended up in court it was ruled that the responsibility fell on South West Water to bring the ditches up to modern hygiene standards.

South West Water had better things to spend the money on – like share options worth £144,95 for its managing director. The consumers turned to the apparently powerful watchdog OFWAT to force South West Water to take action. Finally, after no encouragement from OFWAT, the company is now thinking of installing the new sewerage system. But it still refuses to foot the bill and has approached the residents for a financial contribution towards the clean-up.

The European Union, meanwhile, is investigating why Yorkshire Water, which is now trying to buy up its own shares, was once given £23 million of regional aid to fatten it up for privatisation when the sold-off company now makes profits of more than £140 million a year.

The money, from a fund earmarked regenerating regional economies in the EU, was spent on improvements to three sewage works – improvements that had to be carried out in any event. When the EU bureaucrats sent the cheque, perhaps they forgot to point out that regenerating local economies does not mean boosting shareholders’ dividends and executive salaries.

I have a feeling that Yorkshire Water was hit by so many scandals that it ended up re-branding itself as Kelda.

These stories are an example of why English water is in the terrible state it is: greedy senior management doing as little as possible to maintain or improve the supply, awarding themselves grossly inflated pay and benefits and flitting off to foreign junkets and complacent and apathetic regulators doing as little as possible to protect the interests of these companies’ customers.

Jeremy Corbyn and the Labour Party were quite correct to demand these companies’ renationalization, along with other utilities. And it can’t come soon enough.