Bills are rising but the government seems incapable of standing up to the water companies

We need an ambitious approach to water reform and the future of our water resources. We haven’t seen much evidence of that from the government.

Water companies

Andrew Pakes is a former advisor to the shadow cabinet on environmental issues and is the Labour & Co-operative parliamentary candidate for Milton Keynes South

According to press briefings, it seems that water bills are next in line for the cost of living debate. After being knocked against the ropes by Ed Miliband during the conference season, the prime minister is now planning his own autumn cost of living drive.

Although the average cost of water is dwarfed by energy prices, water bills have been quietly creeping up in recent years. The rise in water bills has been matched by the drop in family income since the start of the recession. Average water bills for 2013-14 are £388 (with great variation around the country), 3.5 per cent higher than in 2012-13. Bills went up by 5.7 per cent on average the year before.

The water regulator, Ofwat, also estimates that 2.6 million households across England and Wales spend more than five per cent of their disposable income on water and 5.4 million households are paying more than three per cent.

And yet, the government has been remarkably silent on water bills, just as it has with wider cost of living concerns. It has failed to bring forward any plans to help families feeling the squeeze from rising water bills, despite Labour legislating for social tariffs in the water sector as part of the Flood & Water Management Act (2010).

The coalition consulted on introducing social tariffs in 2012, but opted for a voluntary approach whereby water companies can make their own decision about whether to offer reduced rates or not. Just as with energy, Labour is setting the agenda on water reform. In Brighton, Mary Creagh and Gavin Shuker called for the mandatory introduction of social tariffs to help households most in need, and a more ambitious approach to protecting our water resources.

The Water Bill tabled by the government says nothing about affordability. After two years of delay the government has published an unambitious bill that fails to address sustainability, the ecology of our rivers and water basins or the long-term use of our resources.

Whilst it will bring in some elements of competition, it fails to tackle the abstraction regime and the right of permit holders to take water out of water courses. It may even make matters worse by allowing permit holders to charge a value for the excess water they can abstract adding a new level of commercialization to what is a public good.

The government has delivered a £50 annual reduction to water bills  in the South West to reduce their bills. The South West is a classic example of what happens when privatization goes wrong.

Even the government admits that privatization failed to create a sustainable market there. Privatisation created a water company in Devon and Cornwall responsible for 30 per cent of England’s coastline, but with a customer base of just three per cent of the population. There had been little investment in sewage infrastructure, and so the bill for cleaning up the coastline was simply passed onto local water customers, leaving them with the highest average bills in the country.

The water companies have leveraged in extensive infrastructure investment since privatization, but there is little accountability to customers. Water is a heavily regulated sector with prices set over a five-year period. Ofwat should be standing up for consumers and demanding real-terms bills fall in the next price period. The government should be getting tough on tackling bad debt which adds £15 a year onto everyone’s bill.

The government’s latest advice to Ofwat fails to mention limiting prices, such as the cap they have imposed on rail fares.

The cost of living crisis provides an opportunity to re-examine water affordability. With prices rising faster than wages, David Cameron knows that families are facing a squeeze. But the answers involve government standing up to vested interests and championing consumers.

We need an ambitious approach to water reform and the future of our water resources. We haven’t seen much evidence of that from the government.

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