Labour’s letting water companies take the pee with rising bills

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”.

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”.

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”.

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-d…

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

“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:

The public knows what matters to them. But does PM Starmer?

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