Questions for the water industry

Inflation-busting price rises (bills up three-fold even though other prices have doubled), heavy reliance on debt finance, profits of 35 per cent, and the lack of any market in water supply all emerge as key features of the post-privatisation water world.

Contrary to popular belief, Wales doesn’t occupy some sort of water Nirvana either.

Althoug Glas Cymru is a not-for-profit, it nevertheless is a private company not a state-owned one.  In contrast, the water industry in Scotland and Northern Ireland remain in public ownership.

Nor has Glas Cymru been exempt from some of the same practices as its sibling water companies.  Its average annual bills are above average, even amongst privatised companies and its estimated profit rate is not far behind those of the conventionally-private water companies.  Its main difference is it doesn’t pay a dividend.

Not all Welsh households are Glas Cymru customers. A minority of households in Wales are supplied by Severn Trent, a stock-exchange listed company which has enjoyed handsome profits despite below -average household bills.

It’s not just about bills.

The impact of water companies on Wales is much wider than what they charge consumers. Large swathes of Wales are used to supply the water that companies sell on to consumers in the midlands and north west as well as those in Wales. So even if Welsh consumers are somewhat sheltered from the worst excesses of privatisation, the environment is not.

So, Welsh people have a legitimate interest in answers to the questions of how not only Glas Cymru operates but the water industry as a whole.  As the NPI report asks:

1.  Why has the ownership of this industry changed so much since privatisation?

2. Why have water bills trebled in 25 years when inflation overall has only doubled – and can

the share of the average bill that goes to profit be justified?

3. What can consumers do if they are unhappy?

4. What dangers lurk in the industry’s dependence on debt finance?

5. What is the alternative to the government taking on some of the industry’s risk?

6. What would a ‘responsible’ water industry look like?

 It would be good if an Assembly Committee could begin to probe some of the answers.

Victoria Winckler is Director of the Bevan Foundation.