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  1. ITV Report

Water bosses slammed for "lining shareholder pockets"

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Water firm bosses have been criticised for "lining shareholder pockets" at the expense of fixing leaks as the summer's first hosepipe ban hit seven million people.

The operation of the industry, privatised by Margaret Thatcher in 1989, is coming under increasing scrutiny, with Labour vowing to renationalise water if elected.

Steve Mogford, the chief executive of United Utilities, whose hosepipe ban is scheduled to begin on August 5, was paid #2.3 million last year, a 49% increase since 2013.

And bosses of England's nine privatised water companies banked #58 million in pay and benefits over the last five years, according to research by the GMB union published in June.

Household water bills rose by 40% above inflation between 1989, when the industry was privatised, and 2015, according to a National Audit Office report published the same year.

In a study of the privatised water industry between 2007 and 2016, Professor David Hall found water companies collectively made profits of £18.7 billion - and paid out £18 billion in dividends to shareholders.

Yet privatised water firms in England typically lose between 20% and 22% of supply due to leakage, according to figures from Ofwat, the water industry regulator.

Prof Hall, a global expert on the water industry at the University of Greenwich, said privatised water firms have an incentive not to fix too many leaks as it begins to bite into profits and become uneconomic for them.

He said:

They are making big profits, virtually all of it taken out of the industry in dividends, not reinvesting anything and racking up debt.

They can't recoup the cost of making reductions in leakage levels except by reducing profits, that's not what they want to do.

There's been consistent criticism of England's privatised water companies, consistent criticism for their relatively high leakage rates for the last 20 years at least, this is not a new issue.

If the leakage levels were not so high, the daily volume of water delivered would be higher, therefore we would reach the point of hosepipe bans much later.

Any restriction on water use is a restriction on people's quality of life.

Reaction to natural phenomena is something we all have to do but in 21st-century countries we should expect water companies to organise systems and plans so that when drought comes along our lives are minimally affected.

A hosepipe ban is a fairly serious thing to impose. Watching plants die in your garden through lack of water is not pleasant.

– Prof Hall, a global expert on the water industry

Prof Hall cited the publicly owned water industry in the Netherlands and Germany, where leakage is under 10%, along with Paris, which took back water supply from private ownership in 2010 and leakage levels are similar.

United Utilities' latest annual report shows in the last year it lost 454 megalitres (one megalitre is 1,000 litres) through leakage.

Cat Hobbs, director of We Own It, an organisation which campaigns for public ownership of utilities, said:

United Utilities is allowing an irresponsible level of leakage - 20%-25%.

A hosepipe ban might be avoided if that water wasn't being wasted. We need to bring water into public ownership now so investment can go straight into infrastructure instead of lining shareholder pockets.

In Paris, water is now in public ownership and leakage levels have been cut to 10%.

– Cat Hobbs, director of We Own It