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MICHAEL GOVE calls Ofwat’s decision to fine Thames Water £120 million — including £65m to be paid back to its long-suffering customers — “decisive action.”
The corporate giant has “completely failed” in its duty to customers by neglecting to stop leaks, the Environment Secretary admits, but the Ofwat ruling that will see each of the firm’s customers reimbursed the princely sum of £15 over two years reassures him that the system works.
It “shows an ongoing commitment to ensuring that customers receive the service they deserve.”
But if the minister thinks a slap on the wrist will be enough to make Thames Water mend its ways — or even its pipes — he hasn’t been doing his homework.
A firm with monopoly control of the supply of water to the capital, which registered operating profits of over £600m last year and which has paid out billions in dividends to private shareholders even while more than doubling its long-term debt (which was over £10 billion in 2016) will hardly feel the pinch at being fined a few million.
After all, a record-breaking £20.3m fine just last year, which Thames incurred for dumping the equivalent of 1,700 Olympic swimming pools of sewage into the river, has clearly failed to prick its conscience.
Thames’s owners — a faceless coterie of Canadian pension funds, the Abu Dhabi and Kuwait investment funds, BT and the China Investment Corporation — can sleep sound in the knowledge that the privatised water supply in England and Wales will keep the payouts flowing.
Like other Tory sell-offs — the railways spring to mind — privatised water is a racket allowing parasitical “investors” who have neither created the water itself nor even built the infrastructure used to deliver it to rake in the profits at our expense.
Privateers who bought our water and sewage systems courtesy of the Thatcher government in 1989 were not burdened with the sector’s £4.9bn debts — the Tories lumped the public with those — and were given a golden handshake of £1.5bn of our money as a pat on the back for agreeing to rob us blind.
The price of water has risen by 40 per cent above inflation since. Thames has paid no corporation tax in a decade, but that doesn’t stop it running to the taxpayer for help whenever it has to spend money: former chancellor George Osborne guaranteed the £4bn it needs to borrow to build its much-vaunted “super-sewer” under London.
Nor has it used its tax savings to ensure it is able to meet its pension liabilities, which were in surplus a decade ago but had hit a deficit of £260m by 2016.
Thames Water isn’t a bad apple. Its corporate irresponsibility is typical of the privatised water industry — Corporate Watch and the GMB union found this week that the bosses of nine private water companies had trousered £58m in pay, pensions and perks over the past five years.
Severn Trent’s CEO’s £2,450,700 pay packet has gone up 50 per cent since 2013. The head of United Utilities pocketed £2,310,000, a 49 per cent increase over the same period and equally divorced from any conceivable improvement in performance.
Shadow chancellor John McDonnell’s commitment to replacing “this dysfunctional system with a network of regional, publicly owned water companies” is the only solution that will end the rip-off.
Fining companies that can continue to pay millions in dividends while wallowing in debt and avoiding tax is a pointless exercise. Water belongs to us all and its supply is a natural monopoly.
Let’s take back what’s ours.
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