Water pledges boil down to so much hot air

COMMENT: 'They are committed to sharing the benefits of efficiency with customers. But ask them if this means some throttling back in their dividend policies and the response is: "No chance" '

The privatised water companies are so unpopular it is hardly surprising their little attempt at image enhancement has gone down like a lump of raw sewage floating off the Cornish coast. When it comes to customer satisfaction the glass, sadly, will always be half-empty for the privatised water industry, not half-full.

Still, yesterday's "vision of the future" setting out how much better things will be one of these days is a start, even if the 32 "pledges of action" quickly dissolve into flannel on closer inspection. It might seem extraordinary that an industry whose business is supplying water should actually need to pledge that henceforth its customers will be provided with water when they want it. But it is less surprising when you consider that until very recently Yorkshire Water's motto was you can have the stuff when we've got it.

So the industry is getting somewhere but only at a painfully slow pace and only, one suspects, as the dread prospect of a Labour government and Frank Dobson in charge at the Environment Department looms ever larger. The problem with the specific pledges of action nine of the 10 privatised water firms committed themselves to is that they do not boil down to anything of the kind.

Hosepipe bans will become a thing of the past but only four of the nine can say precisely when. Apart from Severn Trent (which is landlocked) none of them can say with hand on heart that they will never again discharge untreated sewage into the sea.

All of them are committed to "sharing" the benefits of greater efficiency between customers and shareholders. But ask them whether this means some throttling back in their progressive dividend policies and the response is, "No chance."

Even the pledge to reduce leakage rates to levels which are "economically sensible and technically feasible" is not new and in any case will not bear fruit until well into the next millennium. In fact the Meeting the Challenge document issued yesterday is, as Mr Dobson pointed out, groundbreaking mainly for accidentally leaking the Government's aim of foisting compulsory metering on everyone.

The best bit of all is that the Water Services Association had braced itself for precisely the sort of negative reaction yesterday's initiative received. It is nice to see that seven years of torrential criticism has not dented its sense of humour.

Cleaning up the act offshore

A decade ago, the US resorted to crude economic blackmail to make some of the more notorious Caribbean money laundering centres start cleaning up their act. This can work for a time, but as one country is squeezed the crooks move rapidly to another. Recently, the emphasis has been on international co-operation and agreement to bring offshore centres to heel, and this has involved a wider group of havens than the Caribbean.

Is it working? Hard to tell, because money laundering and tax-evasion and avoidance, another serious attraction of offshore centres, are by definition secretive businesses. However, Michael Foot, the Bank of England director in charge of supervision, yesterday dropped a strong hint that there are some laggards out there who are failing to honour agreements made to tighten banking supervision and stamp out money laundering. He made clear in a speech that if they did not pull up their socks they could find their banks banned from reputable financial centres in the European Union.

The Basle Committee on Banking Supervision is attempting to raise the standards of bank supervision in offshore centres while the Financial Action Task Force, based at the OECD in Paris, is working to improve co- operation in the fight against money laundering. The most important recent breakthrough came last year when the Basle Committee reached an agreement with the Caymans and 18 other offshore centres, including Guernsey, Jersey, the Isle of Man and Gibraltar, to raise standards of supervision and provide much greater information about the activities of banks in their jurisdictions.

This was extended later in the year to 140 countries, which agreed to improve their own legislation and procedures by mid-1998.

It is hard to be sure which are the laggards worrying Mr Foot. Gibraltar, at one stage more of a problem than the Caribbean, has at last tightened up. The Caymans, a British dependency once synonymous with dubious offshore activities, was applauded by Mr Foot - who was there for a conference on financial crime - for passing British-style anti-money laundering legislation last year.

On the other hand, the Foreign Office announced before Christmas that it was prepared to use reserve powers to improve financial legislation in the Caribbean dependencies - presumably meaning the other four, Anguilla, the British Virgin Islands, Montserrat and the Turks and Caicos.

But as Mr Foot admitted, laundering is not just something done in offshore centres. Big money may be passing through laundries much nearer to home - even London, where the laws are tough but the sheer volume of financial transactions provides the opportunity for crooks to hide their tracks.

Care for elderly in the doldrums

Care for the elderly should, in theory, be the most fantastic growth business, for as everyone knows, we have an ageing population. And one day it surely will be. For the moment, however, it flounders in the doldrums, caught between the twin restraints of swingeing local authority cutbacks and an industry-wide failure to supply the market with what it really wants.

Nowhere is this more apparent than at TC Group, the industry leader. Consolidation in the still highly fragmented provision of elderly care has clearly not been the panacea expected when bid-fever took hold of the sector in the middle of last year. TC Group's warning yesterday that the vice-like squeeze on local authority budgets was continuing to hit occupancy levels and profits suggests that bigness provides little shelter from the chill winds currently blowing through the sector.

Cynics will argue the creation of TC in October following the merger of Takare and Court Cavendish was a marriage made in hell. The board, a combination of all the directors from the original companies, always looked top heavy. The mechanics of the merger may have distracted management momentarily, but the main problems of TC stem from the legacy of Takare's original and flawed strategy.

It could hardly help its hefty skewing towards state sources of income, which are now being screwed down by the Government. But building those cheap and cheerful homes to meet the needs of local authorities looks to have been the wrong approach. The next century baby-boomers will look for much higher standards for their old-age care than are on offer now. The trickling 1 to 2 per cent growth in the market now could turn into a flood then, but only a few of the present operators seem to preparing themselves to cope with it.

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