Parliament and Politics: Water prices rise 'almost 50% over five years'
Wednesday 23 September 1992
According to an international water price survey, prices have leapt by 35 per cent since privatisation and consumers will continue to bear the brunt unless there is a fundamental review of the UK water-pricing formula.
German consumers face the highest charges, where the costs of modernising the eastern part of the country after unification has driven up prices, according to the 12-nation survey.
German users are charged 78p per cubic metre, compared with 54p paid by Britons.
Consumers in Belgium, France and the Netherlands all paid more than the British. Canadians enjoyed the cheapest water at 19p per cubic metre.
In Britain, the inhabitants of Eastbourne on the south coast paid more to fill the bath than anyone else at 93p per cubic metre. Ablutions were cheapest in Stirling at 27p.
Londoners could get scrubbed and cleaned for 44p while those in Birmingham and Manchester were charged 53p.
UK prices increased by 12.2 per cent last year, more than three times the rate of inflation, the report by National Utility Services says.
Andrew Johns, NUS director, said: 'The continued rise in costs this year will certainly fuel the debate as to whether the formula fixed at the time of privatisation to control price increases has been set at the right level.'
The formula allows the companies to raise prices substantially above the inflation rate. Last year they agreed to impose increases below the maximum level allowed after pressure from Ofwat, the water industry watchdog.
Ian Byatt, Ofwat director general, announced a review of the formula but consumers will have to wait until 1994-95 before it takes place. Last month, he warned that average water bills could rise to pounds 250 by the end of the century, compared with the current average of pounds 170. Tightening environmental standards would be the main cause of the increases, he said.
British consumers were having to meet the costs, the report says. 'No benefits of any kind can be seen for the consumers, who are forced to pay a monopoly supplier prices escalating above inflation,' Mr Johns said.
Water companies persuaded the Government that the formula was necessary to fund capital investments required to improve efficiency and bring 'what has been widely claimed as a Victorian industry into the 1990s', the report says.
EC directives on water standards were also cited as reasons for its existence.
'This generous price formula must now be strongly questioned, as consumers see no benefit from an improved system - only increased management salaries combined with increased dividends and profit declarations from the water companies,' it says.
The report predicts a dismal future for UK customers, who will not benefit from water privatisation until the industry decides it is time to improve the pricing structure or some effective form of competition can be introduced. 'The outlook is one of continuing high price rises for the coming years,' it concludes.
International Water Price Survey; National Utility Services, Croydon, London.
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