Leading article: Private water companies must do more to deliver

Share
Related Topics

The privatisation of utilities proceeded from the principle that market competition would offer an improvement on state monopoly. It would help keep prices down and encourage better service – at least, this is how it was sold to consumers. For governments the expectation was that commercial companies would, by their very nature, run leaner, more efficient operations and so be able to invest more to update old infrastructure.

In many respects, privatisation has succeeded, with the telecommunications sector leading the way. When British Telecom was lambasted earlier this week for being the worst home phone supplier, this was not the national disaster it might have been when it held the monopoly. Those who judge BT's service inadequate have little difficulty finding a replacement – and the competition gives BT an incentive to improve.

Compared with telecoms, the privatisation of the energy utilities has produced more mixed results. Recent price rises for oil and gas on the international market have precipitated sharp rises in the price of domestic energy; the benefits of "switching" have been mitigated, and the hassle factor has also to be considered. On balance, though, we must also consider how prices might have risen, had the sector not been deregulated – and whether the level of investment would have been anything like the same.

Were a vote held for least popular utility privatisation, however, the winner would surely be water. This is partly because a clean water supply is widely seen as a natural right, so sharp price rises naturally raise customers' hackles. It may also be because the competition element is limited to tendering for the contract. Customers cannot pick and choose their supplier. The only way to reduce the bill is to have a meter fitted and economise – but this will reduce costs only for lighter users. And while good husbandry of water, as an increasingly precious resource, is to be encouraged, the steepness of recent price rises, combined with poor service, has produced many unhappy customers.

Without the chance to "switch", their only recourse is to the regulator. Severn Trent is the latest water company found to have fallen disgracefully short of the standard required. Ofwat proposed yesterday to fine it almost £36m – around 3 per cent of turnover – not only for poor customer service, but for deliberately providing false information, which allowed it to raise prices unjustifiably. The company also faces further fines in the criminal courts. So far, Severn Trent has responded with an offer to reduce bills by £2.40 per home for the next two years – a concession customers could be forgiven for finding inadequate. It is also pleading that its current management had nothing to do with the misrepresentation, for which previous – ousted – managers were responsible. Swingeing though the company may feel the financial penalties are – especially if they are augmented by fines in the criminal court – it is hard not to believe that even tougher measures are needed when a company deliberately misleads in this way. For the customer – who has no choice of supplier – it is immaterial who was in charge at the time.

Ofwat has generally shown itself a doughty regulator. In February it imposed a similarly large fine on Southern Water for distorting its true performance, and last year it fined Thames Water £12m for "inadequate" reporting and poor service, while stipulating that it had to comply with requirements on leakages. Yet if three major water companies have been caught massaging their figures and failing to meet service standards in less than a year, more exacting oversight is surely required – at the time, not just after the fact.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Sales Advisor - £35,000 OTE

£18000 - £35000 per annum: Recruitment Genius: A Sales Advisor is required to ...

Recruitment Genius: Customer Service Advisor / Contact Centre Advisor

£16000 - £20000 per annum: Recruitment Genius: As the UK's leading accident an...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Web Hosting Support Agent

Negotiable: Recruitment Genius: One of the North West's leading web hosting pr...

Day In a Page

Read Next
 

If teenagers were keen to vote, it could transform Britain

Peter Kellner
Crocuses bloom at The Royal Botanical Gardens, Kew  

From carpets of crocuses to cuckoos on the move, spring is truly springing

Michael McCarthy
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003