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: Account Manager

£20000 - £35000 per annum: Recruitment Genius: This full service social media ...

Recruitment Genius: Data Analyst - Online Marketing

£24000 - £35000 per annum: Recruitment Genius: We are 'Changemakers in retail'...

Austen Lloyd: Senior Residential Conveyancer

Very Competitive: Austen Lloyd: Senior Conveyancer - South West We are see...

Austen Lloyd: Residential / Commercial Property Solicitor

Excellent Salary: Austen Lloyd: DORSET MARKET TOWN - SENIOR PROPERTY SOLICITOR...

Day In a Page

Read Next
 

Letter from the Deputy Editor: i’s Review of the Year

Andrew Webster
RIP Voicemail?  

Voicemail has got me out of some tight corners, so let's not abandon it

Simon Kelner
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all