Monday, 11 August 2008

What do you do with a privatised monopoly that is out of control?

I am old enough to remember back in the 80's that the Liberal Party (as then was) went through some contortions in deciding how to deal with the Thatcher privatisations.

Hindsight is a wonderful thing, but one way of deciding what to support and what to oppose is to look at whether you are simply turning a public monopoly into a private one. In such cases there is a case to be made for saying that there can be little benefit in privatisation. After all, the basis of capitalism is that greed is good and if there are excess profits to be made from the hapless citizen for a product that they cannot do without then a private company will go all out for those excess profits.

In such cases where a genuine market could be created then privatisation can certainly bring benefits (albeit, with the need for a strong regulator to watch out for price fixing).

So, in simply terms, privatising airports good, privatising water bad.

The latest round of water company business plans has shown up just how terrible a privatised monopoly can be. Here in the South West we have 30% of the coastline and about 3% of the population. We also have a tourist industry that relies on clean beaches for business. So, even if we did not have environmental sensibilities to start with, we have a business need for clean coasts.

A difficult job seems to my mind to have been done extraordinarily badly by South West Water. It's not as if they pay vast amounts to their shareholders or to their bosses in bonuses, but they still manage to provide a fairly terrible service at the highest possible cost to customers.

The latest round of price rise bids are a good exemplar. Welsh Water (a company which also has a good deal of coastline to deal with) are pledging to increase bills by inflation only. Other companies are asking for permission to raise prices by between 0.7% and 3% above the level of inclation. You would have hoped that companies might have been pledging to cut bills about now having been able to increase prices for more than 15 years in a row, but inflation level rises between 2010 and 2015 seem fair enough.

And then we heard the figures from South West Water. They want to raise prices for those of us with water meters by about 12% as well as the rate of inflation. If you do not have a water meter then the price rise will be 40% above the rate of inflation. Average bills will hit around £1000.

SWW claim that after that point they hope to be able to ease back on price rises.

I cannot think of this as anything other than a disgrace. It is certainly the case that the privatisation of water was handled badly in the first place. There should have been extra investment by the Government in treatment facilities to put the South West on an even footing with the rest of the UK.

However, this cannot be an excuse for the ludicrous mismanagement by South West Water. The time has come when the Government must say enough is enough. Unless SWW can find a way of delivering a high quality service, including the pledged investment, with average bills rising by no more than the rate of inflation, then the time has come for the Government to strip them of their right to fleece local people in this manner each and every year.

If this rise is allowed to go ahead then many people in Cornwall will be having to pay more than one in every ten pounds of their income in water charges.

Enough really is enough.

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