For the fourth year running, water companies have been ordered by the regulator Ofwat to return money to customers, in the form of lower bills, for missing key pollution and leak targets.
Refunds amounting to £158 million in total will translate into a reduction of bills of less than £10, however, as charges are set to rise under a new five-year deal.
The companies are being rightly pressed to invest more in infrastructure to improve water quality and stop our rivers and seas being used to dump sewage. Yet at the same time the money they need for the task is being taken from them.
No one doubts that the water companies have been poorly managed and allowed to rack up huge debts while dispensing generous dividends. But this happened on Ofwat’s watch and should have been reined in years ago.
Where is the rationale in imposing fines on indebted companies expected to invest heavily in new pipelines and sewers? How can they meet the environmental requirements imposed on them without achieving the returns needed to attract investment? They just end up borrowing more and getting deeper into the mire.
Ofwat sets out its “vision” as delivering everyday excellence, ensuring the long-term stewardship of the environment and pursuing value for money for the consumer. Among the regulator’s duties are “to secure the long-term resilience of water supply and wastewater systems; and … meet the need for water supplies and wastewater services.” Can Ofwat claim to have achieved any of this?
The question that needs to be asked is whether the problem in the water industry is not just the failure of the companies but of the regulator itself.