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However, governments never like to climb down so we need to
be on our guard. This all blew up as the Environment Bill made its way
through Parliament which placed some obligation on water companies to
better monitor sewage discharges but there was no legal duty on water
companies to reduce raw sewage discharges. The rebellion of Tory MPs
challenged this lack of legal duty. As a result of the U-turn Ministers
will write in their own amendment to place a legal duty on water companies
to cut sewage discharges.
I say we need to be on our guard for three reasons. Firstly,
the word cut. How will that be defined? What will be the benchmarks?
Frankly, the volume of sewage discharges is already unacceptably high so
even if they are cut in half, which I’m sure the water companies,
government and regulators would claim as a massive win, they will
still be unacceptably high. Secondly, who will monitor and measure the cut?
We all know the abysmal record of the Environment Agency in this respect.
Thirdly, and probably the nub of this is cost. Pre-U-turn,
when Government whips were trying to quell the rebellion, cost was cited as
the reason why no legal duty should be placed upon water companies.
However, it is hard to know where we are when it comes to the question of
cost. The Storm Overflow Taskforce, made up of the water industry and our
friends Ofwat and the Environment Agency, put the cost in range £3.9bn to
£62.7bn. Yes, really that is no typo. That is a range of 1,607%. I think the
last time I saw a percentage on that scale was in the small print of a
payday loan advert.
Unfortunately, I haven’t been able to find any other cost
estimates so let us play around with what we have. In terms of the
consumer, the low end of that £3.9bn bill spread over ten years would mean
an extra £14 on each household water bill each year. At the high end that
£62.7bn translates to £221. The average annual water bill is currently
around £450. Or looked at another way government has been more than ready
to add green levies on our electricity bills which currently stand at 23%.
If we did the same with water that would produce roughly £30bn over 10
years, so in the midrange of the Storm Overflow Taskforce estimate.
Alternatively, and probably more politically palatable for
some, we could go after the profits of the water companies. Since
privatisation shareholder dividends have been in aggregate £57bn, so
roughly £2bn a year. Say we cut the dividends in half that could be a
billion a year towards sewage infrastructure, but still a good way short of
the mid-point of £3bn a year.
So, whichever way you cut it, the solving of our sewage
problem is going to fall on the bill payer. We’ve won the emotional
argument. Now we need to win the fiscal one.
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