Southern Water may not be able to guarantee that water comes out of its customers’ taps but, credit where it is due, it does know how to lay on a metaphor.
On the day almost 60,000 Hampshire residents faced having to queue for fresh water until the weekend the company, already carrying £6bn of debt, was told it can increase bills by 53% in order to borrow more.
The supply interruption for households, schools and hospitals near Southampton summed up the challenge of fixing a system tested almost to destruction by Britain’s 35-year privatised water experiment.
On the one side are customers sick, sometimes literally, at paying higher bills for what looks like failing services and rising tides of sewage. On the other, investors and creditors without whom the financial model collapses, demanding a greater return to pour good money after bad.
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In the middle is Ofwat, a regulator many blame for creating the current mess through laissez-faire oversight, whose five-yearly “price review” process concluded this week is, by common consent, the most consequential since publicly owned regional water companies were sold off in 1989.
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After decades in which the regulator’s focus was keeping bills down, public outrage at pollution and equally toxic financial engineering has changed the politics and priorities of water, but not the solution.
In its settlement, Ofwat has come close to meeting companies’ full demands to spend, borrow and charge more, on the condition they improve performance, cut sewage outflows and expand the network to cope with population growth and climate change.
