‘Thames Water creditors’ sewage deal will not wash with customers’

In Roald Dahl’s “Matilda” the headteacher Miss Trunchbull who throws children across the playground gets away with it by going “the whole hog”. She says “Make sure everything you do is so completely crazy it’s unbelievable”.

Thames Water’s creditors have certainly been taking lessons from her. Their latest bid to Ofwat is to be allowed to release sewage, outside of legal limits, until 2040.

It’s the government’s job to not get so distracted by all the other crazy things going on in politics that they can’t spot this unacceptable behaviour. And step in to stop it.

Our new polling of Thames Water customers – the first of its kind – shows households in the region are desperate for them to do so.

Labour’s sewage reduction targets and new water legislation will be irrelevant if a whole new precedent is created to increase pollution for the next 14 years.

READ MORE: ‘Labour has a strong story to tell about its progress on tackling hunger & hardship’

The polling by Survation reveals that a majority of 1000 Thames Water customers believe that the creditors’ deal is unacceptable, that Ofwat should reject it and should put the company into special administration. 68% of Thames Water customers believe that the company should be nationalised and run in the public sector.

Negotiations over the deal should have concluded before Christmas but haven’t because of the demands for environmental leniency.

If you are a Labour MP now is the time to tell Ofwat and the government that this deal or anything like it cannot be allowed. The government must bring Thames Water into special administration immediately, enabling it to slash far more of the debt than any alternative (40-55% compared to the creditors’ offer of 25%).

In this context it is also quite unbelievable that yesterday former MP Natascha Engel wrote a piece in the Times commenting that “punishing Thames Water will make things worse”. She acknowledges that the country’s mood is to condemn fat-cat chief executives and shareholder dividends – on that we agree!

But her arguments on behalf of private investors are deeply flawed and assume the learned helplessness of a government that believes nothing can be done without the private sector (while simultaneously – and rightly – bringing rail franchises into public ownership).

Engel argues that the government can’t afford to fund water companies, missing the obvious point that they are profitable assets because customers pay bills every month. The problem under privatisation is that a huge chunk of that money gets extracted in dividends and leaves the country instead of being invested in improving infrastructure. This is a state sanctioned rip off and billpayers’ patience is wearing thin.

Our polling shows that 79% consider Thames Water’s recent 35% bill increase to be unreasonable. Over one third (34%) say they can’t afford this bill increase.

Engel argues that we mustn’t discourage investors. But we need investors like Thames Water’s creditors like a hole in the head. Research by the University of Greenwich shows that shareholders have contributed less than nothing since privatisation in 1989.

When asked how much shareholders should be compensated if the entire water sector came into public ownership, the most popular option from Thames Water households was ‘no compensation’, with 36% of respondents in favour. This is a powerful statement.

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Instead of ongoing shareholder rule, customers want real, meaningful accountability with environmental groups being on Thames Water’s board (66% in favour) as well as households (77% in favour) and Thames Water employees (64%).

A key argument that Engel links to is that the “fiscal rules” must be defended – but surely they are in place to show sound financial management? It is putting the cart before the horse to force extra costs onto billpayers and achieve a smaller haircut on debt from the creditors simply to have a nominally lower national debt.

The cost of the government tying its own hands on Thames Water is extremely high – the trashing of our environment and households who are getting poorer and angrier about the cost of living by the day. The political cost includes the disillusionment, cynicism and fury of people who believed this government was on their side.

Nigel Farage is ready to harness these emotions and has said – if disingenuously – that shareholders must lose all their money and not be bailed out. A third of Thames Water customers said that the future of the company was likely to influence their vote at the next General Election.

Tony Blair’s government chose to defend the public interest at the cost of angering shareholders over their compensation levels when Railtrack collapsed. This government must bite the bullet and do the same.

It’s the government’s job to restore order to the chaotic, failed privatised water system instead of defending the status quo. If 35 years of privatisation had succeeded we wouldn’t even be having this conversation.

Water ministers must stop putting themselves in the unenviable position of defending a failed system when nine out of ten countries run water in public ownership.

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We are contacting all 79 Thames Water MPs this week, asking them to sign an open letter to Ofwat calling on them to reject the outrageous deal being proposed by the creditors.

Thames Water households have made their position very clear in our new polling. It’s time for the government to stop letting a handful of creditors set their own crazy rules. They have already demonstrated that there is no limit to what they will try to get away with.

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