Water price hikes will impact millions of UK consumers

In a move that favours corporations over consumers, the UK Competition and Markets Authority (CMA) has approved price hikes for four water companies. This comes despite a cap set by Ofwat to protect consumers during the cost-of-living crisis. Notably, this decision mirrors past attempts by water companies scrambling to offset costs resulting from their failure to maintain critical infrastructure.

According to the Guardian, five companies appealed to the CMA for approval of additional price hikes. Four appeals by Anglian, Southern, Wessex, and South East Water were granted. However, Northumbrian’s request was denied. Their customers won’t face further increases. In contrast, the companies that succeeded serve a whopping 14.7 million customers. This signals eye watering hikes for millions of billpayers who will bear the brunt.

The rising cost of greed

These appeals came after Ofwat allowed companies to hike consumer costs by 36 percent by 2030. However, only 17% of the £2.7bn extra revenue they’ll generate will be spent on repairing “creaking networks of pipes, sewers, and reservoirs.

Instead of cutting obscene bonuses to cover “shortfalls,” they’re boosting profits while allocating a meagre sum to urgently needed repairs. It’s clear these appeals were just a revenue-generating move.

Prioritising profits while punishing consumers is nothing new for our privatised water companies, as Prem Sikka pointed out on X:

Bailiffs for consumers, bonuses for bosses

Calls to re-nationalise essential services have long been ignored by Britain’s ruling elite, under Labour and the Tories.

When water company bosses demand higher profits, the CMA grants their requests. This stark imbalance leaves consumers trapped and unable to ‘shop around’. Every hard-earned penny is shaken from them to line the pockets of shareholders and executives.

We recently wrote about the bailiffs sent out to chase underpayments and overdue bills from struggling consumers:

Overall, Yorkshire Water, Southern Water, and South West Water (SWW) made the heaviest use of bailiffs, when the data is adjusted for population. Meanwhile, Wessex Water hasn’t used bailiffs for over a decade.

However, other companies also made massive use of debt collectors on specific years. For example, Severn Trent sent bailiffs out 11,574 times over 2022. Even more egregiously, Southern Water instructed bailiffs a staggering 15,707 times in 2019.

Labour MP John McDonnell highlighted the fact that water companies have broken the law hundreds of times in recent years, with little real backlash. He said that:

“Only five directors of water companies have been prosecuted in the last 30 years. Contrast that with the thousands of mainly poor people the water companies set the bailiffs on each year.

The system is more interested in prosecuting families that are struggling to pay their water bills than the company directors responsible for polluting our rivers and seas while lining their pockets from profiteering at the expense of both their customers and our environment.”

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These appeals are about to make things significantly easier for one water company in particular, South East Water, currently facing a hefty £22m fine for supply failures. We’ll be watching closely to see if and when the fine is paid. In related news, the Guardian reported that Pennon Group, which owns South East Water, is likely to face further fines for power outages.

In the end, as these appeals make clear, it’s consumers who foot the bill, while executives find loopholes.

Punished for the sins of water giants

The Guardian also highlighted growing discontent among the British public over the value for money billpayers are receiving, writing:

The decision could prove a political headache for Emma Reynolds, the environment secretary, after the industry’s ratings hit rock bottom last October amid record levels of sewage spills.

The pollution scandal has returned to the spotlight in recent weeks after the Channel 4 drama Dirty Business told the story of how private companies have been allowed to contaminate Britain’s rivers and waterways.

They also inform that Kirsten Baker – chair of an independent group who approved the increase – attempted to justify the decision:

We’ve rejected most of the bill increases water companies asked for but allowed limited extra funding where that’s genuinely needed, balancing concerns about affordability with the need to secure our water supplies and cut pollution.

A significant part of this extra money reflects market movements since Ofwat’s decision.

However, the Guardian added:

Mike Keil, chief executive of the Consumer Council for Water, said the increases “may be less than what these five water companies wanted but they are still more than what many customers can afford or will consider fair”.

“We’ve seen almost a tripling in complaints brought to us about the affordability of water bills in the past year and further increases will add to the worries of some struggling households,” he said.

Consumers are not a magic money tree

Inequality is now wider than Dickensian Britain levels, and it is undeniable that ordinary people continue to bear the burdens created by the failures of the rich and powerful.

Inequality now surpasses even Dickensian levels, and it’s undeniable ordinary people shouldering the burden – punished for the dirty crimes of corporate offenders.

People are stuck, unable to switch suppliers, a harsh reality for families struggling as costs spiral due to corporate greed. Ofwat is meant to balance the interests of consumer and supplier, but have been bypassed by the CMA, failing the British public.

Featured image via the Canary