If the fountains run dry, fine the bosses

Published in the Evening Standard 29 June 2006

You’ve got to pity Richard Aylard, the luckless soul who serves as PR spokesman for Thames Water. Along with Saddam Hussein’s legal adviser and Tim Henman’s motivational coach, Aylard is engaged in desperate, doomed work. Like them, he has been saddled with a near-impossible task, paid to do what simply cannot be done.

For no-one could buff the public image of Thames Water, not given that company’s current record. The latest embarrassment is its announcement that, should it succeed in its application for a drought order, it will turn off the fountains in Trafalgar Square, along with the displays in Sloane Square and Somerset House. There’ll be no car-washes or window cleaning; public parks will go unwatered. The green parts of the capital will turn brown; the bubble and flow of one of the city’s best-known landmarks will turn to dust.

In other circumstances, Londoners would regret this news, but understand it. If they believed the well was genuinely running dry, they would willingly accept the strictures sought by Thames Water – along with the ban, already in place, on using hose pipes on their lawns. They would show the spirit of ’76, when the nation heeded the call to conserve water and bowed to the slogan of the summer: shower with a friend.

But this is not 1976. For one thing, back then people accepted as a matter of common sense that there was a drought on. Even as a nine year old boy, I could understand that nine straight, hot weeks without a drop falling from the sky might reduce our water supply. It’s not like that now: last month was one of the wettest Mays on record, and the winter hardly felt dry. The water companies are left explaining that groundwater levels are alarmingly low, but that’s something we cannot see for ourselves. We have to take it on trust.

And trust is the one thing the companies do not have. That’s chiefly because Thames tells us there’s a water shortage even as it loses nearly 900m litres of water every single day through leaking pipes. The first time I came across that statistic, I assumed it was a misprint. But no, I read it right. Thames loses a third of the water it puts into the system, enough to fill around 350 Olympic-sized swimming pools, every day of the week. Now, I’m no engineer, but even I can work out that if the pipes didn’t leak, we’d have plenty of water and there would be no drought – and no drought order, no hosepipe ban, no threatened stand-pipes. And the fountains of Trafalgar Square could gush all summer long.

It’s at this point that poor Richard Aylard pops up to tell us that, in fact, Thames Water is spending £500,000 a day repairing aged pipes, some of which are 150 years old. He says this is an enormous task, neglected for decades, and that the company is doing all it can.

You’re almost convinced when Thames go and spoil it all by announcing, as they did last week, that their pre-tax profits rose by 31% to a whacking £346.5m. That’s £346.5m that could have gone repairing leaks – but went into shareholders’ pockets instead. Nor are Mr Aylard’s efforts helped when Thames Water customers, and that includes most Londoners, open their bills to see prices have increased by well over 20%.

To put it simply, Thames Water are charging us the maximum they’re allowed, they’re raking in enormous profits – and yet they tell us we can’t water our gardens or wash our cars because there’s a shortage, when we know they’re frittering away nearly a billion litres of the stuff every day.

So it’s little wonder that the public are not pulling together, Blitz-style, to take whatever hardship Mother Nature wants to throw at us. Because we don’t blame Mother Nature: we blame Thames Water.

Is there a solution, besides raging, a la Victor Meldrew, at our wilting plants and dirty cars? The first move is to pressure the company to spend more fixing those repairs: at present, they’re spending less than half of what they make in profit. Such pressure is the proper task of Ofwat, the regulator. It’s been setting targets for leak-reduction to Thames, targets that the company has missed three years running.

Now it’s time for Ofwat to say enough is enough and to use the power it has. The severest penalty at its disposal is a fine of ten per cent of turnover. For Thames’s water business that would amount to £65m. (Under cirrent rules, that £65m would go straight to the Treasury: Gordon Brown should make his own gesture and ensure the cash is spent on pipe repairs.)

Ofwat is due to make its decision in the next fortnight: let’s hope it plays hard, perhaps even demanding that Thames pay back the extra cash it’s taken off consumers in return for repairs that haven’t happened.

That would at least send a message to the company that it has to change. It’s no good Aylard insisting that profits are essential, otherwise no investors would come forward to pay for the massive programme of repair work. Smart investors would know that in return for stumping up serious cash now, they would be on for big profits long into the future: after all, they will have monopoly control over a commodity everyone needs. Bets don’t get much safer than that.

And if Thames Water don’t get the message, there is another way. In Wales, water is provided by a not-for-profit company which either reinvests any financial surplus or pays it back to the consumer. Welsh Water has done that for the last two years, giving every household a £19 rebate on their last bill. And consumer groups say the quality of service has improved radically.

That Welsh model seems remote from London just now. But if the summer ends with standpipes on the streets, the demand for it could get louder – and Thames Water will find itself drowning, with few friends coming to the rescue.

Posted on June 29, 2006 04:53 PM

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