The GMB has called for the water industry to be re-nationalised after a new report shows customers are being charged over the odds to line the pockets of shareholders.
The Centre Forum report, published yesterday, finds:
* since 2005 prices for water have been too high, more than required to run a decent service for customers whilst providing a reasonable return for investors;
· This has led to very high profits for water companies. These profits, which are funded out of consumer bills, have not been spent on improving customer service or for investing in infrastructure;
· Money has been transferred straight to shareholders who have seen extraordinary returns on their investment.
· Ofwat got things wrong in price reviews after 1999 by overestimating the cost of capital for water companies:
· The winners have been the shareholders who have used this extra revenue to borrow billions and transfer it out of the company through very large dividend payments. The losers are undoubtedly the public who are paying for it.
· there are allegations of widespread tax avoidance;
· the level of corporate borrowing is becoming unsustainable;
· the ownership structure means that there is very little public accountability;
· most of the largest water companies are owned by private equity funds and there are no public meetings where management can be held to account;
· The ownership structures are murky to say the least with strings of companies dotted around the world’s island secrecy jurisdictions and tax havens;
· This ownership structure makes it difficult for the public to know what is going on with its water suppliers:
Gary Smith, GMB National Secretary for Utilities, said “This report confirms what GMB has saying for years but our concerns have been dismissed.
“The claim that this rip off could not have been foreseen when this natural monopoly industry was privatised in 1989 is spurious. It was known then that the multimillionaire elite in private equity target income streams from care homes, from pubs, water and other sectors to cover interest payments on vast borrowings. This has led The Centre to an £111 billion estimate that buyout companies in the UK will have to refinance over the next five years. There will be more insolvency.
“The coalition government will do nothing to correct this as the people who organised this rip off in the water industry are their friends and financial backers.
“The only way to stop this rip off is re-nationalisation of this natural monopoly and this has to be a top priority for the next Labour Party election manifesto.”
Union News
