Water: why we are paying more and getting less

By Christopher Booker
17 Mar 2012

http://www.telegraph.co.uk/comment/columnists/christopherbooker/9150638/Water-why-we-are-paying-more-and-getting-less.html

Storage capacity has barely increased in 20 years, though population has risen by 10 per cent.

In two weeks’ time, millions of people in southern and eastern England will face a £1,000 fine if they use a hosepipe. So, as our water bills continue to rise faster than inflation (mine has risen by 10 per cent this year), many people will get even less water for their money. But before we blame this just on the unusual winter drought, a few figures are in order.

Since our water industry was privatised 20 years ago (it is now largely foreign-owned), our total storage capacity, 520 billion gallons, has barely increased. Due to drought, our reservoirs are only 90 per cent full, a shortfall of 50 billion gallons. Yet in the Thames Water area alone, more than 50 billion gallons a year is lost in leaks – fully a third of the total that the Australian-owned company delivers to its customers.

So where have all those tens of billions of pounds that we have handed to the water companies gone, if they haven’t been spent on increasing our water storage, over a period when the population rose by 10 per cent, or on mending leaks? (In Holland, where water is still state-owned, only 6 per cent is lost in leaks.)

One important factor, which is usually hidden from us, I was able to reveal in this column on May 13, 2007, when I reported on a letter sent by the relevant minister, Lord Rooker, to Lord Pearson of Rannoch, who had asked in the Lords for an update on how much we had spent complying with EU water directives. Rooker replied that we had spent £65 billion on meeting the requirements of three directives on water quality, but only £14 billion on “infrastructure”, such as improving water storage and cutting down on leaks.

So a large part of the reason why we pay more for less is that we are compelled to put the needs of complying with EU directives above those of the British people who pay the bills. But isn’t it interesting that such information isn’t made generally available, and only slipped out thanks to a letter to a member of the House of Lords from a minister who must have hoped that it wouldn’t get any publicity?

Behind the scenes, the Government is getting seriously worried about the political impact of soaring energy bills. Last year, Chris Huhne commissioned a study which has now recommended that the definition of “fuel poverty” be changed. In 2009, four million households were in fuel poverty as presently defined – spending more than 10 per cent of their income on energy. This figure, the report predicts, is likely to soar in the next four years to 9.2 million, or 43 per cent of all households. But by changing the definition, it would be possible to show the increase as being only from 2.7 million households to 2.9 million.

One of many puzzling features of this report, by Professor John Hills, is how little of this increase he ascribes to the Government’s “green” taxes and policies, supposedly designed to halt global warming. Nowhere in 200 pages, for instance, is there any mention of the proposed “carbon floor price”, due to come into force in a year’s time, whereby a minimum £16 will be levied on every ton of carbon dioxide emitted in making electricity, rising to £30 a ton by 2020 and £70 a ton by 2030.

The horrendous impact of this tax is one of many aspects of current “climate policies” which seem to have escaped general notice. In 2010 we burned 40 million tons of coal to make electricity. Every ton burnt produces 2.9 tons of CO2 (as each carbon atom combines with two of oxygen). So the tax on the resulting 116 million tons of CO2 will amount next year to around £1.9 billion. The CO2 emitted by producing 175,000 gigawatt hours of electricity from gas will yield a further £1 billion, bringing the total cost to £2.9 billion, or 15 per cent of the wholesale cost of our electricity.

When the Treasury did its sums on how much this would add to our electricity bills, it did so on the basis that we would already be paying £14.20 a ton for “carbon” under the EU’s Emissions Trading Scheme (ETS), so that the additional cost would not be huge. But what they didn’t allow for was that the price of carbon under the ETS has collapsed to just £6.70 a ton. So next year we will be having to pay nearly £10 a ton more than anyone else in Europe.

By 2030, when the UK carbon tax has risen to £70 a ton, this will represent £500 a year for every household in the country. Add in the £100 billion the Government wants to see spent on windmills over the next eight years, and we can see why they would want to change the definition of “fuel poverty”.