Westcountry

Consumers in the Westcountry currently pay the country's highest water bills. So how can South West Water, a company which made a profit of £156.8m last year, justify its sky-high rates?

SWW's bills have risen by around 14 per cent in the last 12 months. The sharp rise means customers across the region are paying annual charges of between £378 and £650.

And the situation is expected to get even worse for hard-hit residents when SWW announces its charges for 2008/09 next month (February 2009). They are expected to surge by at least 10 per cent.

The Exeter-based firm blames the high rates on the increasing cost of keeping the coastal region's sea water and beaches clean. The South West is home to 30 per cent of the country's beaches but just 3 per cent of the total population.

SWW also says that it has had to spend a fortune on upgrading the region's water and sewerage infrastructure after years of under investment prior to privatization in 1989 (I discuss this later in the article).

"Historically, customers in the South West have faced higher than average bills because of the region's relatively small population and the cost of maintaining water infrastructure spread over a very wide area," SWW said in a statement.

"We have also invested heavily in modernising the region's water and sewerage services following a century of little or no investment prior to privatization. The £2bn we have invested since 1989 is delivering real and beneficial results for customers, the South West and the South West's economy.

SWW: "Historically, customers in the South West have faced higher than average bills because of the region's relatively small population and the cost of maintaining water infrastructure spread over a very wide area."

"We now have the cleanest rivers in the country, some of the cleanest bathing waters in Europe, we are hitting new highs in the quality of drinking water with 99.96 per cent compliance and becoming one of the best at preventing leaks."

But this explanation will not go down well with the firm's 1.6 million customers who have complained strongly against the rising bills. The majority feel that SWW's parent company Pennon has put profit ahead of the cash-strapped customer. Industry insiders will say that this is hardly surprising given the fact they have to make the best return for their shareholders. But surely SWW could give its long-suffering customers a late Christmas present and decide to leave rates unchanged or in line with inflation for 2008/09.

Late last year, South Hams District Council (SHDC) called on SWW to lower its rates. The council's Scrutiny pressure group talked with Ian McGuffog, business planning manager for SWW. But to Scrutiny's dismay, Mr McGuffog said that SWW would not be reducing prices in the near future. "The Scrutiny Group was extremely disappointed to hear that there is no sign of this changing in the near future," said Cllr Cathie Pannell, chair of Scrutiny on SHDC.

SWW is not entirely to blame for the crippling water rates we face here in the South West. Some of the blame must also go to the Conservatives and Labour.

The Tories, under the leadership of one Margaret Thatcher, privatised the water industry back in 1989. There's little doubt that privatisation, along with new European rules on pollution, has improved the quality of water. However, it crucially failed to do one thing. Other industries like gas and electricity were successfully opened up to competition. Consumers could shop around for the best deals which meant prices stayed low. But that's never proved possible with water, allowing firms like SWW to hold a monopoly in their specific region. This has basically allowed water firms to charge customers what they like.

Conservative MP Anthony Steen defended the Tories' policy to privatise the water industry. The MP for Totnes told BBC Devon: "We took a view when we contracted out water that there would be swings and roundabouts. You couldn't ask people from Hull to subsidise people from Truro, and I think that's probably right. What you can say is that we have a well-run organisation now. Before, it was rather like the Kremlin."

The Labour party has also played its part in the sharp increases in water bills. When the party came to power in 1997, they promised to monitor the business practices of privatised utilities. But three terms on, it appears as though they have done very little on water affordability apart from giving people the right to go onto a water meter free of charge. Prime Minister Gordon Brown needs to do more.

But despite the failings of the current government, how can a company which made a profit of £156.8m last year seriously justify its hefty bills? Let's hope common sense prevails next month and water rates are left unchanged or at least increased in line with inflation.