Customers are paying the price for Yorkshire Water’s failings - Andy Brown

Yorkshire Water rarely fails to deliver impressive results. Not, of course, in terms of reducing pollution, improving the service and keeping the bills down for local customers. But they remain champions at cynical pay awards for top executives, blisteringly high debt levels and the ability to try and justify what can’t be justified.

The level of net debt that Yorkshire Water is carrying is over £7.5bn and rising. That is a truly eye watering level of debt. We customers have to pay interest on it every year to service the debt before anything else is paid for.

Had that debt been entirely taken on so that investment could be made in a better service then it might be justified. It is possible for a well run company to carry a high level of debt if it has used the money to set up an ultra-efficient modernised operation that only requires a bit of occasional updating.

Yorkshire Water is not remotely in such a comfortable position. They are carrying that mountain of debt at a time when they are trying to run a service which is in serious need of urgent capital investment.

That wasn’t supposed to be what happened when Margaret Thatcher talked the country into launching a reckless experiment with privatising a core service that we all utterly depend on. We were told loudly and frequently that introducing private sector efficiencies would result in massive savings, hefty levels of investment and much improved outcomes for customers.

What actually took place was the comfortable security of holding a licence to run a monopoly tempted investors from across the globe to buy up a vital British resource and to run it for the convenience of the shareholders and the Directors not the customers.

Dividends were generous. Paid for by taking on debt. Director salaries and pension schemes were generous. Authorised by the shareholders who were receiving inflated returns on their money which were paid for by that debt.

Meanwhile customers could do nothing other than to pay up whilst their bills soared. For decades investment in upgrades to the service were completely inadequate to meet the challenge of an aging Victorian sewer system. When new housing estates were built they were usually simply connected to existing sewage farms.

Now data centres are gobbling up water for cooling that farmers and gardeners need to cope with increasingly frequent spells of extreme heat.

Decades of under investment have resulted in routine discharge of raw or semi treated sewage into our rivers. It is entirely legal and sensible to do this when there is extreme weather and the alternative would be sewage floating down the streets. It is entirely illegal and unreasonable to discharge sewage when the weather is not extreme and there is just a normal rainy day.

Our great Yorkshire rivers receive those discharges of sewage more frequently than is the case in many other parts of the country. The Aire Valley has regularly featured at the top of the national list of frequency of discharges with the Wharfe not far behind.

Some brilliant campaigners have drawn attention to the health risks associated with routinely discharging sewage into the river Wharfe short distances above the popular bathing beaches of Ilkley.

Rivers like the Aire and the Don that mostly run past working class districts lack sufficient active campaigning groups and so risk getting quietly treated with even more disrespect for the environment.

Faced with rising bills, staggering debt levels and increasing not reducing environmental damage the temptation is to press the government to simply nationalise a failing service.

It isn’t as easy as that. It is relatively simple to sell off a government owned asset and use the money to lower taxes for a while. It is very difficult to buy it back at a time when government debt levels are through the roof.

The only practical solution is therefore fiercely enforced regulation which either results in the water companies meeting required standards without raising bills or declaring themselves bankrupt. It is absolutely critical that the nation does not reward the owners of these assets for decades of shoddy behaviour by nationalising their debt.

When losses and debts are the result of decisions taken by private companies the shareholders and bondholders must expect to take the consequences of making poor investment decisions. Neither the bill payers of Yorkshire nor the taxpayers of Britain should be bailing out failure.

Mentioning the bill payers leads me to one final thought on the results declared by Yorkshire Water. Profits were up. Primarily because of around £300m increase in revenues from bill payers.

We are constantly told that we customers are going to have to pay more if we want investment in the service. We’ve already paid more and haven’t seen that investment. The regulator’s job is to step in and protect us from unreasonable price rises. Just as the Environment Agency’s job should have been to stand firm and prevent illegal sewage discharges.

Until those regulators do their job in the confidence that they will have the full backing of central government when they take on powerful companies the customer is going to continue to be in the firing line for higher bills.

Andy Brown is Green Party councillor for Aire Valley.