Letter: Whopping increase

IT WAS interesting to read the letter from Darren Bentham of Southern Water (‘In control of bills’, February 23). Unfortunately, his figures just don’t seem to add up.

Using national statistics for household size (and Southern Water’s own figures for water consumption) - our water usage is almost exactly in line with that for an average household in the UK.

If we were still paying water rates, our annual charge would be £352. Under the new metered pricing we shall be paying £652 when the transition period is over.

So let’s be generous and say we reduce our consumption in line with Southern Water’s expectations of ten per cent - our bill might end up at around £587 per annum. This is still a whopping increase of £235 a year, or 67 per cent.

So quite who the ‘vast majority of people’ are that Mr Bentham cites as preferring water metering is beyond me. If the average family is facing a 67 per cent increase as a result, the significant majority of his customers shall be worst off.

Indeed – only two and single person households seem to benefit; and even then only if their homes are of a similar rateable value!

It certainly won’t take too long to recoup the cost of installing the meter. But then the argument put by Southern Water at their roadshows was that this is about trying to reduce water consumption – so the extra £235 or so we shall each be paying them every year must just be a happy coincidence.

Or do they really expect us to use just 54 per cent of the water we currently consume (the amount of water the old bill now buys)?

Water in the UK is not subject to normal market forces. There are no competitors and pretty predictable demand – yet there are shareholders who expect a return. On the other hand, housing stock has expanded manifold in the South over past decades – without comparable investment in infrastructure to meet that extra demand.

The water industry had two alternatives – raise funding from conventional sources (eg loans or share capital) to enable capital investment to cope with that new demand.

That is what would happen in a perfect market.

The other solution was to throttle demand by increasing prices, and raise investment capital directly from captive customers by compulsory metering (to the serendipitous benefit of shareholders).

What a surprise it took the latter course.

ANDREW BROWNE

Clarence Road, Horsham