Waterwatch in the Anglian Water Region response to the Ofwat consultation paper on:

Proposals for the modification of the conditions of appointment of Anglian Water Services Ltd

Anglian Water has for the past 11 years, enjoyed a very high level of profit. They have returned as much as 34% profit on turnover a level far exceeding what would be expected of other competitive company's on the stock exchange.

Revenue from the elevated charges of the past years since privatisation have not been wholly directed into the important local utility service, but used to bankroll the development of The Anglian Water Group, comprising of an array of non-core businesses.

Waterwatch welcome the prospect of reducing cost through less expensive methods of borrowing, but are somewhat sceptical about the reasoning behind the splitting up of the financial arrangements of the group. It would appear the original utility company Anglian Water Services will be left with a very high level of debt. And it is difficult to see how they will meet their commitments in the not too distant future, as more and more customers experience sewer problems as housing development increases in the region.

The fact that Anglian Water service will become a Cinderella company with all the debt, left holding the Ofwat licence will mean the chances of exerting pressure on the company for overdue improvements will be remote. Waterwatch see this as the main purpose of restructuring

The high borrowing in proportion to turnover will serve as an excuse to delay improvements to the already ailing sewage and water infrastructure. We see the water infrastructure as being similar to Rail Track with an ageing system plagued by under-investment and decades of neglect.

There are a number of serious problems on the horizon that will have to be addressed shortly. Anglian Water serves a largely rural area with a long coastline. Whilst beaches are a lot better than they were, most resorts have only managed to reach the basic guideline standard with regards to sewage pollution. Pressure from the holiday industry to further improve bathing water quality will inevitably come following the devastation from the foot and mouth disaster, which has hit tourism so badly.

Waterwatch exposed Anglian Water's unsavoury practice of dumping raw sewage solids on the region farms a few years ago. About 80% of the regions sewage sludge still goes on to this important area for UK food production. This is a very cheap option, especially as very little pre-treatment other than stabilisation is carried out on the waste. Again, the food and farming industry are facing a serious crisis of confidence and are eager to clean up their act, concentrating less on hazardous waste recycling and more on producing safe food. Other countries like Switzerland have already banned sewage from their farms. Clearly the solution to this problem is potentially very expensive for the company if a ban on farm sewage dumping was introduced here in Britain.

It is hard to see how a competitive tendering structure can operate with the parent company supplying services to a group member. Obviously the parent company will be hugely advantaged over an outside competitor.