Press Release – Immediate release Thursday 11 June 2015

NEW THAMES WATER ‘TAX’ TO HIT 15 MILLION CUSTOMERS TO PAY FOR REDUNDANT TUNNEL

Thames Water’s (TW) 15 million domestic customers from Oxfordshire to Dartford face a new utility tax on their water bills starting this year, to pay for the £4.3 billion Thames Tideway Tunnel (TTT), which only serves inner London.  The campaign group, Thames Blue Green Economy (TBGE), has condemned the tax as a “blatant victimization of hard-working families by Thames Water”, and called on the Government to intervene and stop the Tunnel (Note 1).

According to the Department of Environment, Food and Rural Affairs’ (Defra) own calculations, the 25km long concrete tunnel will, on average, cost every TW domestic household up to £80 annually by 2020/25 [Note 2).  For large households on meters, the bills are likely to increase to some £120 annually.  Some 15% of all families will be paying water bills at more than 5% of their total income, and 500,000 children in low income families will be hit particularly hard (Note 3).  Compulsory metering will mean that large families and those who suffer serious ill health, and do much more laundry, will face proportionally higher water bills.

To add insult to injury, this hugely expensive Tunnel is not even needed, as Thames water quality already meets Environment Agency and EU quality standards (Note 4)

Ann Rosenberg, spokesperson for TBGE, said: ”This Tunnel is a hugely expensive folly.  It will soon be costing householders at least £80 extra every year, and hit low-income families and half a million children especially hard.  This is a blatant victimization of hard-working families by Thames Water.  It must be stopped”.

The campaign to stop the Tunnel and protect Thames Water customers is backed by prominent members of the House of Lords and the House of Commons, who have called on (following below) Ministers in Defra and the Treasury to stop the rip-off.
 
Long-time opponent of the TTT, Lord Berkeley said:” This is quite simply a scandal. The proposed Thames Tunnel is not needed. River water quality already meets EU standards. Why should hard-pressed families receive a nasty shock in their water bills which from this year will rise and rise?  I have written to the Defra Minister Liz Truss urging her to step in and stop this corporate rip-off and protect consumers before it’s too late. Costs are likely to spiral during construction, and the government’s agreement to underwrite the contingent liability before, during and after construction is offering Thames Water an open cheque backed by the UK taxpayer”.

Roger Mullin, SNP Shadow Treasury spokesman said: “The revelation that the contingent liability for this massive risky engineering project will be met by the whole of the UK is outrageous, even though the cost of the Thames Tideway Tunnel will be paid for by Thames Water’s domestic customers. I shall be asking detailed questions of the Treasury in due course, including the implications for taxpayers throughout the UK". 

Campaign group, Thames Blue Green Economy, (TBGE) is behind the two legal challenges to the Tunnel in the Royal Courts of Justice.  Tidal Thames water quality is already within acceptable EU and Environment Agency water quality standards and will be even more so when the Lee Tunnel becomes operational later this year. 

For further information, contact:

* TBGE - Ann Rosenberg: annrosenberg72@gmail.com; M. 07810 647199
* Policy and Politics – Lord Berkeley: tony@rfg.org.uk; M. 07710 431542
* Infrastructure Finance - Martin Blaiklock: tmblaiklock@me.com ; T. 020 82553851
* Legal - Emily Shirley: emilyeshirley@hotmail.co.uk ; M. 07753779074
* Build Costs - Roland Gilmore: roland.w.gilmore@gmail.com; M 07887 573952
* Environment – Dido Berkeley: river@thamesbank.org.uk ; M. 07961 446978

NOTES TO EDITORS

NOTE 1 - TBGE is a broad coalition of environmental experts, including water industry experts, engineers, academics, politicians and environmental campaign groups who support an Integrated Water Management (IWM) approach over a needless tunnel.  The TTT is designed as a detention tank to hold up to 1.24 million cubic metres of water.  At £4.2Bn it will cost £3,400 for each cubic metre of ‘empty space’.  IWM is defined as  ”a process which promotes the coordinated development and management of water, land and related resources, in order to maximize economic and social welfare without compromising the sustainability of vital ecosystems".  IWM has significant cost benefits including improved air quality, enhanced public health and the creation of thousands of local jobs.

NOTE 2 – Bill impacts are in 2011 prices from Defra’s ‘Thames Tunnel Strategic Economic Case, Nov. 2011, pg.13.  All TW customers will have to pay via an annual increment (the utility tax) to normal water bills, starting in 2015/16 at around £10-15 per household at the outset of construction and increasing to an estimated average increase of £70-80 per year by 2020-25.  In other words, TW customers will be paying for the project for 7 years before completion in 2023 and for decades thereafter.  Ofwat estimates that 200,000 additional households will be paying more than 5% of their income on water bills, or more if there are significant increases in costs from other sources.  As metered bills are some 50% higher than average for larger households, this will fall hardest on households in child poverty across the region.  There are 500,000 children in low-income households in London (including 45% of all children in Inner London).  These households also face rising housing costs and reducing support. (From 2011 Census (ONS), Family Resources Survey (DWP), and Households Below Average Incomes Data Set, 2012-13) (DWP see Chart 4.4.)
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NOTE 3 – See DEFRA’s strategic case cited above.   These estimates by Ofwat for DEFRA differ from Thames’ own estimate that only 5% of their customers currently pay bills exceeding 3% of their incomes.  They base their calculations on gross incomes, not net incomes after housing costs (see WRMP 2010-15:Statement of Response to Consultation, October 2013, p31).  Although there will be limited social tariffs and assistance schemes, on present plans they are unlikely to fully mitigate the scale of these increases in bills.  The biggest winners from metering are households with above average incomes.  The combined effect of compulsory metering and the Tideway Tunnel could amount to bill increases of more than   £300/year for households with more than three children.  See The Impact of Household Water Metering in South East England,  (EA Science Report SC070016/SR3) July 2009, ICS Report for the Environment Agency and the GLA, Table 37 gives estimates exceeding £200 /hsld/year for the increase in bills after metering for households with three or more children.  The NAO has pointed out that the combined impact of utility investment charged to customers in the energy and water sectors has not been coordinated or planned, has risen substantially, is likely to cause particular hardship for those on low incomes, and that because customers have limited choice “Customers are heavily reliant on the government and regulators to act for them and protect their interests”.  The NAO note that there is no agreed definition of affordability in the water sector, DEFRA no longer publish statistics, and Ofwat has dropped its plans to update analysis it produced, and intended to update, in 2011. (See NAO, Infrastructure Investment the Impact on Consumer Bills, 13 November 2013.).  Ofwat apparently intends to restrict its vfm assessment of the largest single project in water industry history to competition for construction contracts and Infrastructure Provider, and scrutiny of costs.  There has been no review of whether the project is cost beneficial since DEFRA’s analysis of November 2011, and no independent review of DEFRA’s findings has been published.  DEFRA estimated benefits of between £3bn and £5bn rested on assumptions that the Tunnel was essential to meet environmental standards and there would be significant environmental harm without the tunnel.  The evidence reviewed below brings that into question.

NOTE 4 - The upgrading of the London sewage treatment works at Mogden and Beckton was completed in 2013 and 2014, and the construction of the Lee Tunnel is nearing completion, at a combined cost of about £1.2bn.  The latest information from the 9 Automatic Quality Monitoring Stations on the Tideway is that the dissolved oxygen in the Tideway now meets the standards set for it. In addition the upper Tideway now meets the Water Framework Directive (WFD) dissolved oxygen (DO) standard for good condition and, once the Lee Tunnel is operational at about the end of 2015, halving the storm overflow volume, there is every likelihood that the middle/lower Tideway will also meet the WFD good dissolved oxygen condition.
  

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