It was reported on 16 July that management at Northumbria Water had announced that sewage leaking from damaged pipes could be where pollution has been coming from, pollution which was said to have plagued a popular seafront area in the Northeast for years.
It was further noted that water quality at Cullercoats Bay in North Tyneside had been given the lowest possible rating by the Environment Agency (EA) since 2018, in tests for contamination from bacteria linked to human and animal faeces.
During July this year, there were reports that Northumbrian Water had been ordered to pay over half a million pounds to the Environment Agency after two separate pollution incidents had seen unauthorised sewage discharged into two local North East streams.
Furthermore, it was said that ” The agency accepted the two Enforcement Undertakings totalling £550,000 after separate pollution incidents at Sedgeletch sewage treatment works (STW) in Houghton-le-Spring, Sunderland, and Lanchester STW in Lanchester, County Durham”
Huge profits and salary
In yet another news report in July this year, it was stated that Northumbrian Water was going to award Heidi Mottram, the chief executive of the water company with a £1.5 million retention payment over the next five years. It was also said that this was “in a package that sits outside Ofwat’s new powers to ban bonuses for companies responsible for serious pollution breaches”.
It has also been pointed out that in 2023, Northumbrian Water paid its shareholders £396 for every hour it dumped sewage. This was said to be the 4th highest rate in England, with the so-called “profit from pollution” rate being based on Northumbrian Water ‘s shareholders receiving £110.8m in dividends, while the company polluted for 280,029 hours. It was also noted that “Northumbrian Water has paid out a total of £4.1 billion in dividends since privatisation in 1989” while “Its debts have reached £3.5 billion. It was privatised with no debts. And 19% of the bill of every customer is spent servicing Northumbrian Water’s debts.
It is perhaps a small wonder then that many in Northeast England are looking at alternative ways for our water to be provided.
Democratic control of water
On 23 September at Gosforth Civic Theatre an event took place to examine how and why Northumbria water should be taken back into public ownership.
The event began with a rendition of the hymn Jerusalem on tape as a reminder that England was once a green and pleasant land and that water had helped to get the industrial revolution started.
Then there was an introduction from former North of Tyne Mayor and Newcastle Green councillor Jamie Driscoll.
He reminded the audience that the meeting was about the mutual ownership of water. At present Northumbria Water is owned by a Hong Kong billionaire and so it is difficult for employees to do work on mitigating Climate Change.
It was also argued that national public ownership had not always been good with the situation around the National Coal Boards and the Miners Strike of 1984/5, being cited as an example.
The question was then asked: What would be democratic ownership ?
It was thought that the questions surrounding this should be on a practical basis. How will it protect people?
We then heard from the main speaker for the evening, Norman Rides.
Norman Rides presentation
Norman claimed that it was time to take water back into public ownership and that the 1989 Water Act had been part of the Thatcherite privatisation drive and had been a mistake.
No other major European countries had gone down this privatisation road and now our water was held hostage by international capital.
We were shown a map of the operating area of Northumbria Water, stretching from the Scottish border to the North Yorkshire Moors, with seven sub-areas within Northumbria. It was also pointed out that tidal areas had to be treated differently to fresh water areas.
We then looked at the ownership structure of Northumbria Water. CK Hutchinson, based in Hong Kong, owns a lot of Northumbria Water.
There is also 15% owned by CK Asset Holdings and a further 25% American owned by KKR, and that part of the ownership has been put there to block any changes to the ownership system.
There are also various subsidiaries and they raise the finance. This means that the ownership structure is far from transparent.
Next we took a look at the company finances. At present there is a gross revenue of £1 billion with a profit before interest of £286 million and a profit for the year of about £63 million.
The finance costs dealing with interest payments are 14%, which means that 14% of our bills are going to finance companies. This is unnecessary as there were no debts when Northumbria Water was privatised.
There are current assets of £440 million, but almost all the assets are in hock. If creditors turn up there would not be enough money to pay them.
Indeed, the net assets were said to be £150 million, so contrary to what some commentators say, we don’t have to pay billions to take water back; Northumbria Water is worth £150 million.
In other words, it would cost £63 each for the people in the Northumbria Water area to take back ownership.
There is a huge amount of debts, mostly in Euro bonds as they are cheaper. This is not to do with the EU but a way of paying in one currency and being paid back in another currency . Conveniently, nobody knows who owns the Euro bonds, so they can avoid paying tax.
It was also argued that we have been encouraged recently to put money into housing with relatively few shareholders today, compared to the boom in the 1980s.
So, Northumbria water was said to have what could be described as fairly shaky finances today, with a credit rating of BBB+ which is not great.
There are also numerous liabilities, which are off the balance sheet with the approval of Ofwat.
Meanwhile, there is a huge need for refurbishment and renewal of infrastructure.
Bylines Network Gazette is out!
The latest Bylines Network Gazette is out now. Become a Friend of Bylines Network or upgrade to a paid Substack subscription, and you will get access to a vital collection of citizen articles and stories.
Journalism by the people, for the people.
What can be done instead?
More money needs to be invested in local water by local people as a multiplier and a help for the local economy, with community wealth building taking place.
The solution
The solution would be a cooperative or mutual organisation of customers/ account holders. Mutual company: this would have the membership of all account holders. However, it may be difficult to set high minimum share levels.
A cooperative solution would ensure that account holders cannot be denied membership; membership voluntary participation while non-members may lack motivation.
There should be a two-tier board:
An executive board, with chief officers responsible for strategy execution which would report to a governing board, elected by members and responsible for the ethical values of the company.
The process would see an inauguration with a bank account and 5-10 core members, followed by consolidating member growth and development, expansion promotion, mass membership, staff and finally transition to trade sale, receivership or government assistance.
It was also noted that CK Hutchinson Holdings makes significant profit every year and the government will need to be involved and so the cooperative provides an alternative which might nudge the government into action, while the provision of an alternative can also put pressure on companies regarding sorting out sewage.
How can you get involved?
You can find out more by email here . There is also a petition on the We Own It website. You could also write to your MP about the issue of water ownership or join or form a campaign group e.g. Surfers against Sewage.
Friends of Bylines Network
There has never been a greater need for grassroots journalism that investigates the stories that really matter, holds power to account and champions the voices of everyday citizens. We are proudly powered by volunteers but what we do isn’t free.
STAND WITH US for independent, citizen-led journalism that makes democracy stronger, and you will even get some exclusive benefits.
