Graeme Demianyk's Westminster Blog

Few regions would have expected to be handed £35m a year by George Osborne in last year’s autumn statement. But that’s how much the Chancellor lavished on Devon and Cornwall (and bits of Dorset and Somerset) by way of a £50 per household rebate to all South West Water customers.

It was a tacit apology for botched water industry privatistaion in the 1980s. Three per cent of the population paying for the clean-up of around one-third of the country’s coastline has left the region – a pretty poor one – with the highest bills in the UK.

Today, South West Water announced average annual bills would go up £26 to £543 from April. That was on top of the £30 rise last year, which took the charge for water and sewage to £517:  the first time any UK water utility charged above £500.

So the first £50 hand-out wiped out within two years.

The £35m, ministers have said, will last each year until the end of the next spending period, which is towards the end of the decade. This is yet to be written on the face of a government Bill, however.

If bills go up at the rate they are, South West Water’s levy should fall below £500 again by 2014. And by 2019/20, bills should be less than £400.

Charges then would be closer to the rest of the pack. Severn Trent customers will pay £325 next year, the lowest in the country.

But what happens when the Treasury turns off the taps?

Some have suggested the £50 tackles the symptom, not the cause. That charges in the Westcountry will spiral again from 2019 onwards. It will be another Government’s problem by then.

Western Morning News – October 7, 2011

Government action to tackle sky-high water bills in the Westcountry will feature in the Queen’s Speech next April, the Western Morning News has learned.

But MPs have expressed frustration that long-awaited help for South West Water customers appears to have been delayed by major reforms to the NHS and welfare. ​

Among a range of measures, ministers are considering giving the region a £40 million annual subsidy that would see the average South West Water bill cut by around £50.

They are to decide later this year whether to go-ahead with the Treasury-funded bail-out to ease the highest bills in the country.

Some households in Devon and Cornwall are paying more than £1,000 a year for water and sewerage charges, a legacy of industry privatisation in the 1980s, while the average bill topped £500 for the first time this year.

Speaking to the Western Morning News, Environment Secretary Caroline Spelman said the state intervention needed legislation, and that a Water Bill would be in next Easter’s Queen’s Speech at the opening of Parliament.

Mrs Spelman said: “It requires legislation and I have booked a place in the second session of Parliament for a Water Bill. So that measure will find its way on to the statute book.

“It requires legislation demonstrating our commitment to try to help water users in the South West, to make it more affordable for them.”

Labour initiated the influential Walker review of water bills, which established it was “unfair” for 3 per cent of the population to be keeping one-third of the coastline clean.

But it was not until Chancellor George Osborne acknowledged South West Water’s “unusually high” bills in the Budget earlier this year that it was clear Government was prepared to act.

Neil Parish, Tory MP for Tiverton and Honiton, said: “I would have preferred this to be sooner, but there has been an awful lot of pressure on the business of the Commons.

“We welcome it and we want bills reduced in teal terms for people in Devon and Cornwall.

“It’s just not fair that many of our retired residents on fixed incomes to have to pay these high charges.”

Sarah Newton, Conservative MP for Truro and Falmouth, said: “I’m very frustrated but it’s probably a result of the Health Bill and Welfare Bill – major reforming bills taking up more time.

“It is in the queue. We are pleased there is a commitment and there is light at the end of the tunnel.”