RATEPAYING ASPECT OF T HT, WATER QUESTION.
TB7REE plans have been mooted for the buying up of the existing water-works in the Metropolis, as a basis for establishing a new system. The Government plan implies such a new valuation of the property of all the Companies, in order that they may be con- solidated into one, as comes to the same thing as buying them up. The Board of Health plan (which may be mentioned, although it has been disavowed by Government) included the purchase of all the present plant of the Companies, in the view of bringing the water-supply under the management either of the Board itself or of some other -persons acting under their inspection and control. Mr. Mowatt's bill also proceeds upon the hypothesis that the pre- sent Companies are to be bought up for the purpose of being brought under the management of a board, which would be remote- ly and indirectly influenced by the ratepayers.
These and other plans for buying up the present Water Com- panies are no doubt intended by the authors of them to lower the present water-rates; but this is an advantage that will not be expected by any person who duly considers the nature of the ease, or what has taken place in ether towns when existing water-works have been bought up on behalf of the inhabitants ; in all of which a rise in the water-rates has been a consequence.
The present yearly dividends of the nine Companies amount to about 240,000L What price is proposed to be given in compensation for forcibly seizing the property that yields to the shareholders this revenue? The Government have as yet named no sum. The Board of Health, in a report sanctioned by them and just laid be- fore Parliament,* suggest Z00%000/. Mr. Mowatt's bill does not specify a sum, but it provides that the purchase-money shall in no case exceed ten years' purchase,—that is to say, 2,400,000/. Thus, assuming, for sake of illustration, 4 per cent to be a usual rate of interest, the shareholders, instead of 240,8004 a year, would receive according to the Board of Health's proposal, 80,0001.—ac- cording to Mr. Mowatt's more liberal proposal, 96,0001., if he can- not get it for less: the Board proposes to Aeprive them of 160,000/. a year—Mr. Mowatt, of only 144,000/., besides what more he can get. Upon this basis these ingenious persons have no difficulty in contriving, to their own satisfaction, a cheaper water-supply. One wonders whether most to admire the ingenuity or the honesty of these proposals. If property is to be dealt with by legislation in this unscrupulous manner, would it not be much simpler to pass an act of Parliament obliging the present Companies to take off 150,000/. from their present water-rates, without any fuss about consolidations, Boards of Health, or Secretary of State controls?
As the parishes have taken the field, and as there is reason to apprehend that their efforts may be diverted into a wrong channel by a delusive expectation, we call attention to the rate of com- pensation that has been actually granted by Parliament in the chief if not the only parallel eases of recent occurrence. In the autumn of 1846, the Manchester Corporation having resolved to take the supply of water for the town into its own hands, had to buy up the Manchester and Salford Water Company; who repre- sented their gross annual income as 28,9501., their expense as 8,497/., leaving a net income of 20,4531.; for whioh the Corporation had to pay 541,0001., or about twenty-six and a half years' pur- chase. In Bolton, under similar circumstances, the Corporation had to pay the Water Company from twenty-nine to thirty years' pur- chase ; and in Liverpool, the Corporation had to buy up three Com- panies at from twenty-six to twenty-nine years' purchase. It is quite clear that if we force the Water Companies to give up their , we are bound to pay them the fair actual market-
price property, we This is the view that has been acted upon by Parliament in similar cases. Now 240,000/. a year, at twenty-live years' purchase, will come to 6,000,000/., and not improbably more would have to be paid. The money would of course be borrowed, and the interest have to be defrayed at the expense of the ratepay- ers. To them the 240,0001. of water-dividends that they are now obliged to make up would not be diminished, but simply he per- petuated. The distributing means of the old works would, indeed, fall into the hands of the public; but they would be in some mea- sure -unfit to be made use of in working the method of constant supply. Less than one-half the money would pay for entirely new works, with pure-water, and with all the modern improvements in the mode of supply. Sir George Grey, in the debate of the 5th instant, represented the fundamental "principle"—by which he means a kind of axiom —of the Government bill, to be that there should be no competi- tion. We are amazed at the persistence of Sir George Grey in such a fallacy, after our having shown a month beforet what had been the advantage to the public of competition in the ease of the two large Companies on the Surrey side ; clauses in whose acts effectu- ally prevent their combining to approviate each a separate dis- trict, as has been done by other Companies. The average prices of ail the nine Water Companies were thus -classified by us- * Raped es the Soft Water Springs on the Surrey Sands, p. 44. tSee Sfiestador of ad May. Per house. Per 1000 /aliens.
Of the two competing Companies, 20s. Of the seven monopoly Companies, SU.
Both the Companies, up to this time, obtain their supply from a
very objectionable of the Thames ; but even in this respect competition has in41)11t1 an improvement in advance of other com- panies deriving their supply from the Thames. The Lambeth Company has works in progress for bringing its water from the Thames above Teddington lock, secure against all mixture from London sewage. In such circumstances, it is very natural that Sir William Clay, the chairman of the rival Company, should "re- pudiate the principle of competition," as the strange slang that passes for English in the House of COMT1101113 has it, and be de- sirous of getting the Government to take his property off his hand at its present value. But if the Government will not interfere with the competition that exists on the Surrey side, improvement will not stop here. Not only the Chairman, but Mr. Quick, the en- gineer of the Company, has expressed an approval of the water from the Surrey sands ; and, in defence of the Company, they will, with- out consulting any Secretary of State, (only leave them alone,) bring in the soft water from that source, which the other Company will be obliged to meet by some equivalent or superior improve- ment; and if neither Company did it, some new company would. The objection generally stated to competition and at least pro- fessedly relied upon by Sir George Grey, Sir William Clay, and other like authorities is this—that although competition may bring down prices at first, yet it soon ends in a combination of the rival companies. For example, a gas company sells its gas at 7s. per 1000 cubic feet; it obstinately refuses all deduction, and mocks at threats of rivalry : well, a new company is established, having obtained support by offering to sell each 1000 cubic feet at 4&: where, it is asked, by Sir George Grey, Sir William Clay, and others that profess to know no better—where is the security that the new company will not combine with the old, and the prises get up again to 7s. or even higher ? Any shopkeeper in the City will answer these eminent Parliamentary authorities, thus —" Before our Corporation admitted the new company, legal and binding security was offered by the company, and accepted, that their gas was never to be charged more than 48. per 1000 cubic feet. This does not prevent combination altogether; but at least the new company cannot combine with the old in order to raise the price above 4s. : all that is possible in the way of coanli- nation is, that the old company may combine with the new to bring down their own prices to lower than 4s." In like manner, when the Government last year threw out the Watford Spring Water Company, which proposed to bind itself never to charge more than 3d. per 1000 gallons to large consumers, (instead of 6d. proposed by the Government in their own present bill,) it was idle, if not hypocritical, to pretend that competition by joint-stock water companies cannot be of any advantage to the raterayers. Neither the nature of the ease, then, nor-experience in other similar cases, will permit us to expee4- flat the rates can be low- ered by buying up the old Companies, or that improvements in the supply can be made without a decided increase in those rates ; whereas by introducing at once a salutary competition, the benefit would be immediate. If last year in the ease of gas the Corpora- tion of the City had been as foolish as the Government now 1B in the case of water, and tried to buy up the old Gas Companies in- stead of accepting the proffer of a new Company to bring in gas at a restricted price, would the consumers now be paying only 4s. per 1000 cubic feet, with a prospect of its being less and a certainty of its never being more ?
Previous page
