TH.E GOVERNMENT BILL FOR THE BETTER SUPPLY OF WATER TO
THE METROPOLIS.
THE main alteration on the present system proposed by Sir George Grey is the consolidation of all the nine joint-stook Water Com- panies on either side of the Thames into one great company, which is to possess a monopoly of the supply of water to the Metropolis, and to be secured in that monopoly by the pledge of Government and Parliament not in future to admit new companies. Now, ex- cept on the Surrey side, (of which we shall have occasion to speak more particularly afterwards,) all the present Water Companies enjoy a monopoly, each over a district of its own, with no control ever its despotism but the apprehension of provoking an agitation for the institution of a rival i company. It is not very evident, therefore, what advantage to the public is to arise from the conso- lidttion. No doubt, the Secretary of State for the Home Depart- ment is to have power to order the new company to introduce any improvement that he may judge proper ; and this is the only foun- dation of hope for improvement under the new arrangement. But similar power could be taken equally well over the present Water Companies. The effect of this mterference of Government in the affairs of monopolizing trading companies will simply be to sanc- tion their natural inertness, to encourage jobbery in making out- lays, and to relieve them from all responsibility. It has been said, indeed, that by this consolidation there will be a saving in the expense of management. This has been said, but not proved. The returns prepared by the Board of Health and presented to Parliament show such expenses in only three of the nir e works, but three supplyins.° 40 per cent of the whole wa- ter. The highest return gives only 61d. each house per annum, or a halfpenny each house per month, with an additional halfpenny a year, perhaps at Christmas time. It is on the anticipated saving in some of these thirteen halfpence on each house per annum, that Sir George Grey founds the hopes of the ratepayers, and justifies his proposal of a new monster trading monopoly to be instituted in the British Metropolis in the middle of the nineteenth century, as a monument of the ripened and practical sagacity of Whig statesmen.
In the course of the discussion, it was assumed on all sides that Parliament had a right to let in new companies ; but that if Par- liament interfered with the independent management of the pre- sent companies, those companies would have a right to compensa- tion for whatever diminution their profits might undergo in consequence. A fallacy prevailed with most of the speakers, from which Mr. Hume's practical sense saved him—that no new joint- stock company could be instituted without soon raising its prices and becoming merely a new member of the old combination of waterworks against the public. The plan of the Government is complicated ; but we will endeavour to place in a clear light the probable action of the introduction of new rival companies' and how the interest of the ratepayers and the public is likely to be affected- by the Government measure. In round numbers the Water Companies receive 240,000/. a year of dividend. -4re understand the Government propose to guarantee to the present Companies dividends varying from 200,0001. to 240,000/. Only 200,000/. a year is to be paid to them at the first; while 40,000/. a year is to go for outlay on improve- ments; but when all the improvements are finished and paid for, and the expenses are diminished under Me new management, the shareholders will receive their present 240,000/. minus an unspecified discount on all those sums, to be allowed by the Water Companies in consequence of the increased security conferred on their property. This unspecified sum is to go along with the 40,000/. in malting improvements.
The two large Companies that supply the Surrey side—the Lam- beth and the Southwark and Vauxhall—compete with each other. The other seven companies possess a monopoly each in its own dis- trict. The following are the average prices.
Per house. Per 1000 gallons.
Of the two competing Companies 20s. Of the seven monopoly Companies 35s.
Now, out of this 35s. per house, the seven monopoly Companies share 21s. a year of dividend. It is this 21s. a year that the Go- vernment proposes to secure for ever to the present Water Com- panies at the cost of the ratepayers. Now, let it be observed, the two competing Companies, which charge no more for their water per house than the others share as dividends, do nevertheless pay fair dividends. Indeed, a new company is actually before Par- liament, offering to brillg water into the same district at 25 per cent less. Let it also be borne in mind, that last year the Go- vernment stopped a new company that was ready to bring in a constant supply of pure and soft water into the most expensive district of the Metropolis, (occupied by the West Middlesex and the Grand junction Companies, whose average charge is 58s. each house per annum, and 10;d, for each 1000 gallons,) binding them- selves by special clauses to charge no more than what made an average of 20s. per house for 170 gallons per day, which is rather under 4d. per 1000 gallons for houses, and no more to large consumers than 3d. per 1000 gallons. The experience of other towns shows that water can be supplied profitably at similar rates. The seven monopoly Companies at present share 4d. per 1000 gallons in dividend alone, their whole price being 61d. It appears quite plain, therefore, that the sum proposed to be secured to the Water Companies for dividend alone, at the expense of the ratepayers, is enough to pay for the entire cost of water, if competition were admitted by new companies on the same prin-
ciple as gas has been lowered in the City from a price that was 50 per cent higher than the consumers of the gas now pay. Clearly, it would be madness in Parliament to admit another joint-stock water company on the same terms as the existing Water Companies ; but it is equally clear, that whenever the chemical Commissioners, now engaged in investigating the question of quality, shall have pointed out what quality of water is best for the supply of the Metropolis, new joint-stock companies will be ready to bring it in at a statutory rate for the entire water-rent not exceed- ing the present average dividends of the Companies on the Middlesex side, whose entire charge for water is 661 per cent more than this. The present Companies, if they should propose to undertake the same improvements, have no right to expect to do so on better terms ; for, however, much it is the wont of Parliament to respect the rights it has granted to joint-stock companies, yet when those companies return to Parliament for fresh powers, those new powers will be granted by Parliament only on such conditions as the pub- lic interest in the new circumstances requires.
The Government bill seems intended to secure the Companies in their present dividends ; but it does so in a very unjust manner. The average dividend, we have already said, amounts, on the North side of the Thames, to 44. per 1000 gallons ; at which rate alone water could undoubtedly be supplied to the Metropolis at a profit. But some of the Companies have been comparatively moderate, others rapacious, in their charges. The New River, the East London, and the Chelsea average charges for 1000 gallons, is 53d. ; whereas the West Middlesex and Grand junction aver- age charge is 101d. While intending only to remunerate fair claims, the Government actually holds out a premium to all future joint-stock companies to abuse their powers. And it is to be re- membered, that it is the protection against new companies that has enabled the two we have specified to succeed in attaining such ex- travagant water-rates.
The recent practice in legislation for joint-stock water companies, is to restrict the water-rates down to a specified maximum charge; to restrict the dividends also to a given maximum rate ; and to afford the ratepayers efficient access to inspect the books of the company. We are therefore amazed to hear Sir George Grey and others talk as if competition by joint-stock companies were a nul- lity, or as if the recent fall of gas from 68. or 7s. per 1000 cubic feet to 4s. had taken place in China.instead of in the city of Lon- don. There cannot be a better proof of the effect of competition than that, while the Grand Junction Company, under a monopoly, charges 8d. per 1000 gallons of water, the Southwark and Vaux- hall, under competition, charge only 4d. ; both companies having the same chairman, Sir William Clay.
One great defect of the Government measure is that it is a leap in the dark, so far as regards improved .qualiti. The chemical Commissioners have not yet given in their report ; which, how- ever, we must have before we can be sure that we can obtain bet- ter water than the present for the supply of the whole Metropolis. The report may not be so decided as not to require further inquiry and deliberation ; and this is the more likely from the circumstance that the chemists referred to cannot, since their appointment, have had opportunities of examining the waters in the Dog-days, when river or surface water is most corrupt. In any case, it would be imprudent to legislate on their report hastily. Everything con- sidered, then, would it not be best for the Government, after laying the report of the chemists before Parliament, which we presume could be done before the end of the month, to abandon their bill, and with it all intention of interfering farther than to see that no private bill, whether of the present or of any other companies, be passed without securing that the water-rent be moderate, that the supply be constant, and that the water be equal to the best that it is practicable to obtain ?
It is perfectly clear to us, from careful examination and in- quiry, that if the Government and Parliament interfere no farther than this, the best water procurable for the Metropolis will be sup- plied by the ordinary course of competition at one-third less than the present average rates.
Previous page
