Sunday, 20 November 2016

Dee Valley takeover threatens Welsh Water too

This is not a local storm in a teacup. It has very far-reaching consequences. 

The proposed takeover of Dee Valley Water by Severn Trent raises serious questions about our most precious natural resource.

Local workers, many of whom will lose their jobs if the planned takeover goes ahead, have started this petition, which deserves our support.

It's a well-reasoned argument for Dwr Cymru/Welsh Water to take over the Wrexham-based company and highlights the firm's Welsh identity, something that would be completely lost if Severn-Trent had their way.

What's less understood is that Dee Valley Water's book value is around £20m, so why is Severn-Trent bidding £78m for it?

The bigger picture is murky.

At present, Dwr Cymru effectively has a monopoly on water services in the parts of Wales it serves. Severn-Trent, although based in Coventy, takes much of its water from mid Wales and has geographic control of much of that area.

In England, there are proposals by OFWAT to open up the water market. The move would allow consumers to buy their water from any number of water companies, as we now do with electricity and gas. It's unlikely to provide any benefits to customers but will allow water companies to grow.

The situation in Wales is different because Dwr Cymru is a not-for-shareholder-profit firm, unlike companies such as Severn-Trent. Its model pays any dividends to customers - the Welsh people - rather than shareholders.

Also, and this is critical to the Dee Valley story, there is no political appetite for opening up the market here in Wales. So an aggressively expansionist company like Dee Valley is looking to muscle into Wales and chooses to take over a small company at almost four times the book value.

Crucially in Severn Trent's offer is its commitment to merge Dee Valley with its existing Welsh business:
"Severn Trent intends to maintain a separate Welsh licence for Dee Valley and, subject to regulatory approval, intends that the whole of Severn Trent’s business in Wales will be regulated under Welsh Government Policy."

It is our belief that Severn Trent is seeking to build up a Welsh subsidiary that can challenge Dwr Cymru. This would mean that all the water services of Wales would be run from Coventry, as is currently being proposed in this takeover of Dee Valley.

The stakes are very high. Anyone concerned about who runs the Welsh water industry, about jobs and expertise in our communities and ownership of our most precious natural resource should join the campaign to halt Severn Trent's takeover of Dee Valley Water.

Plaid Cymru's Jonathan Edwards MP raised concerns about the unequal relationship between Wales and England regarding our water three years ago:
"Full territorial integrity should be recognised, and it should be for the people of Wales to decide what happens to the water of Wales through our democratic institution, the National Assembly for Wales. It is therefore crucial that full control of water is devolved to Wales. It is a continuing disgrace that the Labour Government cynically blocked full devolution of water policy in the Government of Wales Act 2006, leaving the power of veto with London Ministers.

"Full control over water would finally end the grossly unfair system enshrined in the Water Act 1973, and perpetuated by the 2006 Act, in which water was lent to Severn Trent Water at a scandalously low rate of 5p a year for 999 years and the Secretary of State for Wales was empowered to overrule the National Assembly for Wales on matters of Welsh water supplies to England."
Now, more than ever, we need to have Welsh control over Welsh water.

UPDATE: Please sign the workers' petition.

Picture: Protest against the drowning of Welsh valleys in the 1960s. This has been an emotive subject for half a century and more.


Anonymous said...

Don't expect the Labour Government in Cardiff to do anything about it. Severn Trent is being advised about its Welsh affairs by Ann Beynon, who just happens to be the wife of former Labour Govt minister Leighton Andrews.

Anonymous said...

Also don't expect any help from ofwat, they openly want stw to takeover dvw they don't want small well run water only companies, Wales and England will end up with the big six companies just like power, then we will all watch our household bill rocket.

Avril Smith said...

This is Wales' most precios resource and should stay in Welsh hands benifitting Wales not over the border. Keep Welsh water under Welsh control.

Anonymous said...

No no no just no simple as where's the petition I need to sign to oppose this ??

Anonymous said...

Is there any obligation for Dee Valley to sell? I am not familiar with the set-up. Is it a private company? Who are the stakeholders?
Can Welsh Water not make a counter bid?

Plaid Whitegate said...

Here's the petition:

I agree re OFWAT - it isn't doing anything to protect Welsh water. We need full control over our water resources to protect them.

In response to Anon 10:57 - the decision comes down (at present) to the Dee Valley shareholders. They meet on 21 December to decide whether to sell out to Severn Trent. The current offer is for £17 a share, way over the book price, so it'll tempt many. Welsh Water could in theory put in a higher bid but it would have to be 10% higher and the company just isn't worth that.