Water company directors linked to Tory donations: Labour highlights scope for conflict of interest. Patricia Wynn Davies reports

DIRECTORS of nearly a dozen companies in the much-criticised privatised water industry have links with businesses contributing to Tory party coffers, according to a Labour investigation.

A dossier spotlighting the potential for conflicts of interests was released by George Howarth, shadow environmental protection minister. While insisting there was no suggestion of wrong-doing, research showed how easily the divide between politics and business could be blurred, he said.

Repeating Labour claims that consumers had been 'fleeced' by the companies since privatisation, Mr Howarth said only 3 of the top 10 companies had spent more on investment than they paid to shareholders.

The dossier says Thames Water donated pounds 50,000 to the Conservative Party before the 1992 election without consulting shareholders or customers. It also says 11 water company directors also hold high- level positions in other organisations which have made sizable donations to Tory funds.

The 11 include: John Thompson, a director of Thames Water, who is also a director of Scottish & Newcastle Breweries, which donated pounds 70,000 in 1992 and pounds 50,000 in 1993; Andrew Simon, a director of Severn Trent Water and of Laporte, which has given pounds 231,000 since 1979; and Ralph Iley, a non-executive director of Northumbrian Water and director of the Cookson Group, which has donated pounds 60,450 over the same period.

Mr Howarth said: 'I am not saying anything illegal has taken place at all. The point is that when all these interests get so closely snuggled up together the border line between the various public interests, private interests and the Conservative Party itself become blurred.'

The dossier puts the average increase in consumers' bills since privatisation at 67 per cent, accompanied by a 125 per cent increase in company profits and a 133 per cent rise in the pay of water company charmen.

Mr Howarth also lambasted Tory MPs, including Gerry Malone, the former deputy chairman, now health minister, for showing a 'sudden interest in debating a Private Member's Bill on Antarctica', which led to the fall of a Bill to ban domestic water disconnections.

Labour has made no commitment to returning the industry to public ownership. Mr Howarth said 'a regulator with democratic accountability and legitimacy would be much better able to stand up to the water companies'.

Labour would also insist that a much higher proportion of necessary investment was funded by borrowing rather than by higher charges for current consumers.