We Must Regain ownership of Our Water Industry
It is often difficult to generate debate about the ownership of our water industry. But such a debate is essential if we are to rebuild Britain successfully.
Water is a pre-requisite for every industry and, indeed, for life itself. Why then, we might ask, are water companies in private hands?
Thirty-three years ago, we owned the water delivered to our taps and the sewerage infrastructure that removed waste. Then, Margaret Thatcher sold the entire industry at a loss to the public. She removed all their debts and sold each company for less than it was worth.
The water industry before privatisation was certainly weak and in desperate need of investment. Water quality was variable, and our beaches suffered from polluted outflow. But the industry’s problems were related to years of underfunding in infrastructure, not to it being in public hands. The government chose not to invest in order to create the environment for privatisation.
Privatisation has largely enriched private shareholders who have done little to invest in this vital public service. Since privatisation water companies have accumulated over £45bn of debt that is ultimately the responsibility of billpayers or governments. And, according to the Competition Markets Authority (CMA) 20% of our bills now go to servicing that debt.
Ofwat itself has raised concerns about the level of debt and the demands of financing it but has done nothing to prevent water companies doing pretty much as they please.
We are almost alone in the world in relying, as an entire country, on the private sector to provide clean, safe water. What is worse is that 70% of the water industry in owned by foreign capital, including shadow companies in offshore tax havens and private equity groups. It is seen by them as a safe investment with great returns and little or no risk.
One problem we have is that because water has been flowing and sewerage being removed, we have not collectively recognised the urgency of securing our water industry. We now need an urgent debate to identify the best way to turn this around and regain ownership of our water? We need to ensure that everything we invest in our infrastructure pays for improvements and not for profits and dividends.