We Want Thames Water Back Debt-Free
by Bob Ansell
The story of Thames Water is the story of privatisation failure generally and water privatisation, in particular.
According to the Financial Times, since 1989, water companies in England and Wales have paid out £72bn to shareholders. To put this into perspective, that represents nearly £2000 for every adult in England and Wales. To achieve this financial generosity, the water companies have borrowed a colossal £53bn. When privatised, they were sold off with no debt. We paid around £1.9 billion through taxation to make the new owners debt-free.
One of Margaret Thatcher’s arguments at the time of privatisation was that private companies would be able to borrow for investment. But, according to the National Audit Office, the newly privatised Thames Water plc and its subsequent owners have instead increased charges by around 40% in real terms up to 2015, with much of the increase taking place between 1990 and 1995.
There is a great deal of evidence to show that throughout its post-privatisation history, Thames Water's infrastructure has been severely compromised because of the relentless pursuit of short-term financial gains. For over 30 years our precious water resource has been handed round like a financial plaything from one foreign private investment bank to another.
This is particularly the case from 2006 when Thames Water was acquired by the Australian investment bank, Macquarie. They simply prioritised boosting profits at the expense of investing in essential infrastructure upgrades. As a result, the utility's network has deteriorated significantly, leading to frequent water mains bursts, leakages, and disruptions in supply that adversely affect the public and the environment. In addition, Macquarie used some of its pension fund to pay dividends to shareholders. This has led to an increased personal risk to those currently working for Thames Water.
Thames Water may be the most obvious failure that is in the news, but the entire water industry is in trouble. So, what do we do about the problem? In England and Wales 70% of our water is owned and controlled by foreign companies at our expense. It is interesting to note that Scotland did not join the privatisation frenzy. And, since 1989, investment in water infrastructure in Scotland is 35% higher than in England, while bills have risen 10% less.
Across most of the world we stand out and almost alone for allowing private investment banks to dictate the investment in our water infrastructure and control our natural water resources. For obvious reasons almost no other country allows this. We must take control of our water in a manner which does not follow the usual privatisation story of private profit leading to public bail-out and liability. We have already paid for our water industry. Now we want it back, debt-free.