English Water

Over on Comment is Free, Neil Clark writes:

Here we go again. In the past 12 months, we've had significant hikes in our gas and electricity bills (not reversed by recent cuts due to a fall in wholesale prices) and above-inflation increases in train fares – which are already the highest in Europe. Now it's time for the water companies to put the boot in.

Ofwat has announced that average household water and sewerage bills in England and Wales are to increase by an average of 5.7% from April. As in the case with the rail fares, we're told that the reason that prices are rising is to enable more "investment" by the water companies. But a closer inspection is highly revealing. While English water companies are hiking charges by as much as 8.2%, Glas Cymru, the owner of Welsh Water is only raising prices by 3.8%. In Scotland, there's going to be no price rise at all.

The discrepancies can be explained by the different ownership structure of the water companies in England, Wales and Scotland. While England's water industry was sold off to the private sector by the Conservative government in 1989, Scotland's stayed in full public ownership. Scottish Water, with no pressure to provide dividends to shareholders or reward wealthy investors, not only charges lower prices to its users than English companies, it has also recently announced that its price freeze, introduced in 2009, will continue for a fourth successive year. In Wales, Glas Cymru is a not-for-profit company limited by guarantee, set up after the collapse of the privately owned Hyder in 2001. Average household water bills in Wales in the six months to September 2010 were £4 lower than a year before.

Despite the obvious benefits to consumers in Scotland and Wales from these ownership models, pro-privatisation zealots are keen to see the whole of the UK's water industry in private hands. While acknowledging that "undoubtedly, efficiency has improved at Scottish Water"; and that "Glas Cymru has performed well", the Adam Smith Institute, in its paper "Privatisation – Reviving the Momentum", has called for both the Scottish and Welsh water industries to be privatised. On Glas Cymru, the ASI states: "There remains scope for further improvements, which the discipline of private-sector ownership are best placed to deliver".

Today's news surely shows that it's England which should be copying the Scottish and Welsh models and not the other way round. Water privatisation was arguably the most ideologically extreme of all the Conservative sell-offs of the 80s and 90s. Selling off water would have been regarded as a completely barmy idea by the One Nation, middle-of-the-road postwar Tories like Harold Macmillan, but it became Conservative party policy under Margaret Thatcher. So thanks to the Conservatives, we in England now have our water provided by companies such as Thames Water, whose parent company Kemble Water is a subsidiary of Kemble Water Holdings Limited, which is owned by the Macquarie Group, an Australian global investment banking conglomerate. Thames Water is raising its prices by 6.7%.

Southern Water meanwhile, which is increasing charges by 8.2%, is owned by Southern Water Capital Ltd, which in 2007 was bought by a consortium led by JP Morgan Chase. JP Morgan's Chase announced profits of $4.26bn last October – something for those about to fill their kettles in Brighton or Eastbourne, to reflect on.

Bringing water back into public ownership in England – which could be done by the government simply nationalising the existing companies and establishing a new publicly owned body named "English Water", would not only lead to lower prices, but would be a move of great significance. For a key hallmark of the neoliberal era, which kicked off in Britain on 3 May 1979, has been "commodification" – i.e. the turning of things never before seen as goods into commodities, to be bought and sold.

Water, which falls out of the sky for free and which everyone needs, was obscenely commodified by the Thatcherites. You don't even have to be a Marxist to agree that there is something fundamentally wrong about water being sold off in order for global conglomerates to make even more profits from hard-pressed ordinary people. Action to end England's great water rip-off urgently needs to be taken.