Let's Wash Privatisation Down The Drain

Neil Clark writes:

The Crazy Gang. The Keystone Kops. The Marx Brothers. Just three of the all-time great comedy troupes. To which we need to add another name - the Institution of Civil Engineers.  Last week this bunch of comedians issued a report which claimed that water in Britain is too cheap and recommended the introduction of compulsory metering. It would be a hilarious, side-splitting joke if only the subject under discussion wasn't quite so serious.

In England water prices have risen by an average of 5.7 per cent since April, nearly double the rate of inflation. More and more people are finding it harder to pay their water bills. Research by the Consumer Council for Water has found that one in seven of all customers feel their charges are now unaffordable.? Far from being too cheap, water in England is actually too expensive - and the reason is a simple one. It's called privatisation.

Since the Thatcher government sold off the water industry in 1989, prices have risen by over 45 per cent above inflation. In the days when water was publicly owned, water rates were a minuscule item in the household budget. Now it's been calculated that over half of lower-income households are spending more than 3 per cent of their available income (after housing costs) on water charges. In a country where it never seems to stop raining, millions of ordinary people are in water poverty.

But while hard-pressed families and small businesses struggle to pay for a resource which comes out of the sky for free, the fat cats just keep on getting fatter. For international capital, water privatisation has been one huge bonanza. The consortium which owns Southern Water Capital Ltd, the parent company of Southern Water, is led by the US investment bank JP Morgan Chase, which last October announced profits of $4.26 billion. Southern Water recently raised its prices by 8.2 per cent. Thames Water, which raised its prices by 6.7 per cent, is owned indirectly by a consortium led by the Australian global investment banking conglomerate Macquarie.

Northumbria Water is owned by Cheung Kong Infrastructure Holdings - Hong Kong's largest public limited company led by the billionaire businessman Li Ka-shing, who according to the latest Forbes list is the ninth-richest person in the world, with a fortune of $25.5bn. Li's company also has a 4.5 per cent stake in Southern Water. The private owners of the water industry, whether they be US investment banks, Hong Kong billionaires or British capitalists, have one overriding objective - to extract as much profit from us as they can.

Which is why our bills are so high and continue to rise above inflation. Research from the University of Greenwich has calculated that having our water industry in private ownership adds almost £1bn a year to the cost of our water - that's equivalent to putting 12 per cent on the average bill.

We don't have to look too far to see how water users are better off when the industry is in public hands. In Scotland, where water was never privatised, a price freeze is now into its fourth year. "Scottish Water - in public ownership - has been a substantial success story in Scotland. It has managed its infrastructure well and frozen water charges for households for the last four years," a Scottish government spokesman said last week.

Renationalisation would not only mean lower bills and an end to water poverty - it would also enable the construction of a national water grid to transport water from areas which enjoy above-average rainfall to those where the rainfall is less. That's never going to happen at present, with the water industry hopelessly fragmented. To add insult to injury, seven privatised water companies imposed hosepipe bans on their users earlier this year, citing lower winter rainfall as an excuse.

Don't believe a word of it. As GMB national secretary for water Gary Smith correctly states, "It cannot be repeated often enough that there is no shortage of water in Britain." We do get more than enough rain - the problem is the extraordinary wastefulness of the privatised water companies. One of the companies to impose a ban in April was Britain's biggest water company Thames Water, which tops the table for leakages.

According to industry regulator Ofwat a whopping 25.7 per cent of the water the company collects is lost in leakages, amounting to 665 million litres of water a day - a total that could fill Wembley Stadium every 36 hours. The same company, the GMB has revealed, has closed 25 bulk water storage facilities in the south-east, selling several of them to property developers. One such site was the reservoir at Cheshunt which was sold to make way for 249 flats and houses.

Selling off reservoirs might be bad news for water users, but it's certainly a profitable approach. Since 1990, Thames Water has paid out £5bn in dividends. Not only that but it was revealed in today's Morning Star that Thames Water boss Martin Baggs was awarded a massive bonus of £418,359 for the year to March 31 on top of his annual salary of £425,000 and that he is set to receive hundreds and thousands of pounds worth of shares as part of a long-term incentive plan.

Yet rather than attack the water companies for their profiteering and gross inefficiency, the Institution of Civil Engineers prefers to call for the introduction of compulsory water meters.  We all know what would happen if compulsory metering were to be introduced under private ownership - we'd been ripped off even more.

But if the institution does't get it, the general public do. A poll published in the Sunday Express last month showed that 71 per cent want water to be renationalised. Revealingly, the support for renationalisation is highest among the over-55s - people who can remember the days before water was privatised and who know that it really doesn't have to be like this.

Despite the poll, not one of our three main parties supports taking water back into public ownership. On the contrary, Prime Minister David Cameron believes that water privatisation can provide a model for the sell-off of Britain's roads. "Why is it that other infrastructure, for example water, is funded by private-sector capital through privately owned, independently regulated utilities, but roads in Britain call on the public finances for funding?" Cameron said in his speech to - you've guessed it - the Institution of Civil Engineers in March this year.

Enough of this Thatcherite nonsense. Let's wash privatisation down the drain and show the neoliberal shower who currently govern us that we've had enough of policies which only benefit the fat cats.