Taking The Water

Michael Meacher writes:

Did you know that two-thirds of our water companies are owned by foreigners? Does it matter? Well, yes it does. They can major on water supplies in their own home country and neglect the UK arm of their business, they can fail to deal quickly or adequately with leaks in the UK even when it involves foul water, and they can decline to invest in urgently needed new facilities.

The classic example of the latter is Thames Water, owned by the Australian bank Macquarie, which is now demanding that the UK taxpayers shell out £4bn for a new so-called super-sewer, despite having drained off huge profits and imposed fast rising prices since privatisation. Of the 10 big water companies most are now in the hands of private equity consortia, often foreign-owned, whose objective is not better water supplies for the British people but rather leveraging to procure rapid profits, sweating the assets, and then exiting within 5 years leaving behind huge debts.

More than £100 a year of an average household bill, that is about 30%, goes on profit, compared with 9% in the energy sector which is itself known for egregious profiteering. In the last 10 years water bills have risen by a massive 64%, compared with an increase of just 28% in average earnings. In the last 3 years alone average earnings have fallen by 7% while water bills have continued to rise remorselessly.

There is no competition in the water industry and the only potential constraint is the industry regulator, but he has chosen to succumb to corporate lobbying in allowing water bills to continue to shoot upwards to feed fancy executive bonuses and big dividend handouts. Last year alone, National Debtline took a record number of calls for help with water debts, and there were more such distress calls over water bills than over problems with rent or mortgage payments.

So what should be done? The water industry in England and Wales is subject neither to consumer (market) pressure nor to government control. Unlike energy, it is rarely subject to political or media criticism. The UK is also unusual in having a largely private sector-dominated industry, with France the only other OECD country in this position. That’s why private water ownership in Europe is increasingly concentrated in two large French-based multinational companies, Veolia and Suez.

But the City of Paris re-municipalised its water supply in 2010, and where municipalities particularly across the southern eurozone countries are selling off their water assets, it is only under the pressure of austerity. Clearly, because there is no competition in private water ownership, because the UK water companies are not investing to meet Britain’s national interest, and because they have put profits, management bonuses and shareholders’ dividends before consumers’ interests, the UK water industry should be taken back into public ownership along with the railways, Royal Mail, and at least some banks and energy companies.