Surveys have found that 69% of the public want the nation’s water companies taken back into public control. So why is it not the policy of Keir Starmer’s Labour Party, asks ANDREW FISHER
Fine old mess: Thames Water was fined £1m by Croydon Council for delays in five years – not that it has made any difference
“In advance of every significant privatisation,” wrote Nigel Lawson, the former Chancellor, in his memoirs, “public opinion was invariably hostile to the idea.”
Lawson, who died last April, was right: in 1989 an opinion poll found that 79% of the British public was opposed to water privatisation. Nevertheless, Lawson and the Thatcher government pressed ahead and privatised.
The public was right to be hostile.
In the years since our public assets were handed over to private corporations, water bills have gone up by more than 40% in real terms. The companies have made a packet, paid their directors massive bonuses and their shareholders large dividends – and failed to invest in the assets they had secured on the cheap.
In April 2023, water companies jacked up our bills by the most in almost 20 years. Water regulator Ofwat and the Government sat by as these shysters fleeced us again during the worst cost-of-living crisis on record.
And here we are today, with the current owners of Thames Water nearly bankrupt, the infrastructure creaking due to underinvestment, and the companies asking to be allowed to hike bills again.
Surely some politicians will tap into the public mood and tell the water companies the party is over?
It is a charge often levelled against the current Labour leadership that they don’t know where they stand on issue until opinion polls or focus group results come back.
Today, 69% of people want water taken back into public ownership.
The most enthusiastic for this move are pensioners (over-65s, who remember when water was publicly owned) – 73% of whom back public ownership.
But, some will say, Labour is desperately trying to win over Conservative voters. The facts, though, quash that argument – more than two-thirds of Conservative members want water in public ownership, too. Only one-quarter opposed.
Public ownership is overwhelmingly popular, including with Labour’s target voters.
Privatised monopolies simply pass fines on to consumers
Croydon North MP Steve Reed is Labour’s shadow environment secretary and therefore in charge of the party’s water policy. He has been very clear that he sees tighter regulation as the way to go, rather than public ownership.
Reed has spoken of “severe and automatic fines”, “personal criminal liability for water bosses”, and “new powers to Ofwat”. None of which is to be dismissed, although all are measures that have been tried and largely failed: privatised monopolies have a knack of passing any regulatory fines on to consumers.
It was reported last year that Thames Water was fined nearly 900 times in five years, amounting to nearly £1million, for delays in repairs that led to traffic issues in the borough of Croydon alone. Who do you think is picking up the tab for that?
In office, Reed may still face a decision on public ownership that cannot be ducked.
Water bored: Steve Reed OBE may face difficult decisons on utility ownership
Thames Water today is on the brink of collapse. It has racked up £14.7billion of debt. In 1989, when it was privatised, it had zero debt.
Since then, the company has paid out £7.2billion in dividends and even in 2022 – with massive debts weighing heavily – Thames Water managed to pay £37million of “internal dividends” to its parent company.
Thames Water’s debts far outweigh the company’s value, and it is near bankrupt.
While Reed wants bigger fines, Thames Water, scrambling for its existence, is lobbying Ofwat for fines to be capped. It may be that even before Reed gets a ministerial red box, Thames Water has already collapsed and the government of the day has had to decide whether to bail it out or bring it under public control.
That dilemma goes to the heart of myth of privatisation – that risk can be transferred.
The reality is that, with essential services, it will always be the case that Government will step in. The water industry, like the railways (which Labour has pledged to take back) is a series of regional monopolies that have to be maintained. Thames Water serves about one-quarter of England’s population. Whether or not the company goes bust – and that looks like a very real prospect – the service to more than 7million households has to, and will be, guaranteed.
Thames Water has overcharged its customers, over-benefited its shareholders and overpaid its directors, accountants and auditors.
Thames Water discharged raw sewage into rivers at 270 sites
Yet it has failed to invest in preventing sewage being dumped into our rivers and seas. Just last month, Inside Croydon reported on Thames Water’s discharges into the River Wandle here in Croydon, and its pathetic commitment that it will only stop dumping sewage in one of London’s only two chalk streams by 2035.
This is not just an issue around the River Wandle. During the high rainfall in late December and early January, Thames Water was found to have discharged raw sewage into rivers at nearly 270 sites across the Thames Valley in just one week. At some of these sites, sewage was dumped into waterways for more than 100 hours.
And elsewhere in the country we may not know the full extent of the problems, as other water companies have reneged on a promise to produce live maps of sewage spills by the end of 2023.
Neighbouring Southern Water and South West Water have so far only delivered limited maps covering beaches, but not rivers.
This is an industry that is failing. It is failing its customers, failing the environment and, in the case of Thames Water, failing to balance the books.
The sooner this failed experiment with privatisation is ended, the better for our rivers, our lakes, seas and our bank balances. Collapsing water companies may mean 2024 will be the year that our lethargic politicians have to wake up to the failure of privatisation.
- From 2015 to 2019, Andrew Fisher was the Labour Party’s Director of Policy under Jeremy Corbyn. Fisher is also the author of The Failed Experiment – and how to build an economy that works, and now writes regular columns for InsideCroydon
As well as the BBC’s Politics Live, Radio 4’s Today and various other broadcast outlets, Andrew Fisher is a regular guest on The Croydon Insider, the podcast that analyses the latest news from inside Croydon. Click here to listen to his contribution in last month’s episode (requires subscription)
Andrew Fisher’s recent columns:
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- Labour pledge goes walkabout as Reed drops right-to-roam
- If you have a news story about life in or around Croydon, or want to publicise your residents’ association or business, or if you have a local event to promote, please email us with full details at inside.croydon@btinternet.com
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ROTTEN BOROUGH AWARDS: In January 2024, Croydon was named among the country’s rottenest boroughs for a SEVENTH successive year in the annual round-up of civic cock-ups in Private Eye magazine
The water board that I believe is east Surrey water board has been sold off already as advised by Allmatts builders merchants with a email from them this morning
To the Pennon Group, Malcolm, former owners of that environment paragon… Viridor.
You need to be very careful not to get tricked into bailing out through nationalisation those who have absconded with the cash through piling on debt spent on dividend payments rather than spent on infrastructure investment.
Keeping the burden of needed investment in infrastructure in the private sector has merits in that the likely cost comes to £6,600 per family, not something that can be borne by taxation.
On the London Assembly I chaired an investigation into water/sewerage provision in Greater London. I went down the Beckton sewers. Impressive almost cathedral like architecture provided in Victorian times but like elsewhere on the system designed for direct sewerage out flow into the river when rain levels are high.
If you are not going to nationalise and keep the industry in the private sector you might create a US style structure where water companies are public benefit companies. They have lower returns but are seen as solid investments gaining a lot of private sector funding. The regulator role is much tougher.
A tougher regulator could be empowered to ban bonuses for water bosses until sewage discharges and leaks end.
Andrew makes very good points.
However I do feel that first off the transfer of assets and setting up of utility boards should have had legislations protecting those assets that could be enforceable quickly. I also feel that loading utilities with debt to pay dividends that have not been earned is fraudulent and also should have clear legislation that prevents that occuring quickly including freezing of accounts and assets.
Maybe that might have easily and quickly have prevented a lot of the misuse of privatised assets and better services?
Becton/Bazelgette was built in the 1860s just to serve a portion of the population as part of the full major sewage system when the total population of London was 3m and not much climate change issues.
Today that particular Super sewer and the sewage treatment plant has to deal with more than 4m that has been densely packed into the area. The overspill is not due just to heavy rains but the fact that a 150year old sewage treatment plant and sewer has to deal with twice the capacity it is capable of.
Think 1 million toilets all flushing at the same time in the morning noon and evening and before bedtime. Thats the overspill. Add heavy rains over 4cm approx in 20 minutes and that will cause any drain an issue.
But its not just privatisation
Think of all the money from developments developers have paid council plannners to develop and for utilities to be enhanced over the last 100 years in 32 boroughs. How much of that has actually gone to improving our utilities let alone local services?
We need to actually understand our own requirements and the fact that effective urbanisation means that Planning departments across London should be assessing the full impacts of any development and not just paying lip service.
As long as public utilities are in the hands of private companies, whose sole purpose is profit, none of those considerations you have highlighted will be taken into account.
Is it not time that those that run and direct Public Services actually put the Public first and not political expedience?
SES Water are also in trouble, being in the bottom four of indebted water companies. Last February the FT described they were up for sale by their Japanese owners, the sale to Pennon being announced this week.
But not before the owners took out £7.8million for share dividends. A big chunk from a small company.
Be careful what you ask for, perhaps Inside Croydon should list these greedy shareholders… N.B. The second largest shareholder in Thames water’s owner is a private pension fund, this looks after the pensions for Britain’s University academics. We all know who is on the hook when a private pension fund collapses!
It is Green Party policy to bring public services (like water) back into public hands.
Our services should be run for the benefit of the public, not profits for shareholders and overpaid bosses.