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Bailing out the water companies is poor policy – and unpopular

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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.

Andrew Fisher’s recent columns:

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