ANDREW FISHER, pictured right, in his latest column for Inside Croydon, looks at the case for ending the ‘legalised larceny’ that is water privatisation, as the environment secretary sinks deeper into the mire
The review commissioned by Steve Reed, the environment secretary (and MP for a part of Croydon), into the future of the water industry was published this week.
It is worse than just a damp squib. It is a capitulation to the privatised water companies.
In the mire: politicians’ reputations rarely recover from a mauling by Private Eye
Reed had already blocked the review from considering a return of water utilities to public ownership – even though that is a position backed by 69% of the public, including a clear majority of Conservative voters.
Reed parrots the ludicrous assertion that it would cost £100billion to re-nationalise the water industry, and claims that would be money taken from the NHS and education.
This is nonsense, on both counts.
Reed has not explained his £100billion figure, although he has said that it came from civil servants in his department.
In fact, the £100billion figure has been floating around since 2018, when the Social Market Foundation produced a report that was paid for by Anglian Water, South West Water and United Utilities. It is based on the water companies’ “enterprise value”, estimated at the time at £80billion, plus a premium. The figure takes no account of the water companies’ ballooning debts.
The think-tank Common Wealth commissioned legal expert Ewan McGaughey (a professor of law at King’s College, London) to assess the true cost. His conclusion? “The true and fair value in law to bring water into public ownership is close to zero.” He has published his workings here https://www.common-wealth.org/publications/how-to-clean-up-our-water.
And secondly, buying something as a one-off cost, whether it costs 1p or £100billion, comes out of a different budget than the day-to-day revenue spending on the NHS and schools, and is accounted for completely differently.
Reed is taking the public for mugs.
Resign call: Feargal Sharkey says Steve Reed should go as environment secretary
The water campaigner and Undertones frontman, Feargal Sharkey, has called for Reed to resign and hand the job over to someone more effective and more capable, calling his the environment secretary’s first year in office “chaotic”.
Reed was also rightly pulled up by Sam Coates of Sky News for his bullshit claim that he secured £104billion of private sector investment into the water industry last year. That £104billion being paid for by bill-payers, with – as Reed conceded – “a modest return to the companies”. So bill-payers pay for the investment and for a return to the privateers.
That is why your water bills keep going up. And if the government was the owner, that return could actually be going to fund the NHS and schools. Instead, it’s lining up the pockets of shareholders and fat cat bosses.
You might remember that Reed promised to ban water bosses’ bonuses. Many of us said that would be ineffectual, as they could just boost bosses’ basic pay to get around the ban on bonuses. Brazenly, Thames Water said as much themselves back in January.
Privatise water: even Conservative voters are overwhelmingly in favour of re-nationalisation of water utilities. Just not Steve Reed
Faced now with the evidence that water companies have indeed just hiked basic pay to get around his bonuses ban gimmick, Reed limply told Channel 4 News, “I don’t think it’s right for government to intervene in the salaries that private sector companies pay.” It was an admission on television news that his much-vaunted law is about as effective as a chocolate fireguard.
Reed’s review will also allow privatised water companies to rip us off for even longer.
Chocolate fireguard: even Steve Reed has been forced to admit his gimmick law doesn’t work
In publishing his review, Sir John Cunliffe announced that water bills would have to go up by an eye-watering 30%. Since privatisation, water bills have risen above inflation, by an eye-watering 26% on average across England in the last year, and by 31% for Thames Water customers – which include most Croydon households and Reed’s own constituents.
Cunliffe also recommends that companies at risk of failure, such as debt-burdened Thames Water, should be given “regulatory forbearance” – that is, let off fines – to prevent them going bust. This is corporate welfare for failure.
The uproar about this gargantuan failure has not been limited to Feargal Sharkey, either. Even Labour MPs, affiliated unions and others have been getting their (teenage) kicks in.
Labour has not been so lax with rail companies. Laws have already been passed to end the failure of privatisation on the railways – which resulted in government subsidy of private profit, and passengers paying some of the highest fares in Europe. The Thameslink and Southern franchises are due to pass back under public control by April next year.
The Cunliffe review on the water industry was published on Monday. A day earlier, Essex private rail operator C2C became the latest to be passed back into public ownership, as part of the rolling programme of Great British Railways.
The Transport Secretary, Heidi Alexander, said in February, “Passengers have had to put up with broken railways for too long”, and that public ownership meant they could “put passengers first”. So why shouldn’t that apply to water?
Norwich Labour MP Clive Lewis, who has campaigned for water to be under democratic public control, said “Tweaking regulation without changing ownership is like rearranging the deck chairs on the Titanic … The real problem is a privatised, extractive model prioritising shareholder payouts over public good.”
All change: Labour transport secretary Heidi Alexander has shown with railways that re-nationalisation is achievable
Both the Unite and GMB unions have also called for water to be taken into public ownership, with Reed’s union, the GMB, commenting that water companies have been “handed record funding through rocketing customer bills. And they still don’t deliver. We need nationalisation”.
Unison, the country’s largest union and which represents workers in the water industry dismissed Reed’s review as “tinkering around the edges”.
London Assembly Member Leonie Cooper, who leads for the party in the capital on environmental matters, commented, “With record amounts of excrement dumped into the Thames last year, the current system is not working … these proposals don’t go far enough. They do not address the failures of the privatised water model, seen most clearly in the ongoing crisis at Thames Water.
“With crumbling infrastructure and rivers still being polluted, Londoners are expected to foot the bill of a company £19billion in debt. That’s why I’ve written to the Secretary of State, Steve Reed MP, to call for Thames Water to be brought into public ownership.”
In 1989, when her government was privatising water despite overwhelming public opposition, Prime Minister Margaret Thatcher told the House of Commons: “Privatised water is a better deal than nationalised water… Water privatisation, I believe, will go very successfully indeed.”
The only Thatcher idea that was less successful was the Poll Tax.
The only politician seemingly still backing the legalised larceny that is water privatisation is Steve Reed.
- 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 columns for InsideCroydon, the i newspaper and is a regular pundit on BBC and Sky News programmes
As well as his column, Andrew is also conducting podcast interviews, in-depth and informed, with specialists and national figures, sharing their expertise with Croydon. The latest, with journalist and author Ian Dunt, is about how London is a success, and how the right cannot stand it. - It’s available now on Inside Croydon’s Spotify channel
Andrew Fisher’s recent columns:
- Vote for these benefit cuts and you deserve to lose your seat
- Labour’s task looks tough amid finance and membership woes
- Starmer alienates support by adopting the language of Powell
- What a load of old rubbish! And that’s just inside the Town Hall
- 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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Reed has hardly been a shining success in any of the positions he’s held in government or opposition in recent years. When he was shadow Local Government minister (2020-21) his own local authority (Croydon) went bankrupt. When he was shadow Justice minister (2021-23) it was revealed he had received unlawfully hacked emails but failed to report them to the police. Now as Environment Secretary he’s failing to deal with the scandal of the privatised water companies.
Ooo. Hacked emails. Received illegally, you say? Like handling stolen goods?
How did that happen, David?
The decline of the Labour Party into an arm of Corporate Public Relations maybe very lucrative for it’s beneficiaries, but with Labour now polling at 20% it isn’t very good for it is a political party that can secure long term political power. The Blairites may have secured three election victories with such political values, but it is now beginning to look unlikely that Labour will be re-elected without either extremely good fortune or a dramatic change in what it presents to the public. As with the Tories living in the 80’s with what would Margaret Thatcher do, this incarnation of Labour seem to believe that whatever Tony Blair would do is the route to political success. They are living in the past and don’t seem to be aware of the political environment they exist in.
Has the £100million figure been ‘floating around in the water’ like much else there’s been wallowing there, and is it much the same?
I do find it hard to believe that if the company is skint that it would have much in the way of value. Perhaps those who loaded it with debt should cough up rather than us.
You can take Steve Reed to water, but you can’t throw him in