Labour will slash energy, water and post bills through public ownership, writes KEN LIVINGSTONE.
THIS week, Labour outlined how through public ownership — and a commitment to putting people rather than rip-off private profits first — it will slash energy, water and post bills.
This could not be more needed, as the privatisation of key public utilities has seen household bills hiked up to pay for dividend and interest payments while the quality of service has often deteriorated.
Households that are already experiencing a deepening cost-of-living crisis are being ripped off with sky-high bills for energy, water and post to pay out billions of pounds to shareholders.
In other words, the current broken system makes ordinary people pay to put excessive wealth in the hands of the few.
Specifically, Labour has explained that it will make households £220 a year better off under public ownership models for energy and water.
In the area of energy, this will be done by capping bills, investing in renewable energy and ensuring that under public ownership bills will fall.
When it comes to water, Labour will bring water companies into public ownership to drive down bills, reduce leaks and end the shareholder racket that we have seen in recent years.
The example of water clearly shows how the Tory privatisations failed, and ordinary people have been left to pay the price of a rigged system.
The current reality is that bill-payers are being ripped off — the House of Commons public accounts committee stated in 2016 that water companies made windfall gains of at least £1.2 billion between 2010 and 2015 from bills being higher than necessary.
Since privatisation, household bills have risen by over 40 per cent in real terms, yet water companies paid 1,000 times more in dividends than in tax in the last 10 years.
Astonishingly three of them — Anglian, Severn Trent and Yorkshire — paid more in dividends than they made in profit in that period. In other words, they were borrowing on the back of household bills to pay shareholders.
Currently water companies are paying out 1,000 times more in dividends than they pay in tax, and the companies are not even paying their fair share into the public coffers.
Over the last 10 years, the water companies have only provided for taxation of about 8 per cent of pre-tax profits. In 2013 the shareholders extracted nearly £1bn in dividends, but actually paid only £1 million in taxes.
Furthermore, despite the promises made when water was privatised, there is no evidence of improved efficiency. The National Audit Office said in 2015 said that approach of the water services regulation authority Ofwat “does not provide full confidence that leading companies are as efficient as possible.”
People don’t mind businesses making decent profits when they provide a quality service and invest in its future, but in fact in water we have seen 22 per cent of water leaked, while companies continue to be fined for allowing untreated sewage into rivers, causing damage to our health and environment.
And it’s not just in water that the need to chase vast profits has come above providing a decent service to customers.
Electricity bills soared by 20 per cent between 2007 and 2013, meaning that £120 was paid by every household in the UK for dividends to energy company shareholders in 2013 alone.
More recently, since privatisation, Royal Mail has paid out £640m in dividends in just three years while closing 10 per cent of delivery offices, with more cuts and closures on the way.
As Jeremy Corbyn said this week: “The Tories have rigged our economy so that bill-payers fund wealthy shareholders of companies which in turn pay little in tax,” but “it doesn’t have to be this way.”
In stark contrast to this, through public ownership Labour will transform our energy, water and mail markets so that they work for consumers, slashing bills and driving investment in efficiency and renewables.
In other words, Labour’s policy will benefit your wallet, our economy and our environment.
This is not pie-in-the-sky thinking — in fact the majority of countries already provide water services through local or regional authorities.
In the US 85 per cent of the water supply is by the public sector, and Paris and Berlin are among those cities which have recently reversed water privatisation and restored public ownership.
This popular policy can easily be achieved and Labour has explained how a Jeremy Corbyn-led government will compensate for bringing water, parts of the energy sector and Royal Mail into public ownership by exchanging government bonds for shares in the relevant companies.
By putting a modern vision for public ownership, with transparency at its core, back on the agenda, Labour has again shown how a Corbyn-led government will rebalance our economy so that the many are no longer ripped off by the wealthy and powerful few.
First published in the Morning Star.