We all lose as water companies fail again, writes KEN LIVINGSTONE
IT WAS recently revealed that London could face a “mass water shortage” by 2040 if urgent action isn’t taken to fix pipes.
For those of us who opposed Thatcher and the Tories’ privatisation drive, including water, initiated in 1989, and the love affair of all governments with privatisation and linked policies such as PFI and outsourcing ever since, this news may not have come as a surprise.
But the continued failures of privatised water companies just keep on coming.
Access to water is a human right, it is essential to our day-to-day lives, yet the current “market” is clearly failing.
The overall picture in recent years is that the privatised water companies have continued to pay out billions to their shareholders while pushing up prices for customers and short-changing taxpayers by receiving more in tax breaks than they have paid in tax.
Since privatisation, household bills have risen by over 40 per cent in real terms.
Water privatisation is costing us £2.5 billion every year, yet investing this in a publicly owned service instead would reduce leakage levels by a third.
To put it simply, the British public are being ripped off and this is a national scandal, especially as there are so many problems with the service provided.
Amazingly, six water companies paid out more in dividends in 2017 than they made in pre-tax profits — namely, Thames Water, Anglian Water, Yorkshire Water, Northumbrian Water, South West and Southern Water.
If this wasn’t bad enough, in that same year (2017), these same water companies received £253 million more in tax credits than they contributed in taxes, while increasing the amount they passed on in dividend payments by £324,800.
The central reason for this failing and rip-off water system is that these companies operate regional monopolies that have profited at the expense of consumers who have no choice over which company supplies their water.
To give more detail, the present system of provision of water and sewerage in England consists of nine large regional private water and sewerage companies, with a few smaller private water-only companies, which both own the entire assets of the system and are licensed monopolies of water and sewerage services in their areas.
This set-up enables them to whack up prices and load up on debt while shelling out billions in dividend payments to shareholders.
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 the approach of the water services regulation authority Ofwat “does not provide full confidence that leading companies are as efficient as possible.”
Additionally, we have recently seen reports of local councils having to attempt to stop Thames Water discharging raw sewage into public rivers.
And then if we take the example of Southern Water, it has the lowest Environment Agency ranking of the water companies, endless pollution incidents, a subsidiary in a tax haven, and it made £212m profit last year but paid no corporation tax.
South East Water joins Southern Water meanwhile in still having subsidiary companies in the Caymen Islands tax haven, over three years after the regulator asked them to close them to help restore public confidence.
It’s important to point out though that, as the We Own It campaign group has said: “The problems with our water system isn’t just a case of a few bad apples. It’s the whole farce of privatisation.”
It’s therefore time to replace this dysfunctional system with a network of regional, publicly owned water companies.
Public ownership is common when it comes to water around the world and perfectly possible in England — indeed, the systems in Scotland and Northern Ireland remain in the public sector.
Our failing water system is just one illustration of how the current broken system makes ordinary people pay to put excessive wealth in the hands of the few.
After this crisis, it’s time for real change.
Support We Own It in campaigning for water coming into public ownership, visit www.weownit.org.uk.
Originally published in The Morning Star