THE PRIVATISATION FAILURE
Only two countries in the world have a fully privatised water system - the UK and Chile.
All the other 192-odd countries of the world, the water supply is treated as a national asset, though Public Private Partnerships are common.
Paying for Water
Ofwat in December 2024 allowed water companies (WCs) to raise water bills by about 35% to pay for work in separating stormwater from sewage. It is very clear indeed that it is absurd to expect that water and sewage bill payers could or should pay for all the necessary work which is needed to rationalise water management in the UK. Water bills are there to pay for water services provided by water companies, not to pay for those companies to pay for bonuses and dividends.
We are talking here about a massive infrastructure operation on a par with President Franklin D. Roosevelt’s New Deal in 1933, when he created employment to meet the economic suffering caused by the Great Depression of 1929-39.
The money for reform must be raised by central government to address a crisis of water management that adversely impacts the health of both humans and our aquatic environment, a long crisis that has been created by years of neglect and complacency, to be compounded in coming decades by the effects of climate change. There is a clear need for Keynesian-style investment into this vital element of our national life.
Neo-liberal economists and politicians (be they Tory, LibDem, or Labour) will use their influence in the legacy and social media to scream long and loud in protest at this suggestion, because to them, money is the only reality worth considering.
Neo-liberalism is the exceedingly questionable idea that self serving (largely) men, competing against each other for ever-increasing accumulations of monetary wealth, without any external restraint or regulation, will produce the best of all possible worlds. Ecological and human health to net-liberalists is a mere “externality” to economics. They have no concept of investment in human health or in ecology, they only think of investment in strictly financial terms. They cannot understand that investment can change a “waste” into value, or that healthy rivers, streams and oceans have value also.
The neoliberal hysteria will be amplified by a campaign by manufacturers of artificial fertilisers against the use of sewage derived soil conditioners, as mentioned above.
This is a battle that we must be prepared to fight and win, because it is the opening battle of an ideological war between neo-liberalism and real, ecological economics of the coming century, an economics which is based on the relation between mankind and the environment that is our life-support system.
The money needed to reform the way water is managed in the UK can be raised by a combination of:terminating the experiment of privatisation
a tax on the richest layers of British society
a contribution from Quantitative Easing
De-privatisation
Responsibility for water was taken from local government in 1974 and put under regional water authorities (RWAs). Investment in water services fell by 2/3rds between 1970 and 1980 because borrowing was forbidden under the Conservatives in power at the time. Margaret Thatcher privatised the RWAs in 1989, and allowed the private companies to borrow, so investment in infrastructure increased after privatisation. The debt owed by the RWAs was cancelled in order to facilitate privatisation. Debt has increased from zero in 1989 to £60.6 billion by 2022, so that a proportion of water bills (19% in the case of Wessex Water) is diverted to paying interest on the corporations’ debt.
Privatisation means that the WCs must pay dividends annually to their shareholders. In 2022-3 the companies paid out £1.4 billion in dividends to shareholders, nearly 11% of the companies’ total revenues, or 22% of capital investment.
In other words, without privatisation, about 22% more could have been applied to preventing sewage spillages into our environment.
The public are overwhelmingly against water privatisation. A YouGov poll in 2022 showed that only 8% of people supported privatised water, whereas 63% wanted public ownership. Even of Conservative voters, 58% wanted public ownership, with only 12% supporting the privatised system. Sadly, the Conservative, LibDem and Labour parties lack the courage to start to unpick Thatcher’s toxic legacy, and only the Green Party is calling for de-privatisation of the WCs.
Privatisation need not come at a huge cost. The share value of failing companies can fall away to nothing, so the Government can easily take them over when this happens. Thames Water is near this point in 2024. A water bill strike could bring other companies to that point.
An inventive way of de-privatisation of WCs is by punishing spillages, not by imposing fines, but by acquiring company shares instead. Directors could see power slip out of their hands every time another spillage happens. There is a petition calling for this method here: https://weownit.org.uk/act-now/take-shares-not-fines
Privatised WCs are clearly failing, and re-nationalisation or WCs will signal the beginning of the end of the doctrine of neo-liberalism, which has to be cleared away before we can address the global cluster of major social and environmental problems that we face in our time.
A tax on the rich
Households in the bottom decile (tenth) in the United Kingdom earned, on average, £18,706 per year in 2022/23, compared with the top decile which earned £185,358 pounds per year.
The richest 1% of British people hold more wealth than 70% of ordinary British people
Profs Wilkinson and Pickett have shown very clearly that such inequality of income and wealth creates a society that is less healthy, more unhappy, and more dysfunctional than a society that is more equal.
Therefore, the case for raising money from the rich for renovating our water infrastructure is very strong indeed.
The counter-argument that will be raised is that if we raise taxes in the UK, rich people will move abroad. However, rich people tend to hold assets like land and grand houses in the UK, and these assets cannot be moved. These assets can always be taxed, and money can be raised on them.
Additionally, Britain is a regrettably backwards and conservative country; other countries are more progressive, so there will be an international movement to tax the rich, leaving the rich with nowhere to go and nothing to do except pay their fair share of taxation.
Ofwat in December 2024 allowed water companies (WCs) to raise water bills by about 35% to pay for work in separating stormwater from sewage. It is very clear indeed that it is absurd to expect that water and sewage bill payers could or should pay for all the necessary work which is needed to rationalise water management in the UK. Water bills are there to pay for water services provided by water companies, not to pay for those companies to pay for bonuses and dividends.
We are talking here about a massive infrastructure operation on a par with President Franklin D. Roosevelt’s New Deal in 1933, when he created employment to meet the economic suffering caused by the Great Depression of 1929-39.
The money for reform must be raised by central government to address a crisis of water management that adversely impacts the health of both humans and our aquatic environment, a long crisis that has been created by years of neglect and complacency, to be compounded in coming decades by the effects of climate change. There is a clear need for Keynesian-style investment into this vital element of our national life.
Neo-liberal economists and politicians (be they Tory, LibDem, or Labour) will use their influence in the legacy and social media to scream long and loud in protest at this suggestion, because to them, money is the only reality worth considering.
Neo-liberalism is the exceedingly questionable idea that self serving (largely) men, competing against each other for ever-increasing accumulations of monetary wealth, without any external restraint or regulation, will produce the best of all possible worlds. Ecological and human health to net-liberalists is a mere “externality” to economics. They have no concept of investment in human health or in ecology, they only think of investment in strictly financial terms. They cannot understand that investment can change a “waste” into value, or that healthy rivers, streams and oceans have value also.
The neoliberal hysteria will be amplified by a campaign by manufacturers of artificial fertilisers against the use of sewage derived soil conditioners, as mentioned above.
This is a battle that we must be prepared to fight and win, because it is the opening battle of an ideological war between neo-liberalism and real, ecological economics of the coming century, an economics which is based on the relation between mankind and the environment that is our life-support system.
The money needed to reform the way water is managed in the UK can be raised by a combination of:terminating the experiment of privatisation
a tax on the richest layers of British society
a contribution from Quantitative Easing
De-privatisation
Responsibility for water was taken from local government in 1974 and put under regional water authorities (RWAs). Investment in water services fell by 2/3rds between 1970 and 1980 because borrowing was forbidden under the Conservatives in power at the time. Margaret Thatcher privatised the RWAs in 1989, and allowed the private companies to borrow, so investment in infrastructure increased after privatisation. The debt owed by the RWAs was cancelled in order to facilitate privatisation. Debt has increased from zero in 1989 to £60.6 billion by 2022, so that a proportion of water bills (19% in the case of Wessex Water) is diverted to paying interest on the corporations’ debt.
Privatisation means that the WCs must pay dividends annually to their shareholders. In 2022-3 the companies paid out £1.4 billion in dividends to shareholders, nearly 11% of the companies’ total revenues, or 22% of capital investment.
In other words, without privatisation, about 22% more could have been applied to preventing sewage spillages into our environment.
The public are overwhelmingly against water privatisation. A YouGov poll in 2022 showed that only 8% of people supported privatised water, whereas 63% wanted public ownership. Even of Conservative voters, 58% wanted public ownership, with only 12% supporting the privatised system. Sadly, the Conservative, LibDem and Labour parties lack the courage to start to unpick Thatcher’s toxic legacy, and only the Green Party is calling for de-privatisation of the WCs.
Privatisation need not come at a huge cost. The share value of failing companies can fall away to nothing, so the Government can easily take them over when this happens. Thames Water is near this point in 2024. A water bill strike could bring other companies to that point.
An inventive way of de-privatisation of WCs is by punishing spillages, not by imposing fines, but by acquiring company shares instead. Directors could see power slip out of their hands every time another spillage happens. There is a petition calling for this method here: https://weownit.org.uk/act-now/take-shares-not-fines
Privatised WCs are clearly failing, and re-nationalisation or WCs will signal the beginning of the end of the doctrine of neo-liberalism, which has to be cleared away before we can address the global cluster of major social and environmental problems that we face in our time.
A tax on the rich
Households in the bottom decile (tenth) in the United Kingdom earned, on average, £18,706 per year in 2022/23, compared with the top decile which earned £185,358 pounds per year.
The richest 1% of British people hold more wealth than 70% of ordinary British people
Profs Wilkinson and Pickett have shown very clearly that such inequality of income and wealth creates a society that is less healthy, more unhappy, and more dysfunctional than a society that is more equal.
Therefore, the case for raising money from the rich for renovating our water infrastructure is very strong indeed.
The counter-argument that will be raised is that if we raise taxes in the UK, rich people will move abroad. However, rich people tend to hold assets like land and grand houses in the UK, and these assets cannot be moved. These assets can always be taxed, and money can be raised on them.
Additionally, Britain is a regrettably backwards and conservative country; other countries are more progressive, so there will be an international movement to tax the rich, leaving the rich with nowhere to go and nothing to do except pay their fair share of taxation.
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