Water in the UK - Public vs Private

Insight into Claims by Britain's Governing Parties that Privatised Water Is In Any Way Superior to Publicly Owned, But It Does Offer Some Enormous Profits

Of all the privatisations of the Thatcher government, perhaps the most controversial was the privatisation of water. Most countries in the developed world run their water on amunicipalbasis. In some countries, citizens don't receive water bills but simply pay for it as part of their rates. In the UK, however, we now have a patchwork of different ways of delivering our water.

InScotlandandNorthern Ireland, water is delivered by the public sector. Northern Ireland Water is a government owned corporation, accountable to the Northern Ireland Utility Regulator. Scotland has a truly public water supply. Scottish Water is a statutory organization, accountable to Scottish Parliament. In Wales anon-profitorganization, set up after the failure of a private concern, supplies the water. In Englandtenwholly private companies provide water and waste management in ten regions. Once again, this puts England at the forefront of the privatisation drive within the UK.

Water is the very stuff of life, so it is understandable that its privatisation during the Thatcher years was controversial. So why do it? The big argument for privatisation used to be that it was cheaper. However as this turned out not to be the case—or somewhat disingenuous, depending on how you want to look at it—the new argument is that it's more ‘effective'. We are told that, whilst private utilities may be more expensive, they are also more efficient. It turns out this might be a bit questionable.

In 2014, the Public Services Research Unit conducted a review looking at the difference in efficiency between the public and privatesectors. They concluded: "The results are remarkably consistent across all sectors and all forms of privatisation: there is no empirical evidence that the private sector is intrinsically more efficient." This finding is echoed by a whole host of studies into privatisation in both developing and developed nations, which show that the idea of greater efficiency in the private sector is amyth. This applies to water, but also equally to other utilities. A review of the experience in privatizing electricity in Norway, Canada (Alberta) and the USA (California), as well as the UK, concluded that markets did not deliver lower prices and higher efficiency because small groups of producers abuse market power.

The UK's water supply would seem particularly informative to study, due to the diversity of supply methods within one nation. At the same time this very complexity—and the information available—means the industry is very opaque and difficult to scrutinize. In a report for the New Policy Institute, the authors refer to the way the industry, particularly within England, is organised as'very odd'.

Despite the complexities of the English water industry and its ownership model, certain trends are evident. Firstly, as recent media headlines suggest, household bills in England are increasing. Secondly, there is the clearly changing ownership profile of the privatised water companies, and the increasing presence of private equity in the mix. Thirdly, high profits and dividends for shareholders have also generated headlines.

Fourthly, an increasing amount of debt is being carried by the English water companies. And finally, a run of problems and issues have faced the English water companies, including leaks and unsafe water, along with waste water incidents. Taken together these issues seem to challenge the claim by Thatcher's government that a privatised water industry would be more efficient and less costly to run.

In England annual water bills had risen from £120 per year in 89, to £204 by 2006. If you take into account inflation, you've still got a rise of 39% over and above inflation.

And bills continue to rise, despite stagnating wages and a sluggish economy.

Source: Open Democracy

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• Water Supply
• Water Governance