A warning: Water privatisation in England and Wales

[El_Johns]

To see what would be the consequences of the privatisation of the Water Service we need look no further than England and Wales. In 1989 the water and sewage systems in these two countries were privatised. At the time it was billed as the jewel in the crown of the Thatcher Governmet’s privatisation programme. Even in terms of the privatisation of utilities it was unprecedented. In other countries where the water industry had been privatised, it involved concessions or leases under which the private contractor collects all the revenues for a water service, carries the cost of operating and maintaining it, and keeps the surplus as a profit. Britain is unique in having transferred its water and sewage system completely into the private sector.(1)

In 1989, the ten unitary regional water authorities (RWAs) in England and Wales were privatised... The Water Act 1988 transformed these into private companies and sold them off... The Act gave them exclusive 25-year concessions for sanitation and water supply, protecting them against any possibility of competition. This created private monopolies. The Government took a number of steps to boost the profitability of these companies. It wrote off the all the debts of the water companies before privatisation, worth over £5 billion. In addition, they were given a ‘green dowry’ of £1.6 billion. The government also offered the companies for sale at a substantial discount, 22 per cent less than their market value.(4) A very generous pricing regime was established, and the companies were given special exemption from paying taxes on profits.(5) They had a virtual licence to print money, which of course has been exploited to the full. The abuses are so blatant that even the Tory supporting Daily Mail has denounced water privatisation as the “greatest act of licensed robbery in our history.”(6)

The most noticeable impact of privatisation for the public has been the dramatic increase in prices. On average, prices rose by over 50 per cent in the first 4 years... When the water bill is broken down into its components, operating profits, which have more than doubled since privatisation, account for almost the entire increase...(10) One method the water companies have used to increase prices and boost profits is to exaggerate the level of investment required to maintain their network. Forecasts for capital expenditure are consistently higher than actual expenditure, leaving a capital surplus that can be added to profits... Privatisation has also witnessed a massive increase in the fees, salaries and bonuses the directors of the water companies have awarded themselves...

If water privatisation has been a bonanza for business, the corollary is that it has been a disaster for users, the environment, and those employed in the industry... In Britain the consequences of water privatisation have been wholly regressive....

http://www.socialistdemocracy.org/WaterChargesPamphlet/AWarningWaterPrivatisationInEnglandAndWales.html

[blkmusclmachine]

1. Savvy!

[muriel_volestrangler]

2. Update (I think that was written in 2001, since it still has Wales as for-profit)

Ofwat has announced that average household water and sewerage bills in England and Wales are to increase by an average of 5.7% from April. As in the case with the rail fares, we're told that the reason that prices are rising is to enable more "investment" by the water companies. But a closer inspection is highly revealing. While English water companies are hiking charges by as much as 8.2%, Glas Cymru, the owner of Welsh Water is only raising prices by 3.8%. In Scotland, there's going to be no price rise at all.

The discrepancies can be explained by the different ownership structure of the water companies in England, Wales and Scotland. While England's water industry was sold off to the private sector by the Conservative government in 1989, Scotland's stayed in full public ownership. Scottish Water, with no pressure to provide dividends to shareholders or reward wealthy investors, not only charges lower prices to its users than English companies, it has also recently announced that its price freeze, introduced in 2009, will continue for a fourth successive year. In Wales, Glas Cymru is a not-for-profit company limited by guarantee, set up after the collapse of the privately owned Hyder in 2001. Average household water bills in Wales in the six months to September 2010 were £4 lower than a year before.
...
Today's news surely shows that it's England which should be copying the Scottish and Welsh models and not the other way round. Water privatisation was arguably the most ideologically extreme of all the Conservative sell-offs of the 80s and 90s. Selling off water would have been regarded as completely barmy idea by the One Nation, middle-of-the-road postwar Tories like Harold Macmillan, but it became Conservative party policy under Margaret Thatcher. So thanks to the Conservatives, we in England now have our water provided by companies such as Thames Water, whose parent company Kemble Water is a subsidiary of Kemble Water Holdings Limited, which is owned by the Macquarie Group, an Australian global investment banking conglomerate. Thames Water is raising its prices by 6.7%.

Southern Water meanwhile, which is increasing charges by 8.2%, is owned by Southern Water Capital Ltd, which in 2007 was bought by a consortium led by JP Morgan Chase. JP Morgan's Chase announced profits of $4.26bn last October – something for those about to fill their kettles in Brighton or Eastbourne, to reflect on.

http://www.theguardian.com/commentisfree/2012/jan/31/renationalise-english-water

Roughly two thirds of the water supply is ultimately owned by overseas companies: https://en.wikipedia.org/wiki/United_Kingdom_water_companies (eg 'Greensands Holdings', who own Southern Water, my supplier, is owned by "Australian pension funds, a fund advised by JP Morgan Asset Management and a fund advised by UBS Global Asset Management".

[postulater]

3. Very interesting. Thanks.

Scotland Forever!

[El_Johns]

8. thanks for the update.

[otherone]

4. thanks for the post

[Enthusiast]

5. ANY advocate for privatization of water is an enemy of the people.

It is just as simple as that. As with prison, education and toll road privatization, there are no positives excepting personal rewards for crony capitalism.

Any American politician advocating water privatization should be attacked from all sides.

[WinkyDink]

6. "No-one could have predicted....." Remember this thread about the BFEE----

http://www.democraticunderground.com/10022473474

Former President George H.W. Bush’s Family Bought 300,000 Acres on South America’s and World’s Largest Aquifer, Acuifero Guaraní

In my 2008 article, I overlooked the astonishingly large land purchases (298,840 acres, to be exact) by the Bush family in 2005 and 2006. In 2006, while on a trip to Paraguay for the United Nation’s children’s group UNICEF, Jenna Bush (daughter of former President George W. Bush and granddaughter of former President George H.W. Bush) reportedly bought 98,840 acres of land in Chaco, Paraguay, near the Triple Frontier (Bolivia, Brazil, and Paraguay). This land is said to be near the 200,000 acres purchased by her grandfather, George H.W. Bush, in 2005.

The lands purchased by the Bush family sit over not only South America’s largest aquifer — but the world’s as well — Acuifero Guaraní, which runs beneath Argentina, Brazil, Paraguay, and Uruguay. This aquifer is larger than Texas and California combined.

Online political magazine Counterpunch quoted Argentinean pacifist Adolfo Perez Esquivel, the winner of 1981 Nobel Peace Prize, who “warned that the real war will be fought not for oil, but for water, and recalled that Acuifero Guaraní is one of the largest underground water reserves in South America….”

[Squinch]

7. This is the next thing, and this is where the true power over EVERYONE will come from.