...Margaret Thatcher promised that water privatisation would deliver higher investment.
But a detailed analysis by the public service union Unison found that, between 1990 and 2023, there was no net investment at all. “Investors” spent £3.6bn buying shares in 1989 and 1990, but by March 2023 total shareholder equity across the water sector amounted to £3.4bn. In real terms (taking inflation into account), that means a 60% reduction in shareholder capital.
Over that period, shareholders managed to extract £77.6bn (in 2023 prices) in dividends from the water companies. Add this to the withdrawal of equity, and you discover that they have squeezed £82.4bn out of public assets. Much of this money was obtained through loading the companies with debt.
Instead of borrowing to pay for infrastructure improvement, water companies borrowed to pay for dividends. They knew that if the enterprise one day became insolvent as a result, it would be someone else’s problem. Ultimately,
as we now discover in the case of Thames Water, it becomes our problem. Just as the water companies dump their sewage in the rivers, they have also dumped their liabilities on the public. The country becomes their dustbin.
For 36 years, these companies have acted as dispensers of free money to their owners,
most of which are foreign, some of which are foreign states. In fact, the only government not permitted to own England’s water supply is the UK’s. They must see us as total suckers, giving away our national infrastructure, land and assets … for less than nothing.
Any investments have been funded not by shareholders but by their customers, through our water bills.
These rose in the same period by 360%, more than twice the general rate of inflation. The rise has since accelerated. Every year, we pay £2.3bn more for our water and sewerage bills than we would if the suppliers were publicly owned, according to research by the University of Greenwich. High bills, impossible debts, filthy rivers, minimal investment and no resilience: that is the gift of privatisation.
One of the results of this asset-stripping model is that leakage rates remain disgracefully high. While the
hosepipe bans now being introduced
around the nation are likely to save between 3% and 7% of the water we would otherwise use,
19% of the water piped through the network is lost through leakage. Compare this with the publicly owned Dutch system, which loses 4%. For the same reason, no major reservoir
has been completed here since 1992...
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