United Kingdom-based journalist Neil Clark writes in the Guardian UK, “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 (increase in) 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.”
Before we go further into the article, it should be noted that Ofwat is the Water Services Regulation Authority. This authority, established in 1989 under Conservative prime minister Margaret Thatcher, is responsible for the economic regulation of the privatized water and sewerage industry in England and Wales.
Clark highlights, “The discrepancies (in the rate hikes) 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.”
He argues, “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%.”
And while not noted in the article, it should be remembered that the Ontario Teachers’ Pension Plan owns 27 per cent of Northumbrian Water Group Plc, which sells its water services to about 4.4 million ‘customers’ in England. Last year it posted a pre-tax profit of $297 million up from a profit of $272 million the year before. Bloomberg reported in June 2011, “Prices charged by Northumbrian’s water unit increased in line with the Ofwat review allowance of 5 per cent plus the November 2009 retail price index of 0.3 percent, the company said.” Also, the Canada Pension Plan owns one-third of Anglian Water Services, which sells water services to approximately six million people in England and posted a profit of $507 million last year. The profits being made by these Canadian pension plans should also be understood in the context of increased ‘water poverty’, that is the number of people unable to pay their water bills in the UK. It has been estimated that the total arrears ‘owed’ to water companies is more than $2 billion.
Clark concludes, “Bringing water back into public ownership in England – which could be done by the government simply nationalising the existing companies and establishing a new publicly owned body named ‘English Water’, would not only lead to lower prices, but would be a move of great significance. …Water, which falls out of the sky for free and which everyone needs, was obscenely commodified by the Thatcherites. You don’t even have to be a Marxist to agree that there is something fundamentally wrong about water being sold off in order for global conglomerates to make even more profits from hard-pressed ordinary people. Action to end England’s great water rip-off urgently needs to be taken.”
Note: If the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) were to be completed by this June with an investor-state provision intact as is expected, then arguably the Ontario Teachers’ Pension Plan and the Canada Pension Plan would be in a position, as foreign investors, to threaten a NAFTA Chapter 11-like suit under CETA and put a chill on or stop any British government wanting to nationalise England’s privatized water systems as Clark says is imperative.
Clark’s article can be read at http://www.guardian.co.uk/commentisfree/2012/jan/31/renationalise-english-water?newsfeed=true.