Should the Water sector stay Privatised or become Government Controlled?

Nov 24, 2017

In recent months the water sector has come under political and public scrutiny due to its quality and services issues. Water privatisation started in 1989 by the government, which partly privatised the ten previously public regional water authorities (RWAs) in England and Wales. This has, in recent years, caused some questions on whether the sector is doing right by their consumers.

England is currently the only country to have completely privatised its water and sewage system. Investors paid £7.6bn for the water and sewage companies in 1989, and the UK Government took on the sector’s entire £4.9bn debt. This gave the new private corporations £1.5bn of public funds.

Figures have shown that in the past decade, the nine companies in control of the Water sector have made £18.8 billion of post-tax profits. Far from using the money to make the water system better, they have paid out £18.1 billion in dividends, and financed investment through loading £42 billion of debt on to consumers.

It is estimated that the privatisation of the water sector costs £2.3 billion more per year. The labour party would like to return the water and sewage companies back to government control, and have stated that they would do this if they were ever to be elected. Many voters have voiced their concerns over rising prices and poor performance by some of the best companies on leakages and pollution; Thames Water received a record £20 million fine earlier this year for dumping more than 4.2bn litres of raw sewage into the river Thames.

Speaking at Moody’s third UK Water Sector Conference in London, Cathryn Ross, Chief Executive of Ofwat, stated “more than £140 billion of investment has gone into the sector since privatisation and yes bills have risen to accommodate this, but costs haven’t spiralled out of control as they have in some other sectors, and our efficiency challenge has kept costs in check and bills a third lower than they otherwise would have been.”

Do you agree and think the water sector should become Government controlled? Or do you think privatisation is the best for the sector? Tweet us at @HighfieldREC to let us know how you feel.

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