Every few months, there are more shocking headlines about the behaviour of England’s water companies. The latest are about the ever-increasing pay of the chief executives and chief financial officers, which rose to a total of £25.3m across 14 companies over the past year. Meanwhile, people living in England struggle with rising water bills and untreated sewage being discharged (often illegally) on to beaches and in to lakes, and companies such as Thames Water are on the brink of insolvency and want government backing.
It’s not surprising that we’re in this situation: England’s water companies have long been accused of putting the interests of shareholders above those of customers. From their perspective, the privatisation of water has been an astounding success. Between 1991 and 2019, dividends to the shareholders of the parent companies totalled £57bn, which averages out to more than £2bn every year. The majority of these private parent companies are foreign-owned, so the profits aren’t even kept in Britain.
Lack of proper oversight creates a series of perverse incentives. If water companies can charge more for the same amount of water, they’ll do that. If they can dump untreated sewage in public waterways, they’ll do that, too.
The root of the problem goes back to 1989 when Margaret Thatcher, then prime minister, privatised water in England. But right here, in the UK, there’s an example that shows that there is an alternative.
Unlike England, Scotland chose to retain public ownership of Scottish Water and, between 2002 and 2019, the company invested 35% more per household in infrastructure than the privatised English water companies. It charges users 14% less and it doesn’t pay dividends.
While Scottish Water’s CEO pay package, which adds up to more than £500k, has been criticised for being high relative to other public sector employees, it’s relatively low compared with the private pay packets south of the border. More importantly, Scottish Water is accountable to people living in Scotland, as all profit is reinvested back into water and sanitation systems, instead of going to shareholders.
I’ve lived in Scotland for over a decade and the water coming from taps is clean and delicious. Since 2018 Scottish Water’s Your Water Your Life campaign has been offering free drinking water through a network of public water stations across the country. By 2022, the water dispensed at these would have filled the equivalent of 15m plastic bottles. Water in people’s homes is paid for through local authorities charging council tax rather than customers receiving a bill from a private water-company.
As a public health expert, I’ve found it hard not to think about England’s poor water infrastructure because I can see how, across the world, and especially in low-income countries, access to this vital resource is often a matter of life or death. It took the father of epidemiology, John Snow, to identify dirty water as the cause of a large cholera outbreak in London. Clean water isn’t a luxury: it’s necessary to human health and wellbeing.
More recently, Chris Whitty, England’s chief medical officer, highlighted the worrying public health problem of sewage in England’s waterways. He reminded water companies and their directors that human faeces is making people who swim or use the water on popular beaches and rivers sick.
The normal logic of private efficiency might work in sectors of the economy where competition brings meaningful choice and innovation. Take cars: we can choose between different manufacturers, designs, fuel type and price; or even pharmaceutical companies, where competition encourages firms to develop different drugs and invest in risky research.
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But what is the consumer choice in tap water? Water is water: we just need it to be clean, and hopefully to taste good and be reliably delivered through functioning infrastructure. We need the waste we flush down our toilets to be treated and made safe through sanitation systems, before being released into nature again.
Listening to the recent debates, you’d think that bringing English water companies back into public ownership was some kind of radical socialist idea. Guess what? That’s just normal life here in Edinburgh.
If water and sanitation are treated as a commodity, then companies will of course look at how much they can squeeze consumers. But water isn’t something that you can choose to go without. It’s absolutely vital to human life – you’d die without it in about three days – and should be a basic part of public infrastructure provided by government.
