Is it time to renationalise the water industry?

Leakages and outrageous pay have led to ‘knee-jerk calls’ to renationalise water companies

Leaking tap
Water companies lose three billion litres of water every day
(Image credit: VW Pics/Getty)

It’s ridiculous, said Rod Liddle in The Sun. We live in one of the wettest countries in Europe, yet much of southern England is facing “water rationing”, with a drought officially declared last week and hosepipe bans widely in force. “Sure, it’s been dry recently. But we should still have more than enough water to cope.”

The real problem is that the water companies allow three billion litres of water to leak away every day. If they can’t do better, we should renationalise them.

Indeed we should, said The Guardian. Since privatisation in 1989, shareholders have been paid £72bn in dividends and executives have been richly rewarded. Consumers, meanwhile, have seen price rises of 40%. Yet the required investment, in fixing leaks and building reservoirs, has not been made.

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Many companies, moreover, have appalling records on pollution. This summer, the Thames Water boss, Sarah Bentley, will receive £700,000 as part of a £3m “golden hello” pay package, even though in 2021 her company was found to have illegally discharged untreated sewage on more than 700 days over two years. “Britain’s private utility model is broken.”

With an estimated bill of £90bn, nationalisation wouldn’t come cheap, said John Rentoul on The Independent. But there’s no need to look far for possible benefits. In Scotland, water supply is still under public control, and Scottish Water is rated the best UK water company for customer service. It certainly isn’t wasting cash on boardroom pay, either. Its boss receives around £270,000 a year, compared with an average of £1.2m for CEOs of privatised English companies.

State-run utilities ‘famously inefficient’

Nationalisation will be a hard sell to anyone who remembers the “famously inefficient” state-run utilities, said The Times. Customer service was terrible. These companies had no incentive to control costs; it has been estimated that 40% of jobs within them were unnecessary.

Besides, many of the charges levelled against the privatised industry display total ignorance of how the system works, said Robert Colvile on CapX. Take the case of leaks. Water companies can hardly be blamed for losing 20% of water when that’s the level agreed with the regulator: Ofwat calls it the “sustainable economic level of leakage”.

So if we want to bring down leakages, don’t shout at the companies, “shout at the regulator”. As for the cost to consumers, water bills have not risen in real terms for the past two decades. To be sure, privatisation has been “no panacea”, but these “knee-jerk calls for nationalisation” are made with little understanding of the facts.

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