1. Water in public hands David Hall halldj@gmail.com
Visiting professor, Public Services International Research Unit (PSIRU)
University of Greenwich
and
Kate Bayliss
Research Associate SOAS, University of London
Lincoln November 2017

2. History
Private companies
Regulator
Rest of the world
Reclaiming public water
This presentation is based on the paper: ‘Bringing water into public ownership: costs and benefits’ K. Bayliss and D. Hall May 2017
ership_%28Rev%27d%29_2017.pdf

3. History of water services
Water infrastructure widely used in ancient world
Early urban water and sewerage systems in ancient Pakistan/India BCE
Romans build aqueducts and sewers
Early forms of taxation (Egypt, ‘Nilometers’) and local democracy (Spain, water juries)
Municipal water/sewerage systems developed in 19th/20th centuries

4. Privatisation 1989 - and Anglian Water 2017
Regional water companies sold on stock exchange
Expectations were for
Lower prices because of greater efficiency and regulation
Private finance for investments (EU rules)
More responsive to customers
Popular capitalism: widespread shareholdings
In practice have been taken over by multinationals and private equity groups with complex and obscure financial structures

5. Annual average household water bill £ 2015/2016 prices
% increase 1989/ /2017
Industry average 46
Anglian 10
Dwr Cymru 24
United Utilities 58
Northumbrian 47
Severn Trent 30
South West 40
Southern 39
Thames 55
Wessex
Yorkshire 25
Source: HoC Library Briefing Paper
Number CBP06596 “ Water bills - affordability and support for household customers“ 8 August 2016: section 6 p. 32

6. Prices – real increases
Prices rise 40% faster than inflation
One third of households struggles to pay for water
Source: Ofwat Report “Affordability and debt ”

7. Debt and equity in the water sector 1990-2015
Source: NAO 2015

8. English water and sewerage companies post-tax profits and dividends 2007-2016 £m
Source: Authors’ calculations based on company reports

9. Total profits 2007-2016 and uses
Company
Pre-tax profit (£m)
Tax (£m)
Post tax profit (£m)
Dividends (£m)
Interest payments
Retained earnings (£m)
Anglian Water
3,019
-12
3,007
-3,709
-1,388
-702
Total for all 9 English water companies)
20,707
-1,666
18,862
-18,129
-14,650
733

10. Financial Times City Editor Sept 2017
On privatised water: “…. Quite why this natural monopoly should not operate through not-for- profit, public interest companies is ever less clear.” Water privatisation looks little more than an organised rip-off FT Sep by Jonathan Ford , City Editor
On public ownership: “For the first time in four decades, an intellectual revolution is taking place in British politics. …it is the right that risks being left behind. Radical ideas from the hard left … now have mainstream appeal.” Tories are being swept away by Labour’s intellectual revolution FT Sep Sebastian Payne

11. International comparisons
The English system is unique in the world.
Despite much study and publicity, no other country has adopted this model in the last 28 years.
Even where water is privatised, this typically takes the form of a fixed term concession rather than complete transfer of ownership
The great majority (90%+) provide water and sewerage services though municipalities or regional authorities (as in the UK before privatisation in 1989).
Even in the USA, 85% of water is public, carried out by municipalities.
Strong trend in Europe and elsewhere in the last decade to re- municipalise private water services
including the cities of Paris and Berlin
Private water unpopular everywhere e.g. Italian referendum
Also consistently unpopular in UK from 1980s onwards

12. Remunicipalisation of water services 2000-2015
Source: Our public water future ed. Kishimoto et al

13. A possible new system under public ownership
Transition by nationalisation of existing companies, with compensation as determined by parliament, followed by transformation into new regional public bodies.
The ownership of these bodies, and responsibility for water and sewerage services, can be vested in the local authorities in the region, who would form the boards.
Boards could also include representatives of consumers, workers, business, environmental groups
Board meetings could be held monthly, in public, and all documents of the authorities should be open to public scrutiny.
Local consultation meetings could be arranged more frequently.
OFWAT would be abolished and its functions brought under ministerial control.
The new regional water authorities would form an association to conduct annual public peer review of operations and efficiency, following the Netherlands model of ‘sunshine regulation’.