The utter failure of privatising water

We need a plan for genuine community and worker-ownership.

Thames Water remains one of the worst examples of Thatcherite privatisation. Giving it back to its customers and employees to run is long overdue and would avoid the huge tax payer costs of renationalisation too.

Since privatisation bills have rocketed, CEO pay has shot up and Thames Water’s owners became infamous for extracting huge amounts of wealth from the company and their consumers; money that could have led to higher investment to reduce leaks. Or if the owners hadn’t syphoned off so much money offshore there would have been lower bills for its London and South-eastern customers.

There is now a broad consensus on the left that a change of ownership is overdue. John McDonnell deserves recognition for his campaigning against the dismal record of the privatised water companies.

Whilst there is strong public support too for democratic public ownership there isn’t yet any settled consensus as to what democratic public ownership means in practice.

I draw my support for co-operative ownership from the original Clause 4 of the Labour Party constitution which committed Labour to common ownership. Its author, Sidney Webb, wrote at the time:

“This declaration of the Labour Party leaves it open to choose from time to time whatever forms of common ownership from the co-operative store to the nationalised railway, and whatever forms of popular administration and control of industry, from national guilds to ministries of employment and municipal management, may, in particular cases, commend themselves.” (Observer 21 October 1917)

The excellent campaigning body “We Own It” recently published proposals for state ownership of water with a supervisory body consisting of: 1/2 elected/appointed by local/regional/national government as appropriate (democratically elected politicians and also non-executive directors  with useful expertise, chosen by government), 1/6 public service users (from Participate), 1/6 workers or trade unions and 1/6 civil society (relevant environmental, social or community groups).”

A more radical plan would see employees and consumers jointly running Thames Water themselves. Indeed Labour should be pushing for employees and consumers to be able to begin to elect representatives to the Board even now.

One of the problems with the former renationalised water companies is that the big decisions were taken a long way away from the people most affected. ‘We own it’s’ plans risk a similar problem. Similarly, there are few trade unions who think Royal Mail was a great advert for public ownership.

With its Board of Directors chosen in Whitehall, staff concerns were often ignored, dissatisfaction with management rampant and consumers were largely ignored.

We need to build a new model of genuinely democratic public ownership which forces water companies to talk openly to government, local government and environmental organisations.

But if democratic public ownership is to mean what it says on the tin then consumers and employees need to be in charge, electing their own representatives to run the board, oversee management and take the big strategic decisions. Cutting out workers and avoiding meaningful engagement with Thames Water’s service users will just make it easier for the Tories and Brexit Party to re-privatise Thames Water in years to come.

The Australian Bank that owned Thames Water used to choose the Board, decide the dividend rate and employees and customers were forced to accept their decisions. It would be a terrible mistake if we replaced that outrageous model with a rehashed model of the 1970’s water supervisory board with the real decisions taken in Whitehall.

There are organisations where citizens, consumers and employees run services and businesses that the rest of us depend on; they’re called co-operatives and mutuals and their successes should inspire a radical future for Labour’s plans for democratic publicly owned water companies.

Gareth Thomas is a British Labour Co-operative politician who has been the Member of Parliament for Harrow West since 1997 and the Chair of the Co-operative Party since 2001.

UPDATE: Campaign group We Own It have responded to this piece. Spokesperson Ellen Lees:

We agree with Gareth Thomas MP that if democratic public ownership is to survive a future Tory government, it needs to give real power to customers and employees.

“We wrote our report ‘When We Own It: a model for public ownership in  the 21st century’ with exactly this challenge in mind. In it, we call for public services which are professionally run, held accountable by supervisory boards with oversight by government, citizens, workers and civil society.

“We Own It believes in a mixed economy. That means a strong, efficient, effective PUBLIC sector across all public utilities and services – public transport, water, energy, the NHS, schools, council services and so on. 

“And it means many, many more cooperatives in the wider economy – we’d love to see ambitious proposals from the Coop Party to bring Boots or Tesco into worker or consumer ownership, for example. 

“The public sector and cooperatives should not be pitted against each other, scrabbling and fighting over who gets to run natural monopolies. Let’s start to take back our whole economy – with ambitious new cooperatives alongside a strong, democratic public sector.

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One Response to “The utter failure of privatising water”

  1. Tom Sacold

    We should re-nationalise all the privatised utilities.

    But we can’t because that would be against the EU Single Market regulations.

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