The cost of privatisation for bill payers and the environment
Having a privatised water system has not only cost us on an environmental level but comes at a large customer expense, while we continue to hear how the mega-rich investors and companies are reaping rewards.
England is now the only country to have a fully privatised water and sewage system, while Welsh water is also run privately but now as a not for profit. As a result, we’re left with almost all UK’s waterways being considered too polluted to swim in and an eye-watering financial cost as customer bills flow into the pockets of company shareholders.
In England water company debt has soared since privatisation, while the companies continue to pay out billions to shareholders. The latest figures published in the Financial Times revealed a whopping £2.5bn was paid in dividends by water companies in England over two years.
Water and sewage were privatised in 1989 under Margaret Thatcher, sold off for £7.6bn. Between then and 2015, water bills in England and Wales increased by a staggering 40% above inflation. Furthermore, the boss of Thames Water recently claimed that bills need to rise again by 40% by 2030 in order to pay for improvements and address shareholder problems.
However things would be very different if the water system was nationalised, like every other country in the world. Public ownership would mean we could save a massive £2.5 billion a year, from not paying out shareholder dividends and from the lower cost of borrowing.
This equates to about £113 per year per household – the equivalent to a cut in water bills of around 25%, according to research by the University of Greenwich.
The money could have been reinvested in any number of ways including fixing leaks, reducing charges, reducing debt, protecting the water table, reducing the need for hosepipe bans and cross subsidising other public services.
More than 70% of England’s privatised water system is in foreign ownership, benefiting billionaires, banks and funds around the world, including 17% from US-based companies such as BlackRock, one of the world’s largest investment funds. This is who benefits from bill-payers in England simply using water, rather than the environment or the pockets of tax-payers.
As Cat Hobbs of We Own It said: “Shareholders want us to pay to clean up their mess – they want to hike our bills by an eye-watering 40 percent while they pour sewage into our rivers.”
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