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.
Extract — continue reading at the source.
