Alex Gerroll, Manchester Socialist Party
Labour prime minister Andy Burnham plans to give mayors oversight of water companies in the form of regional water authorities. This comes in the wake of Thames Water’s financial woes and pressure on Burnham to nationalise it.
The 16 water cartels paid out around £78 billion in dividends between privatisation and March 2023 in inflation-adjusted terms, while running up more than £64 billion in net debt over the same period, against roughly £190 billion of capital spending. Water companies have run up debts to hand out cash to investors, all while infrastructure crumbles and some of our bills are expected to rise over 50% by 2030 on average. No water-supply reservoir has been both planned and completed under privatisation in England and Wales – that’s since 1989!
The idea for this restructure was initially conceived by Sir Jon Cunliffe, published by the Independent Water Commission last July. The commission did not even consider the idea of renationalisation. In the foreword of the report, Cunliffe states that he understands the concerns about profit within the sector and that, “within the terms of reference”, he “looked in depth at ways to ensure water companies are aligned with the public interest”. The government commissioned a review of a failing privatisation, and told it not to consider ending the privatisation!
Ministers have already accepted the central recommendation: abolishing Ofwat and folding it together with the drinking water inspectorate and the water functions of the Environment Agency and Natural England into one larger, supposedly more powerful, regulator.
The regional bodies were left out by Keir Starmer’s government, however now Burnham is considering reviving them, these new bodies would be tasked with “developing investment plans that reflect local priorities and voices”, according to the commission. Currently Ofwat sets limits on what water companies can charge customers over a five-year period, and provides oversight on infrastructure spending.
The report states that any investment plan composed by these bodies will go to this new regulator for a ‘cost-efficiency challenge’ and to determine what companies can charge customers. Additionally these new regional boards will have extremely limited democratic input, despite the BBC claiming mayors will be heading these boards, all appointments are slated to be made centrally by the Secretary of State.
Unsurprisingly, water workers themselves won’t have an automatic right to decide how the water system is run, nor their unions. Under the proposals, the water companies are still fully under the control of the shareholders, and the new central regulator will have a duty to maintain profits for them rather than to distribute water effectively to people.
The water companies should be nationalised and brought under democratic working-class control instead of a toothless bureaucratic board. Compensation should be paid only on the basis of proven need, and instead of resources sucked away as profit, infrastructure could be improved through input by water workers and the wider working class, to bring down our bills and protect the environment.
