England, Wales and Scotland section of International Socialist Alternative

Water privatisation has failed: Renationalise the utilities now!

By a Socialist Alternative member

Thirty four years after Tory Prime Minister Margaret Thatcher privatised the water industry in 1989, Thames Water looks set to collapse back into (temporary) public ownership. A company riddled with debt, spewing sewage onto beaches and incapable of supplying people’s homes with a ‘commodity’ which falls from the sky – this sums up the utter incapacity of capitalism to deliver basic needs without colossal social and environmental costs. 

Facing public anger over the state of our riverways and beaches being choked and polluted by human waste and chemicals, the regulators and government came under pressure to make the companies pay. Instead, workers have been told to pay the price, with bill rises of up to 11% from April and more to follow. This only adds fresh misery to working class people already struggling to pay the bills. 

Catastrophic for-profit system

This crisis cannot be simply be blamed on the war in Ukraine, Covid or Brexit. The Tories wish to use these as an excuse to hide behind and justify their profiteering. It is a straightforward case of the already-rich looting and extorting from ordinary people for a resource we cannot live without. And they are aided by governments of all three main parties for nearly four decades. 

So-called ‘regulation’ has proved utterly worthless. Incredibly, despite over 300,000 releases of sewage into the rivers and seas every year, the regulator Ofwat has issued one fine in thirty years! This is not regulation. It is window-dressing, deliberately designed to enable the companies to continue getting away with what ought to be crimes. The company bosses and the politicians who enabled their activities should be in a courtroom. Instead, they are laughing all the way to the bank, and expecting more handouts from the public.

According to the water companies, investment of £10bn or more is needed to prevent their activities from destroying our beaches and rivers. Previous estimates have been made by the same companies of up to 50 times this amount! Yet since privatisation, the water companies have paid out around £60bn to shareholders. That is around two billion pounds a year. Five years of not lining the shareholders’ pockets would, it seems, be enough to avoid jacking up the water bills again. That, of course, is unacceptable to big business, which is in the business of delivering super-profits – not affordable services.

Thames Water in particular is tottering on the edge of collapse because of a debt crisis. Rather than borrowing to invest, its owners have borrowed debt in the name of the company, to dish out as freebies in shareholder dividends. Such is the state of British and international capitalism in the twenty-first century. Despite regular summer water shortages in many parts of Britain, between 2017 and 2022, the water companies closed down and sold off 35 reservoirs to profit from the land sale, building just two new reservoirs in the meantime. 

What kind of nationalisation?

There is now widespread speculation in the news as to whether Thames Water will have to be temporarily renationalisation. This is not unprecedented – it happened with the failed energy supplier Bulb, with roughly 20% of the failed train operating contacts on the rail network – and, of course, the failed banks in 2008. 

When the capitalists’ looting reaches such heights that it literally bankrupts the companies, in steps the government to pick up the pieces, bail out the losses, and hand it back to the same set of profiteers for the whole cycle to start all over again. 

Unsurprisingly, this time there have been extensive calls for the whole sector to be renationalised on a permanent basis. One academic study has forcefully argued for no compensation to shareholders, echoing Socialist Alternative’s position of compensation only on the basis of proven need, such as pension fund investments. 

Professor David Hall says quite rightly that “if the shareholders disappear off the face of this earth and Thames Water is transferred to a new public authority, nothing will change on the ground. It’s not the shareholders who manage the pipes, maintain the software systems or anything like that. We have a functional workforce of competent workers and engineers to do that.” 

We agree wholeheartedly. Rather than the Tories’ stopgap, reluctant nationalisations, designed solely to enable a new round of looting, or the past nationalisations creating bureaucratic state-owned monoliths, we stand for socialist nationalisation. The water companies should be run on the basis of working-class control and management. The financial books should be open to inspection on a democratic basis. 

The boards and senior management should be sacked. They should be replaced by elected representatives of the “competent workers and engineers,” together with elected representatives from strong consumer organisations, to hold the service to account in the interests of the whole of society. 

Tax the super-rich

The investment necessary can be financed without putting up bills. But for as long as these services are run for profit, not need, the problems will continue. A publicly-run, democratically controlled utility sector should be funded by taking hold of the wealth of the shareholders. This means taxing the super-rich, ensuring they pay up through public ownership and nationalisation of the financial system. On the basis of socialist planning and public ownership, tax-dodging and speculative hoarding can, at last, be brought to an end.

We say:

  • Nationalise the water companies, under democratic working-class control and management!
  • Investment without bill increases to end pollution and rebuild the infrastructure!
  • Take the money from the looters – tax the super-rich and nationalise the banks!

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