David Hall of the Public Services International Research Unit writes, “Private companies in England are now celebrating their 25th year of lucrative exploitation of their natural monopolies, with most of them now owned by private equity consortia or Asian multinationals. The companies are extracting profits of around £2 billion a year above the cost of a public service funded through low-cost public debt. This means renationalisation would save the average household £83 per year, cutting bills by more than 20%.”
He continues, “This year should have seen the expiry of the original licences awarded in 1989. But a new clause requiring 25 years notice of termination has effectively extended their contracts indefinitely – the clause seems to be of no concern to the competition authorities of the UK or the EU.”
Hall also notes, “[Relentless price rises] have left 23.6% of households in water poverty (defined as water bills at over 3% of household income). Profits [of these private companies] are also reinforced by tax avoidance schemes which channel payments through tax havens.”
He concludes, “Despite all this, the Greens are the only UK party to support bringing water back into the public sector. This makes them the only party in line with public opinion on this issue. The most recent poll on the issue found more than 70% of people favour renationalisation of the water sector – almost exactly the same as the proportion which opposed privatisation 25 years ago.”
The Council of Canadians agrees with David Hall and Neil Clark who has also written on this issue.
We would also add that the Ontario Teachers’ Pension Plan owns 27 per cent of Northumbrian Water Group Plc, which sells its water services to about 4.4 million “customers” in England. Also, the Canada Pension Plan owns one-third of Anglian Water Services, which sells water services to approximately six million people in England.
Given that “more than 70% of people [in the UK] favour renationalisation of the water sector,” what if a future government there decided to do just that? With the investor-state provision in the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), these Canadian pension fund investors would be in a position to sue for lost profits. And their profits are substantial. In 2011, Northumbrian posted a pre-tax profit of $297 million while Anglian saw a profit of $507 million.
To read David Hall’s fuller article about the European Citizens Initiative on the right to water and the estimate that “more than 85 cities have switched from private to public in the past decade,” please see UK is out of step with the rest of the world on access to water.
Further reading
CETA would hinder water remunicipalization in England
OTPP water profits up in the UK, as is the water poverty rate
Water poverty in the UK as rates increase, the recession hits
