It was reported on 16 September by The Guardian that recent research by Common Wealth has revealed that the British public has paid nearly £200bn to the shareholders who own key British industries since they were privatised.
It was stated that, “the transfer of tens of billions of pounds to the owners of the privatised water, rail, bus, energy and mail services comes as families face soaring bills, polluted rivers and seas, and expensive and unreliable trains and buses”.
The analysis found that as a result of this, the British people have been paying what is described as a “privatisation premium” of £250 per household per year since 2010 alone.
It was noted that recently the focus has tended to be on the privatised water industry, which has paid out dividends of £88.4bn while running up long-term debts of £73bn in the past 34 years. During this time, it has also, of course, overseen record sewage spills.
It was further reported that “for the first time the thinktank Common Wealth has drawn together the haemorrhaging of billions of pounds to shareholders across four key sectors, most of which were privatised from the 1980s and 1990s by Margaret Thatcher’s Conservative government – energy, transport, water and mail”.
Other issues with privatisation
The TUC Coordinating Group have also noted a number of other ways by which privatisation has been an expensive – and failed – experiment in this country.
They have argued that privatisation has not made services better and indeed has made them worse, with the NHS cited as an example of a service which has declined in recent decades due to the increased use of outsourcing and privatisation.
They have also argued that privatisation is costing the public more to gain the benefits of services, with the rising costs of services, coupled with subsidies from the public purse, the kind mentioned at the beginning of this article.
Privatisation is also seen as being nothing but a huge racket for those people who own the newly privatised companies, with billions being siphoned off as profits for shareholders and owners. Included among the privatised industries which the TUCCG mention are schools and higher education. This siphoning off of profits naturally has affected the amount of investment that is available for investment back into the service.
Indeed, the TUCCG asserts that, “funds that could be invested to continuously improve the quantity and quality of public services are wasted by privateers and keeping spivs in luxury.” A prominent example of this, is of course the water industry.
House of Commons Public Accounts Committee
This problem was discussed in the House of Commons in July this year. It was noted by the Public Accounts Committee that while water bills are expected to rise at their fastest rate in 20 years, public trust in the sector is at an all-time low. The PAC went on to state that, “over the next five years, customer bills are expected to increase by an average of £31 a year. The PAC’s inquiry found that 20% of people are struggling to afford their water bills – yet companies are implementing these huge increases without explaining why, or how the money will be spent. Ofwat must set clear expectations for companies to explain where customer money is being spent, why bills are rising and what improvements customers can expect for their money, in the next six months”.
It was also noted that one of the main things damaging consumer trust in the water industry is the pollution resulting from decades of underinvestment in antiquated sewage systems. It was claimed that, “the Environment Agency (EA) says there are too many offences to prosecute every wastewater company for their poor environmental performance. Companies are expected to spend around £12bn in the next 5 years to update the system, but this will only fix around 44% of overflows. Defra created an £11m fund for environmental improvements from water company fines in 2024, but has still not distributed the money. The report recommends the Government disburse the amounts promised by the end of the year, and for regulators to work urgently to ensure money raised from fines is reinvested into improving the system”.
The TUC Coordinating Committee also noted that privatisation had been bad for safety, making various industries less safe for both workers and customers, while for workers it often meant not only less safety but also “fewer jobs, more stress on those left doing the job, and worse pay and conditions”.
Finally, it was pointed out that privatisation was also bad for the environment, often making integration and planning harder, making it more difficult to cut carbon emissions and easier to pollute with paying for it. There certainly seems to be a solid case to suggest that privatising the water industry has been very bad for the environment.
Comment
Privatisation is a right-wing experiment, first tried out on a large scale in Pinochet’s Chile in the 1970s and then enthusiastically taken up by Thatcher’s government in the 1980s. And like all experiments it can go and has gone very wrong, at least for the vast majority of the people of Britain. While a few owners and shareholders have made huge profits out of privatisation, the general public have been rewarded with declining services and having to pay huge subsidies out of the public purse.
The present way of doing things in many industries must be changed and quickly, before any more damage is done. There are those who say it will be too expensive, but can anybody seriously say for example that shareholders, especially those of water companies deserve compensation?
Indeed it was noted in April this year that the government’s spending watchdog, the National Audit office (NAO) had reported that water regulators and government ministers had at the time no coherent national plan for upgrading the country’s water and sewage infrastructure.
It was said that, “the environment department and water regulators have “failed to deliver a trusted and resilient” water sector and drive sufficient investment in the sector,).
It was further noted that. “the sector now faces “significant environmental, supply and infrastructure challenges”, the NAO said, with all three water regulators – Ofwat, the Environment Agency and Drinking Water Inspectorate – and the government department for environment, food and rural affairs (Defra) playing a role in the failure”.
It seems very sad that the present Labour government has not renationalised at least the water industry, the energy utilities and done more to speed up the renationalisation of the railways.
To see how public transport could be improved by taking services back into public hands, one only has to look at the Bee Network in Manchester. It has been noted that although there have naturally been some teething problems with the takeover by the GMCA, “back on the roads, TfGM data suggests Bee Network buses are more on-time than privately-run services, more people are catching them, and passenger satisfaction has also improved.”
And there has been a political cost to Labour for not going ahead with more renationalisation. Renationalisation, starting back in July 2024, after the General Election, could have been part of a dynamic Labour government agenda of change, which could have prevented the rise of Reform and distracted attention from the rights obsession with immigration and helped people to think more about issues that really matter, including the state of our water, our health and education systems, our public transport, our energy systems and many other vital areas of national life.
All in all, it was an opportunity wasted. Hopefully a more progressive agenda on public ownership can still be taken up by this government before the next General Election.
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