Friday, June 23, 2006

Water privatisation and the case for social ownership

Water privatisation has had disastrous consequences in many third world countries. It has hardly been a roaring success in Britain, either.

In March, this blog looked at the case of Severn Trent – Britain’s largest water company – which was ordered to reimburse overcharged customers to the tune of £42m, after deliberately supplying false information to industry regulator Ofwat, so that it could press its case for higher prices.

Now we have the disgraceful case of Thames Water. Industry regulator Ofwat authorised the company to increase prices by 24% above inflation between 2005 and 2010, so that it could undertake infrastructure improvements.

Remember, this is an outfit that loses 30% of the water it produces through leakage. That's the equivalent of 357 Olympic-size swimming pools every day. Given that the southeast of England is drier than southern Spain, that's just not on.

Yet Thames has not delivered on its water leakage reduction targets for four years running. Instead, it has imposed a hosepipe ban, and is seeking a drought order.

That doesn't stop it trousering the extra dosh. This week the company announced a 31% increase in profits to £346.5m. It's German owner, RWE, hiked the dividend it pays itself by 53% to £216m.

Hey, Thames Water. As a Londoner, I have no choice but to be one of your customers. And I'm extremely peeved at being ripped off in order to line your pockets.

Ofwat is said to be considering a fine of up to a maximum of 10% of turnover, which equates to about £140m. Not good enough.

What Britain lacks right now is a self-confident labour movement willing to make the obvious case for taking basic utilities back into social ownership, where they belong.

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