How much higher are our water bills because of privatisation? A lot.

A University of Greenwich study for We Own It has found a “privatisation tax” of 35% on our water bills. In other words, we’re spending over one-third more than we need to every time we turn on the taps.

Water privatisation = costly failure

The latest research found that the UK public would save £5 billion per year on water bills if the government brought water into public ownership. And that figure would be higher once it didn’t include paying off nationalisation costs.

Shareholder compensation may not be necessary. Financial ratings company Moody has stated:

the level of compensation would fall within the wide discretion of parliament

The government could take into account the mismanagement of the environment, debt, and politically the amount of profit already made. Water and sewage companies have paid out £73 billion in dividends since Margaret Thatcher initiated privatisation. Additionally, the average pay for water and sewage company CEOs in England is around £1.7m. And they have received £25m in bonuses and incentives since 2019.

Water companies have failed to invest to increase capacity for sewage treatment and deal with sewage and rainwater separately. So, at a total of 3.614 million hours, last year saw a slight increase on the outrageous amount of time water companies spent spilling sewage into our rivers and the sea throughout 2023.

This means the government could place the companies holding the essential utility under ‘special administration’ for environmental or (debt related) factors. The government would not compensate shareholders through this existing legal framework.

We Own It further points out that, for the sake of argument, even at a worst case scenario of compensating shareholders at market value, public ownership would still be worth it. That’s because of the obvious: humans need water everyday, so it’s a valuable utility for the people to own. It’s a risk free money maker.

“Systemic exploitation” via our water bills

What’s more, the problem with ‘market value’ here is that water is a natural monopoly: there is no market.

A consumer cannot rearrange the water pipes and connect to a competing company. And besides, a publicly owned utility can provide high quality water across households and the economy. It’s the same with sewage. Building competing sewage facilities wouldn’t work because it would take up too much space and waste resources.

Labour MP Clive Lewis’ Water Bill is under discussion in parliament. It would bring water under the control of citizens’ assemblies – with part of the goal being to reduce people’s water bills. The MP has called privatisation:

a systemic exploitation of a common resource for private gain.

Featured image via the Canary