Managing director of Southern Water Tim Mcmahon has told the public to ration water in spring time hot weather. But water companies sold off 35 reservoirs in just five years, making £26 million from flogging what were public assets. That’s before Margaret Thatcher privatised them in 1989.
Southern Water: asset stripping
Reservoirs that once provided water for dry weather have now been converted to for-profit housing, as well as fishing locations. Ignoring the blatant asset stripping, Southern Water’s Mcmahon said:
If you look at the south-east of England, it’s drier than Sydney, Istanbul, Dallas, Marrakesh. We have got a very densely populated area and we need to start investing to cater for that.
We need to reduce customers’ usage. Otherwise we will have to put other investments in place, which will not be good for our customers and might not be the best thing for the environment.
In other words, water companies sold off the reservoirs and then passed on the later costs to the public through higher bills.
A 2018 document shows Southern Water will decommission 43 of 93 reservoirs between 2023 and 2030. Yet it only plans to build one more in the coming years with Thames Water. This suggests that for-profit companies are incapable of maintaining vital infrastructure that the country needs.
And it’s not just the reservoirs losing water. In 2021, water firms lost more than 1 trillion litres through leaky pipes.
‘Extracting value’
Speaking in parliament in March, Labour MP Clive Lewis said:
In the 35 years before privatisation, almost 100 reservoirs were built. In the 35 years since privatisation, not one major English reservoir has been built… instead of investing in resilience they’ve extracted value. £75 billion paid out in dividends while pipes leak, rivers choke and the public pays the price. My honourable friends says ‘how can we afford it’, how can not afford it?
The latest research from Greenwich University found that the UK public would save £5 billion per year on water bills through the government bringing water back into public ownership. And that figure would be higher once it didn’t include paying off nationalisation costs.
Besides, 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.
From every angle, water privatisation is a failure – not least with companies like Southern Water. Whether, it’s cost, investment or the lack of a public focused management approach.
Featured image via the Canary
