Water OMG!

It was a fascinating day in Southampton at the Labour Party #NewEconomics conference on Saturday.

What stuck with me the most was being presented with the evidence behind the complete and ongoing rip-off and harm done by the privatisation of water. The pictures below are all from the talk by Dr Kate Baylis (SOAS University of London). I really hope she doesn’t mind – I’m just so cross and worried about this – I need to get it out there!

The amazing ‘denseness’ of the company structures. This web of companies is just one of the water conglomerates – Southern Water. The yellow highlighted company is the only part of the structure that is regulated. 

The fact that these water lords own *all the assets* – every last pipe and tap and pump and filter system. Unlike the railways where at least Network Rail has been kept whole. The debt they have loaded on includes the cost of buying the company in the first place – the amount of actual equity (ie shareholders funds) has dropped.

The water suppliers have a complete monopoly on all the customers in a defined region. They have ‘securitised’ future water bills (ie borrowed against them). So the money we will pay on our bills for water in several years time has already been used up. Does that bode well?

England is out on a limb internationally by having privatised water. Water in the US is 85% publicly owned and managed. When states do privatise they use fixed term management contracts, not give away the infrastructure itself.

So what does our water bill pay for? 26.8% return on capital (dividends to shareholders) and just 3% tax.

And finally, what does all that do to affordability? Guess…

 

The upper line is the average annual water bill. The line below it is average hourly earnings. The crunch date where the lines diverge is 2010. I expect there’s data now for dates beyond 2012 – would be interesting to see it.

Anyway, rant over for now. Vote Labour, get our water back! (not to mention the railways, energy and the rest)

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