While Prime Minister Boris Johnson intends to turn the current general elections into a contest over Brexit, it is Jeremy Corbyn’s Labour Party, which offers a real political alternative including wide-ranging plans for renationalizing key services such as the railways, energy, postal services and water. In this blog post, I discuss the lessons to be learned from struggles over public water across Europe.
Supporters of privatising public services argue that thanks to the competitive pressures of the ‘free market’ four benign consequences would result: (1) the production of services becomes more efficient; (2) the quality of the services is improved; (3) the cost of services for the consumer is reduced; and (4) companies providing these services can still make a profit. The private provision of water too, they argue, is subject to the same beneficial market pressures.
The reality, however, looks rather different. Water privatisation has generally resulted in insufficient investment into infrastructure, soaring consumer tariffs, lower levels of efficiency, poor service quality and ‘the failure of private water corporations to contribute investment finance’ (Lobina 2014: 10). Only one of the four envisaged consequences has actually occurred due to privatisation: companies’ ability to make large amounts of profit. As Aditya Chakrabortty reported in the Guardian, between 2007 and 2012 there was only one year in which the consortium of shareholders of Thames Water in the UK took out less money of the company than it had made in post-tax profits, thereby doubling the company’s debt to £7.8 billion (Chakrabortty 2014).
These corporate profits have come at the expense of consumers, who have seen their water bills increase drastically. In the Italian region of Tuscany, for example, privatisations in the late 1990s, early 2000s resulted in an average increase in water charges of 24 per cent. In some communities, the increase was even a staggering 120 per cent. In the UK too, corporate profits have been financed by users. Even though operation costs have remained the same, water bills have increased by 50 per cent over the last two decades.
In short, water privatisation is not about how to provide best water. The main purpose is to generate private profits! Rather than being about efficiency and universal access of water, this discourse of superior private services facilitates a redistribution of income from people to private companies.
Yet, privatisation is neither inevitable nor irreversible. In Greece, despite the pressures of the Eurozone crisis, to date broad alliances of trade unions and social movements have successfully defended the highly profitable and efficient public water companies in Athens and Thessaloniki against privatisation. When the Irish government wanted to introduce additional water charges in 2014, large demonstrations, a widespread non-payment campaign and the physical blocking of the installation of water meters forced the government to withdraw its plans in 2016.
Moreover, re-municipalisation pays off, indicating where the real savings may lie. In 2010, when water had been taken back into public hands in Paris, the new water provider ensured savings of about €35 million. Water tariffs were reduced by 8 per cent as a result.
The forthcoming elections offer English citizens the opportunity to end water privatisation and follow examples set elsewhere. Labour does not simply intend returning to the past. Together with the think tank We Own It, it has developed plans towards the democratisation of these public, regional companies working towards an affordable, sustainable and efficient water provision for everyone (see When We Own It).
Professor of Political Economy
University of Nottingham/UK
University of Nottingham/UK
Personal website: http://andreasbieler.net
30 November 2019