Why public ownership is key: private water and the problems of sewage pollution and leaks.

Britain’s private water companies are yet again in the news. After reports on high and regular discharge of raw sewage into the country’s rivers (The Guardian, 31 March 2022), it is their high levels of water leakage, which make the headlines in the current drought. While 14 billion litres are the daily demand in England and Wales, another 3 billion litres are lost due to leaks (BBC, 12 August 2022). In this blog post, I will argue that the type of ownership is fundamental when thinking about how to tackle these problems.

England’s private water companies, owned by shareholders, pension funds and international investors, inevitably focus on maximizing profits in their operations. Competing on global financial markets for investment, they are structurally forced to maximize payouts to the private sector in order to avoid investors moving their money elsewhere. Capitalist competition leaves them with no alternative. Public regulators may be able to limit profits. They may be able to make profits conditional on meeting certain performance targets. As I show in my book Fighting for Water: Resisting Privatization in Europe (Zed Books: 2021), they cannot, however, challenge the principle of profit maximization itself. The consequences are clear. High increases in water charges for consumers, in fact 40 per cent since privatization in the late 1980s, as well as low investment in infrastructure maintenance. Hence the problems of sewage pollution and water leaks.

Any profit, even if circumscribed by a regulatory authority, ultimately reduces the possibilities of tackling these problems. It is, therefore, not surprising that public water companies have a better record when it comes to infrastructure investment. ’Scottish Water is already publicly owned and invests £72 more per household per year. If England had copied the Scottish model we’d have spent £28 billion more on improving our infrastructure since privatisation’ (Cat Hobbs, The Express, 10 August 2022).

At the same time, re-nationalisation/re-municipalisation of private water companies in itself does not automatically reverse this situation. At times, publicly owned companies are run like private companies with a focus on maximising returns for the respective municipality, as it is the case in many Italian cities such as Turin or Milan. Equally, just because a water company is in public hands, this does not mean that the company is run well. Nevertheless, public ownership at least provides the option to run the company in a sustainable and environmentally friendly way. A publicly owned company provides the option to offer lower water charges to poorer sections of society and to re-invest more money into infrastructure maintenance, thereby avoiding the high levels of water losses due to leaking pipes. Public ownership is, therefore, the basic precondition for more efficient services. In order to ensure that public companies operate along these lines, the way they are governed, however, also matters.

There are currently experiments across Europe of how such public companies can be run more democratically including user and worker participation in their governance. Prominent examples include the city of Terrassa in Catalonia/Spain, Naples in Italy and Grenoble and Paris in France. In the UK, the campaign group We Own It published a plan - When We Own It - outlining in detail how re-nationalised, democratised public services could be organised. 

It is this combination of public ownership with participatory democratic decision-making procedures, which offers the chance of a more sustainable response to droughts such as the one we are currently experiencing. And consumers tend to benefit too. When municipal water had been taken back in Paris in 2010, ‘Eau de Paris saved the city about €35 million with the shift to public ownership, leading to a reduction of water tariffs by 8% compared to 2009’ (Pigeon 2012: 25). 

The Future is Public!

Andreas Bieler

Professor of Political Economy

University of Nottingham/UK

Andreas.Bieler@nottingham.ac.uk

Personal website: http://andreasbieler.net

13 August 2022