Should We Re-Nationalise England's Water

00:00:00: Hello, we're Sandalwood.

00:00:01: And Sage!

00:00:02: We are AI-generated characters who work with our creator Gareth to generate short serious punchy debates.

00:00:09: Debates that don't just help you figure out what you think but why YOU think it?

00:00:15: So...what are we arguing about this week?

00:00:28: Dieter Helm Professor of Economic Policy at the University of Oxford wrote in February.

00:00:37: The water industry is at one of those pivotal moments in its history, comparable to the mid-nineteenth century when river pollution and waterborne diseases meant that the status quo was no longer sustainable.

00:00:54: The current structure and regulation of the industry are no longer fit for purpose –and the failures of governments, regulators to motivate a more radical reconsideration so that the industry can address the mid-twenty first century challenges it faces.

00:01:17: And incoming Prime Minister Andy Burnham has called for greater public control over water companies, he told The Guardian that Public ownership is absolutely an option adding I would say For Thames Water.

00:01:30: That Is What Should Be Done.

00:01:32: So should the government re nationalise reversing the privatisation of the nineteen eighties.

00:01:41: I'll be arguing that it should do so

00:01:43: and i will be arguing, that nationalization is an expensive distraction from tackling issues really need to fixed.

00:01:50: It would be a wrong thing To Do!

00:01:53: I'm going to argue that privatization has been failure That public ownership in any case is appropriate mode for essential utility like water and the experience of other countries, including Scotland supports the nationalisation route.

00:02:13: Privatisation has failed even on its own terms.

00:02:18: since the nineteen eighty nine privatisation companies have prioritised shareholder returns and paid out between fifty and seventy five billion pounds in dividends instead of reinvestment while loading up with around seventy billion pounds of debt.

00:02:39: Thames Water alone built up a debt pile of roughly twenty billion pounds and then required emergency funding lifelines to avoid collapse.

00:02:50: Astonishingly, while the population has increased by ten million since then not a single new reservoir.

00:03:01: At the same time, water companies have overseen an appalling environmental failure.

00:03:08: Private water firms have routinely dumped untreated sewage into rivers, beaches and coastal waters prioritising cost cutting over ecological stewardship.

00:03:22: Rising sewage discharges has led to major regulatory fines including Thames Water's record one hundred and twenty three million pound fine by its regulator off-watt.

00:03:37: Flood risks from storm runoff, backing up of sewerage are two clear and present hazards for planned housing developments in many parts of the country.

00:03:49: Worsening pollution high levels of indebtedness excessive payouts to shareholders and looming risk of insolvency add up to a compelling argument for change.

00:04:03: The city of Paris recognised this when it re-municipalised its water in two thousand ten, after concluding that its contracts with Veolia and Suez were delivering poor value public ownership facilitated the massive effort involved.

00:04:27: Oda Parry and Scottish Water also publicly owned consistently deliver lower bills, higher investment ratios without answering to equity markets.

00:04:40: Hang on a minute Sandalwood.

00:04:42: Last year the UK Statistics Authorities Regulator Reviewed concluded that data used by both DEFRA and the Scottish Government wasn't robust enough.

00:04:51: make fair comparison between the Scottish and English systems.

00:04:55: That's true Sage But the fact is that bills in Scotland are a hundred pounds a year less than an England, In country much less densely populated and should be more expensive to serve.

00:05:09: Also whatever technical data issues spills of sewerage lower in Scotland.

00:05:17: The public in england intuitively understand this.

00:05:21: Recent YouGov trackers show that eighty two percent believe water companies should be run in the public sector.

00:05:32: This is not just a left-wing position, The same YouGov data indicates that a clear majority of two thousand twenty four conservative voters nearly sixty percent and reform UK voters support returning water to public hands driven largely by local anger over suge spells.

00:05:56: Underlying all the issues with privatisation and public attitudes to nationalisation is a reality that providing water, is a natural public monopoly.

00:06:09: A monopoly because customers cannot switch providers.

00:06:13: so market discipline and rational for privatisation don't apply.

00:06:20: Public – Because Water Is An Essential Non-Substitutable prerequisite for life.

00:06:28: It's as though we have granted certain people, as it turns out mostly foreign people the right to own the rain between the moment it lands and when it reaches the sea.

00:06:42: water privatisation has in practice turned into a risk-free extraction model.

00:06:56: DEFRA's own technical estimate puts full nationalisation at roughly one hundred billion pounds.

00:07:03: Cash taken directly from NHS, schools and defence budgets.

00:07:08: It wouldn't necessarily cost that much Commonwealth argues.

00:07:13: the true cost could be closer to zero because shareholders can expect compensation form an insolvent industry.

00:07:22: It's a pretty wild gamble that a British government could out-negotiate the private equity industry.

00:07:28: And the tighter the squeeze, the longer they'll be dragged through expensive litigation.

00:07:33: That is only the beginning.

00:07:35: Nationalisation would take years to operationalise Diverting focus from the urgent environmental fixes needed.

00:07:42: now The Government has said exactly this in resisting it.

00:07:48: Besides changing ownership wouldn't fix the underlying infrastructure problem.

00:07:53: Victorian-era pipes need massive capital investment, regardless of who owns them.

00:07:59: It's easy to forget that Thatcher pursued privatisation precisely because government balance sheets in the nineteen seventies couldn't fund the required investment and private capital did deliver real infrastructure spending in post-privatization decades.

00:08:14: The next decade looks like requiring a further one hundred billion pounds.

00:08:20: Will a government that took over year to half fund its own defence strategy really find that?

00:08:27: Nationalisation is an expensive distraction, whose principal merit is the photo opportunity.

00:08:33: A minister in hard hat standing in sewage pipe Professor Dieter Helm – no fan of the nineteen eighty-nine.

00:08:40: privatization warns outright.

00:08:42: nationalisation diverts attention from real task restructuring regulation and enforcing a rigorous, polluter pays framework.

00:08:52: The Independent Water Commission agrees.

00:08:54: Regulatory strength not ownership drives performance Bands on executive bonuses Criminal liability for rogue executives Automatic pollution fines.

00:09:06: These force the private sector to clean up our waters using their money.

00:09:11: It might in fact be considerably harder to discipline public officials who have direct political line into ministers.

00:09:19: You've conveniently forgotten, Sandalwood that Scottish Water has faced its own sewage scandals and was rated behind England by it's own government in twenty-twenty one.

00:09:30: Public ownership didn't prevent that.

00:09:32: Ninety percent of OECD regions publicly owned their water yet poor performance remains widespread.

00:09:39: And your claim that England's denser population makes infrastructure cheaper ignores the enormous complexity of re-engineering underground systems beneath one of the world's most developed urban landscapes.

00:09:52: What it comes down to is this, writing a hundred billion pound check to buy out shareholders won't clear a single gallon of sewage from our beaches.

00:10:03: It just dumps a debt mountain on the taxpayer and starves the NHS.

00:10:08: We don't need a costly state takeover.

00:10:11: we need ruthless regulation massive fines and a system that forces private investors to clean up our waters using their money, not ours.

00:10:21: First Sage let me lay out the hard facts of privatisation.

00:10:27: since nineteen eighty nine Private water companies have paidout between fifty and eighty five billion pounds in dividends accumulated at debt mountain over around seventy-eight billion pounds and left firms like Thames Water on the brink of collapse.

00:10:48: Despite our population growing by ten million, not a single new reservoir has been built in England.

00:10:58: Water is a natural public monopoly—a prerequisite for life.

00:11:04: that private equity has turned into risk-free extraction machine at our environment's expense.

00:11:13: Changing the name on the corporate letterhead won't fix a single Victorian sewer pipe, Sandalwood.

00:11:19: The bottleneck in our water industry is capital time and engineering complexity not ownership.

00:11:27: DEFRA's own technical estimate puts full nationalization at roughly one hundred billion pounds cash going straight into shareholders' pockets that won't clear a single gallon of sewage from

00:11:42: have shown.

00:11:43: the real acquisition cost could be close to zero, because failing heavily indebted operators hold virtually no equity value.

00:11:54: The taxpayer shouldn't bail out failed corporate

00:11:58: greed."

00:12:00: Wiping-out shareholder values through insolvency takeovers would trigger years of litigation freeze infrastructure progress entirely and chill international investment across every UK regulated utility And public ownership is no guarantee of superior performance.

00:12:15: In twenty-twenty one, Scottish government officials admitted their publicly owned system was way behind England.

00:12:22: having dumped raw sewage into rivers over twelve thousand times that year The UK Statistics Authority formally concluded in twenty-five That the data isn't robust enough for a fair pollution comparison.

00:12:36: Scotland's recent progress was largely achieved by benchmarking against the high standards set.

00:12:56: The public bears all the political, operational and environmental risk while private equity captures all gains.

00:13:15: It's time for government to take back control.

00:13:30: That is a structural problem.

00:13:32: no change of ownership solves.

00:13:35: Customers cannot switch water providers sage, market discipline simply does not apply here.

00:13:43: Water is a textbook natural monopoly which is precisely why clear majorities of supporters of every political party support returning it to public hands.

00:13:58: Their anger at raw sewage being dumped into our rivers for private profit is both rational and justified.

00:14:08: Yes,

00:14:09: that anger is entirely justified but the culprit is regulatory weakness not private ownership itself.

00:14:16: The Independent Water Commission has identified regulatory strength Not ownership structure as the true driver of infrastructure performance.

00:14:25: Bands on executive bonuses mandatory criminal liability for rogue executives, and automatic pollution fines force the private sector to clean up our waters using their money

00:14:56: not

00:15:01: ours.