Water privatization in England
Encyclopedia
Water privatisation was undertaken in 1989 by the government of Margaret Thatcher
which partly privatised the ten previously public regional water authorities
(RWAs) in England
and Wales
through the sale of assets. The regulatory arm of the RWAs , including pollution control and water resource management, was hived off to the newly created National Rivers Authority
.
At the same time the economic regulatory agency OFWAT was created, following the model of infrastructure regulatory agencies set up in other sectors such as telecommunications and energy. The Drinking Water Inspectorate
(DWI) was set up in 1990 to monitor water safety and quality.
There are 16 mostly smaller water only companies in England and Wales that have been privately owned since the 19th century. In Scotland
and Northern Ireland
water and sewerage services have remained in public ownership.
Research Unit stated that
At privatisation the industry's £4.95 billion debt was written off. Privatization critics argued in 1997 that infrastructure—particularly sewers—was not adequately maintained and that OFWAT implicitly "gave (its) approval to running down the underground network". Furthermore, OFWAT was accused of not comparing company performance with targets, not relating performance standards with past or projected levels of investment, failing to "publish information in a consistent form" and not requesting that levels of service indicators become mandatory. Instead company licenses were renegotiated to address performance issues. The critics concluded that in the "conflict between making profits and providing a certain level of services" the legislation "resolves it in favor of profit".
According to data from OFWAT, service quality and efficiency has improved from the early 1990s until 2010 in the following ways:
Margaret Thatcher
Margaret Hilda Thatcher, Baroness Thatcher, was Prime Minister of the United Kingdom from 1979 to 1990...
which partly privatised the ten previously public regional water authorities
Regional Water Authority
The Regional Water Authorities came into existence in England and Wales in 1975 to bring together in ten regional units a diverse range of bodies involved in water treatment and supply, sewage disposal, land drainage, river pollution and fisheries....
(RWAs) in England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
and Wales
Wales
Wales is a country that is part of the United Kingdom and the island of Great Britain, bordered by England to its east and the Atlantic Ocean and Irish Sea to its west. It has a population of three million, and a total area of 20,779 km²...
through the sale of assets. The regulatory arm of the RWAs , including pollution control and water resource management, was hived off to the newly created National Rivers Authority
National Rivers Authority
The National Rivers Authority was one of the forerunners of the Environment Agency of England and Wales, existing between 1989 and 1996. Before 1989 the regulation of the aquatic environment had largely been carried out by the ten Regional Water Authorities...
.
At the same time the economic regulatory agency OFWAT was created, following the model of infrastructure regulatory agencies set up in other sectors such as telecommunications and energy. The Drinking Water Inspectorate
Drinking Water Inspectorate
The Drinking Water Inspectorate is a section of Department for Environment, Food and Rural Affairs set up to regulate the public water supply companies in England and Wales....
(DWI) was set up in 1990 to monitor water safety and quality.
There are 16 mostly smaller water only companies in England and Wales that have been privately owned since the 19th century. In Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
and Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
water and sewerage services have remained in public ownership.
Criticism
Water privatisation in England and Wales remains controversial. A 2001 study by the Public Services InternationalPublic Services International
Public Services International is a global union federation of public sector trade unions. It 620 affiliated unions, in 160 countries, representing 20 million workers...
Research Unit stated that
- tariffs increased by 46% in real terms during the first nine years,
- operating profits have more than doubled (+142%) in eight years,
- investments were reduced and
- public health was jeopardised through cut-offs for non-payment.
At privatisation the industry's £4.95 billion debt was written off. Privatization critics argued in 1997 that infrastructure—particularly sewers—was not adequately maintained and that OFWAT implicitly "gave (its) approval to running down the underground network". Furthermore, OFWAT was accused of not comparing company performance with targets, not relating performance standards with past or projected levels of investment, failing to "publish information in a consistent form" and not requesting that levels of service indicators become mandatory. Instead company licenses were renegotiated to address performance issues. The critics concluded that in the "conflict between making profits and providing a certain level of services" the legislation "resolves it in favor of profit".
Support
A World Bank paper argues that until 1995 the reforms- increased investment (in the six years after privatisation the companies invested $17bn, compared to £9.3bn in the six years before privatisation),
- brought about compliance with stringent drinking water standards and
- led to a higher quality of river water.
According to data from OFWAT, service quality and efficiency has improved from the early 1990s until 2010 in the following ways:
- Drinking water quality, as measured by the compliance with iron levels and coliform bacteria in service reservoirs, has improved substantially from 1996 to 2010.
- Network pressure has improved substantially: The share or "properties at risk of low pressure" declined from 1.33% in 1990-95 0.01% in 2009-10.
- Supply interruptions have declined: The share of properties subject to unplanned supply interruptions of 12 hours or more declined from 0.33% to 0.06% during the same period.
- The number of written complaints not responded to within ten working days has declined from 21% to less than 1%.
- leakage has been reduced from 5,112 megaliters per day in 1994-95 to less than 3,281 megaliters per day in 2009-10 (the measuring method of two companies has changed over the period, so the actual reduction is even higher)
Further reading
- Jenkinson, T. & Mayer, C. (1994) The Costs of Privatization in the UK and France, in Bishop, M., Kay, J. & Mayer, C. (eds.) Privatization & Economic Performance, pp. 290-298 (New York, Oxford University Press)