The UK water sector has moved swiftly to rebut Labour Party criticism of private ownership and launch a forceful and detailed defence of the benefits of privatisation in response to plans outlined in the Labour Party Manifesto published today.

Launching the Manifesto at Birmingham City University,, Labour Party leader Jeremy Corbyn said:

“We will bring rail, mail, water and energy into public ownership to end the great privatisation rip-off and save you money on your fares and bills.”

The Manifesto says that profit “has proved a poor regulator” for the use of natural resources, stating:

“Whether it is the trillions of litres of water lost through leakages, barriers to renewable energy connecting to the grid or the billions of pounds of billpayers’ money being siphoned off in dividends to wealthy shareholders, Tory privatisation of our utilities has been a disaster for both our planet and our wallets.”

It goes on to say that energy and water will be treated as “rights rather than commodities” in public hands, with any surplus reinvested or used to reduce bills.

According to Labour, “public ownership will secure democratic control over nationally strategic infrastructure and provide collective stewardship for key natural resources.”

Water UK warns "this idea is bad for the environment, bad for customers, and bad for the economy”

Water UK, the body which represents all the UK water companies at national and international level, has moved swiftly to reject the Labour Party claims, criticising the proposals and setting out in detail the benefits privatisation has delivered. 

Commenting on the inclusion of water nationalisation in the Labour Party's election manifesto, Water UK Chief Executive Michael Roberts said:

“It’s incredible that Labour haven’t even bothered to set out a price for nationalisation. You can’t take over a major industry for free – one way or another, taxpayers and pensioners will have to fund the eyewatering, multi-billion pound cost.

“ At a time when the industry is planning record investment, the biggest leakage reduction programme for twenty years, and a major push to become carbon neutral by 2030, these unnecessary nationalisation plans would cause massive disruption and risk setting back a crucial public service for years to come.

“It doesn’t make any sense to go back to the days when cash-strapped governments couldn’t afford to fund the improvements needed in the water and sewerage industry because they spent the money on other priorities instead. This idea is bad for the environment, bad for customers, and bad for the economy.”

Around £160m invested in England post- 1989 privatisation – and bills around same in real terms as 20 years ago

Since privatisation in 1989 around £160 billion has been invested in the water industry in England, with plans for another £50 billion over the next 5 years. According to Water UK, water nationalisation would cost between £86 billion and £90 billion.

It also warns that paying less than a fair market price for water companies would damage the pensions of nearly 6 million people in the UK – including more than 4 million public sector workers and 1,768,942 in private sector schemes.

The industry body is highlighting research by the Global Infrastructure Investor Association (GIIA) which has identified 67 UK pension funds with investment in the English water industry. 

Pension funds potentially affected include the 158,099 members of the UK Mineworkers Pension Scheme, the 370,142 people in the Greater Manchester scheme for local authority workers, and the 134,339 members of the Merseyside local authority pension fund. Around 350,000 workers at Tesco and more than 300,000 BT workers would also be affected by the impact of nationalisation, according to Water UK.

Water UK also say that only a third (34%) of the public are confident in the ability of a combination of local councils and trade unions to run the water industry - the proposal set out in Labour’s water nationalisation plans.

Other post-privatisation achievements flagged up by Water UK include:

• Bills are roughly the same in real terms as they were 20 years ago and and are now falling in real terms. There are plans to reduce them by at least 5% in real terms over the next 5 years, meaning that by 2025 there will have been a decade of falling bills in real terms. Average water bills are now around £1 a day.
• Leakage is down by a third since the mid-1990s and is due to be cut by at least 16% by 2025 and by 50% by 2050. Water companies have spent around £25 billion on the environment since 1995, with 10,000 miles of rivers being protected and improved since then. Environmental work since privatisation has resulted in wildlife returning to rivers that had been biologically dead since the Industrial Revolution.
• Customers are now 5 times less likely to suffer from supply interruptions, 8 times less likely to suffer from sewer flooding, and 100 times less likely to have low water pressure than they were when the industry was in Government hands.

Economic consultants NERA have estimated that households in the UK could lose an average of nearly £1000 each under Labour’s nationalisation plans. A report by NERA shows that if a future government paid less than fair market value for water and energy networks and Royal Mail – for instance, net asset value – the loss to average households would be in the region of £600. But if shareholders did not get any compensation at all, that figure would rise to £960. The figures are calculated based on direct losses from pensions and savings, and indirect losses on holdings of other investments such as UK debt or gilts.