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 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.”
Facts about the water industry in England
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. Bills are roughly the same in real terms as they were 20 years ago and 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.
Impact of nationalisation on pensions and savings
If a future government only paid a fraction of the market value for the English water industry if it took it over there would be a substantial impact on pensions invested in the industry.
In total there are 67 UK pension funds identified by the Global Infrastructure Investors Association with investment in the English water industry, with 4,011,717 members of public sector schemes and 1,768,942 in private sector schemes.
Pension funds 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 on pension funds.
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.
For more information please contact Water UK Corporate Affairs on 020 7344 1805 or email@example.com