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The water privatisation in England and Wales involved the transfer of the provision of water and wastewater services in England and Wales from the state to the private sector in 1989, through the sale of the ten regional water authorities (RWA). [1] The potable water supply as well as the sewerage and sewage disposal functions of each RWA were transferred to privately-owned companies.
At the beginning of the 19th century, most water works in the UK were built, owned, and operated by private companies. The introduction of various parliamentary regulations led to the government assuming control of the industry, with the responsibility for most (but not all) water works and sewerage systems being passed to local government by the beginning of the 20th century. [2] [3] One of the earliest proponents for the nationalisation of the water supply and sewerage (WSS) system was Joseph Chamberlain, who argued in 1884 that "It is difficult, if not impossible to combine the citizens' rights and interests and the private enterprise's interests, because the private enterprise aims at its natural and justified objective, the biggest possible profit." [4] [lower-alpha 1]
Water was considered a public health necessity—rather than a commodity—and potable water was supplied "with the goal of universal provision [priced] on a concept of social equity: household supply was not metered, and bills were linked to property value". [3] Local government subsequently maintained responsibility for most water supply and all wastewater services—assisted by central government subsidies—until 1974, when the ten regional water authorities (RWAs) were created, through Geoffrey Rippon's Water Act 1973 under Edward Heath's Conservative government. [6] [7]
These regional water authorities took over the supply of water from 165 of the 198 statutory water-supply undertakings, entities that included 64 local authorities, 101 joint water boards of groups of local authorities acting as separate legal entities. The 33 private companies were left in place. Sewerage and sewage disposal had been dealt with by more than 1,300 county borough and district councils. [8] [9] [10] Daniel A. Okun, an environmental engineer and internationally renowned figure in the field of water supply and water resources management, regarded the RWAs as "pioneers of their era". [9] [10] This "trailblazing" concept of a single authority, based on a river basin or watershed, being responsible for water extraction, water supply, sewage treatment and environmental pollution prevention, led to "considerable efficiency gains". [6] Despite these efficiency gains, the RWAs were hampered by chronic underfunding and lack of investment from central government. [9] Underinvestment in infrastructure combined with sustained water pollution by industry contributed to a continued decline of both river and tap water quality. [3]
By 1980, investment in the water sector was just one-third of what it had been in 1970. Margaret Thatcher's Conservative government, which had been elected in 1979, had curtailed the RWAs' ability to borrow money they deemed necessary for capital projects. [8] [9] [11] Daniel Okun said: "Before, they could borrow money everywhere easily. They could get money at very good rates. Restrictions on external borrowing prevented the [RWAs] from getting capital. They were considered ineffective because they could not borrow money. Thatcher prevented them from borrowing and then blamed them for not building." [9] When the European Union introduced stricter legislation on river, bathing, coastal, and drinking water quality, the sector was in no position to meet the expenditure requirements and the UK was prosecuted for noncompliance. [12] [lower-alpha 2] Estimates of the capital expenditure required to achieve EU standards and meet the existing backlog in infrastructure maintenance ranged from £24 to £30 billion. [14]
The Conservative government of the day had originally proposed water privatisation in 1984 and again in 1986, but strong public feeling against the proposals led to plans being shelved to prevent the issue influencing the 1987 general election. [15] [16] Having won the election, the privatisation plan was "resurrected and implemented rapidly". [6]
The newly created, privately owned, water and sewerage companies (WSCs) paid £7.6 billion for the regional water authorities. At the same time, the government assumed responsibility for the sector's total debts amounting to £5 billion and granted the WSCs a further £1.5 billion—a so-called "green dowry"—of public funds. [17]
The ten privatised regional water authorities were:
The process of privatisation also created three new regulatory bodies:
England and Wales became the only countries in the world to have a fully privatised water and sewage disposal system. [1] [17] In Scotland and Northern Ireland, water and sewerage services remained in public ownership. Since 2001, Dŵr Cymru Welsh Water, the company which supplies drinking water and wastewater services to most of Wales and parts of western England, has operated as a single-purpose, not-for-profit company with no shareholders, "run solely for the benefit of customers". [18] According to The Independent , the English WSCs are now mostly owned "by private equity firms with controversial tax-avoidance strategies". [19] Public opinion polling carried out in 2017 indicated that 83% of the British public favoured renationalisation of all water services. [20]
In the same year, research by the University of Greenwich suggested that consumers in England were paying £2.3 billion more every year for their water and sewerage bills than they would if the water companies had remained under state ownership. [17]
Campaigners alleged that there was a cover-up of the 1988 Camelford water pollution incident because prosecution would have had a negative effect on the privatisation process. A contemporary confidential memo—later obtained under the Freedom of Information Act—from a senior civil servant to the then Minister of State for the Environment, Michael Howard, warned: "Those of the South West Board with a commercial background are deeply concerned by the investigation. They see the timing of any prosecution of the authority as being totally unhelpful to privatisation, while the prosecution of a board member in their view could render the whole of the water industry unattractive to the City." [21]
In March 2012, delivering a narrative verdict on the death of Camelford resident Carole Cross, Michael Rose, the Coroner for West Somerset, stated that he harboured the "deepest suspicion" that the true nature of the 1988 disaster was "not revealed immediately because the water industry was being privatised," adding that there was a "deliberate policy not to advise the public of the true nature [of the disaster] until some 16 days after the occurrence of the incident." [22]
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References
Bibliography
The Water Services Regulation Authority, or Ofwat, is the body responsible for economic regulation of the privatised water and sewerage industry in England and Wales. Ofwat's main statutory duties include protecting the interests of consumers, securing the long-term resilience of water supply and wastewater systems, and ensuring that companies carry out their functions and are able to finance them.
The National Rivers Authority (NRA) was one of the forerunners of the Environment Agency of England and Wales, existing between 1989 and 1996.
Water privatization is short for private sector participations in the provision of water services and sanitation. Water privatization has a variable history in which its popularity and favorability has fluctuated in the market and politics. One of the common forms of privatization is public–private partnerships (PPPs). PPPs allow for a mix between public and private ownership and/or management of water and sanitation sources and infrastructure. Privatization, as proponents argue, may not only increase efficiency and service quality but also increase fiscal benefits. There are different forms of regulation in place for current privatization systems.
The water industry provides drinking water and wastewater services to residential, commercial, and industrial sectors of the economy. Typically public utilities operate water supply networks. The water industry does not include manufacturers and suppliers of bottled water, which is part of the beverage production and belongs to the food sector.
Sewage disposal regulation and administration describes the governance of sewage treatment and disposal.
South West Water is a British private utility company responsible for the water supply and waste water treatment services throughout Devon and Cornwall and in small areas of Dorset and Somerset. South West Water was created in 1989 with the privatisation of the water industry. It was preceded by the South West Water Authority which was formed by the Water Act 1973 as one of ten regional water authorities formed by a merger of various statutory and local authority water undertakings. South West Water is part of the Pennon Group.
A water board is a regional or national organisation that has very different functions from one country to another. The functions range from flood control and water resources management at the regional or local level, water charging and financing at the river basin level (France), bulk water supply, regulation of pricing and service quality of drinking water supply at the national level (Kenya) or the coordination of water resources policies between various Ministries and agencies at the national level together with the regulation of drinking water supply.
North West Water was a water supply, sewage disposal and sewage treatment company serving North West England. It was established as the North West Water Authority in 1973, and became North West Water plc in 1989, as part of the privatisation of the water industry in England and Wales. In 1995, it merged with NORWEB to form United Utilities.
Northumbrian Water Group plc (NWG) is the holding company for several companies in the water supply, sewerage and waste water industries. Its largest subsidiary is Northumbrian Water Limited (NWL), which is one of ten companies in England and Wales that are regulated water supply and sewerage utilities. NWL is the principal water supplier in the north-east of England, where it trades as Northumbrian Water, and also supplies water to part of eastern England, as Essex and Suffolk Water. In 2011 it was acquired by Cheung Kong Infrastructure Holdings.
Public water supply and sanitation in the United Kingdom is characterised by universal access and generally good service quality. A salient feature of the sector in the United Kingdom compared to other developed countries is the diversity of institutional arrangements between the constituting parts of the UK, which are each described in separate articles, while this article is devoted to some common issues across the United Kingdom.
The WRc Group is a company providing research and consultancy in water, waste and the environment in the United Kingdom. A government body, the Water Pollution Research Board, was set up in 1927 and was merged in 1974 with the Water Research Association and the Water Resources Board to form the Water Research Centre, which was controlled by, and undertook research for, the regional water authorities; the organisation was privatised in 1989 as WRc plc, then acquired by RSK Group in 2020.
Water privatization in Brazil has been initiated in 1996. In 2008 private companies provided 7 million Brazilians - 4% of the urban population - in 10 of the country's 26 states with drinking water. The private sector holds 65 concession contracts in the states of São Paulo, Rio de Janeiro, Espírito Santo, Mato Grosso, Mato Grosso do Sul, Santa Catarina, Minas Gerais, Paraná, Pará and Amazonas. Private companies have committed to invest 4.5 billion reais in the sector. The bulk of Brazil's population receives water and sanitation services from public municipal or state-level utilities.
Severn Trent Water Authority was one of ten regional water authorities established in 1974. Its area of operation was the catchments of the River Trent and River Severn. It assumed the powers and responsibilities of existing water supply authorities in those catchment areas, the Severn River Authority, the Trent River Authority and the sewage and sewage disposal responsibilities of the councils within its area.
Public water supply and sanitation in Scotland is characterised by universal access and generally good service quality. Water and sewerage services are provided by a single public company, Scottish Water. The economic water industry regulator is the Water Industry Commission for Scotland. It "promotes the interests of water and sewerage customers in Scotland by making sure that householders and businesses receive a high-quality service and value for money by setting prices, monitoring Scottish Water's performance and facilitating competition in the water industry". The environmental regulator is the Scottish Environment Protection Agency. Drinking water standards and wastewater discharge standards are determined by the EU.
Public water supply and sanitation in England and Wales has been characterised by universal access and generally good service quality. In both England and Wales, water companies became privatised in 1989, although Dwr Cymru operates as a not-for-profit organisation. Whilst independent assessments place the cost of water provision in Wales and England as higher than most major countries in the EU between 1989 and 2005, the government body responsible for water regulation, together with the water companies, have claimed improvements in service quality during that period.
A regional water authority, commonly known as a water board, was one of a group of public bodies that came into existence in England and Wales in April 1974, as a result of the Water Act 1973 coming into force. This brought together in ten regional units a diverse range of bodies involved in water treatment and supply, sewage disposal, land drainage, river pollution and fisheries. They lasted until 1989, when the water industry was privatised and the water supply and sewerage and sewage disposal parts became companies and the regulatory arm formed the National Rivers Authority. Regional water authorities were also part of the Scottish water industry when three bodies covering the North, West and East of Scotland were created in 1996, to take over responsibilities for water supply and sewage treatment from the regional councils, but they only lasted until 2002, when they were replaced by the publicly owned Scottish Water.
In 1994, the ruling Conservative Government of the United Kingdom brought forward plans to overhaul a number of aspects of local government in Scotland as part of the Local Government etc. (Scotland) Act 1994. Part II of the Act reorganised Scotland's water supply and sewerage services, previously the responsibility of regional councils. Three water authorities were established: East of Scotland Water; West of Scotland Water; and North of Scotland Water. The main reason for this reorganisation was to prepare for the privatisation of water services, to bring Scotland into line with the rest of the UK. The water authorities in England and Wales had been privatised in 1989. However, public opinion was strongly against such a move, with successive polls showing 86–91% of people definitely opposed.
The Welsh National Water Development Authority (WNWDA) and later the Welsh Water Authority was one of ten regional water authorities set up in the UK and came into existence on 6 August 1973 with its headquarters in Brecon. by virtue of the Water Act 1973 It took over the sewerage and sewage disposal responsibilities of the local authorities within its area, the roles and responsibilities of the six existing River Authorities in Wales and most of the water supply undertakings. The authority was dissolved in 1989 as part of the privatisation of the water industry.
The Water Act 1989 is an act of the Parliament of the United Kingdom that reorganised the bodies responsible for all aspects of water within England and Wales. Whereas previous legislation, particularly the Water Act 1973, had focused on providing a single unifying body with responsibility for all water-related functions within a river basin or series of river basins, this legislation divided those functions up again, with water supply, sewerage and sewage disposal being controlled by private companies, and the river management, land drainage and pollution functions becoming the responsibility of the National Rivers Authority.
The Manx Utilities Authority is a Statutory Board of the Isle of Man Government which provides utilities for the Isle of Man. It was created in 2014 by the merging of the Manx Electricity Authority with the Isle of Man Water and Sewerage Authority.