Richard Benyon is a former Environment Minister and is Conservative MP for Newbury.
Opinion polls, as most politicians know, can be strange and confusing beasts. For every person who claims a poll provides the proof behind their belief, there’s someone else who will insist that it shows no such thing.
Take the recent poll by Populus for the Legatum Institute, which seemed to show that the most popular business sector for renationalisation was the water industry. Just 17 per cent of those asked thought the water utility sector should be in private hands.
Mind you, given that 35 per cent thought that “food” should be under state control (by which they must mean everything from Tesco to Nandos), and one in four people thought travel agents should be too, perhaps the pollsters were not engaging minds in a particularly informed way.
But whatever the inaccuracy of polls, for all who believe in the value of markets and of the virtue of past privatisations there is a challenge to win the argument in the water sector. If we can win the case for controlled capitalism in the water sector we can win across the board.
Given a fair hearing, it is an easy argument to make. But in a world where complex issues are debated in 140 characters and emotions outweigh facts, the defenders of the private sector need to get busy.
So, what is the truth about the water sector? As far as the utility companies are concerned it is a good story to tell. Since privatisation a quarter century ago around £150 billion has been invested by private companies. This means the vast cost of modernising a creaking infrastructure has not come out of the same pot as the one that provides for our NHS, our schools and all other public services.
This investment has reduced leakage by a third since just the mid-1990s. It has seen two thirds of our beaches classed as excellent, more than double the amount from 25 years ago. We now have new sewage works, exemplary drinking water standards, and a regulation system that other countries want to copy.
Among many inaccurate statements made at the Labour Conference recently, John McDonnell claimed that water is expensive because of privatisation. You know the argument: fat cats and well-heeled shareholders lining their pockets while people can’t afford to run a bath. But it’s not true.
Whilst poverty, including water poverty, exists, water costs are comparatively low in the UK. According to the independent regulator, Ofwat, bills are £120 lower than they would be if the sector had stayed in public hands. Water and sewerage bills vary around the country but average out at £385 per year. That’s about £1 per day to get all the clean water we need into our homes and all the dirty water and sewage out, without polluting our environment.
This seems acceptable to most households. Those in poverty can access easy payment schemes such as Watersure, and because of the way water companies are regulated not only can prices be capped, they can actually be reduced. In the next few years water and sewerage bills will fall in real terms by five per cent.
The claim that customers are treated badly by the water companies doesn’t stand up to scrutiny either. Around 90 per cent of customers are satisfied with their water and sewerage services, according to the sector’s consumer watchdog. Overall, this is not a picture of an industry that needs fixing.
Of course, sometimes water companies make mistakes – and when they fail their actions are grist to the mill of the hard left. But the really robust regulatory system kicks in to protect the public and the environment when failures occur.
Water companies are internally audited by Customer Challenge Groups and by independent economic, environmental and water quality regulators. When companies fall below the standards expected of them they rightly get punished – as shown by the £20 million fine imposed recently on Thames Water for some serious pollution incidents.
So, what’s the problem that Corbyn and McDonnell are trying to solve through nationalisation that couldn’t be achieved through regulation? We don’t know, because they’re more interested in class war tub-thumping than setting out practical solutions.
You have got to be in your mid-50s to remember how dreadful our publicly-owned industries were. But rather than painting a dystopian picture of how appalling our water, rail, energy and communications industries used to be, we need to talk of the virtues of properly-regulated utility companies and the vast investment they bring to improve our lives and our environment. We must explain how they are relevant to how people live now and in the future, rather than relative to what happened nearly three decades ago. We need to reinvigorate the democratisation of capitalism.
This means giving people incentives to own shares in the companies they work for. A chance was missed with the privatisation of Royal Mail, which favoured institutional investors over mass share ownership. Perhaps putting it in the hands of a reluctant Dr Cable was the error. The Government needs a strategy that includes new and fresh ideas for giving people a chance to own shares in the companies that have such an integral part in their lives.
Furthermore, if we’re going to counter the divisive and destructive anti-business narrative that’s in danger of gaining traction with the public we need to make a determined effort to sing the virtues of private industry – and that includes properly regulated utility sectors like water.
Much has been achieved since privatisation – let’s not allow opponents of private industry to throw those benefits out with the bathwater.