Going with the flow

Last week I visited the Horsham Southern Water plant which helps provide the clean, safe water and waste disposal we all take for granted. It has recently received £1m of additional investment with £4m more scheduled over the next three years.

The plant is the oddest place imaginable for being at the forefront of an ideological debate - but it is. I suspect few wake up in the morning pondering whether their utilities should be run by civil servants answerable to MInisters or run by a provider answerable firstly to shareholders, customers and the independent regulator. Most I suspect just want the pragmatic answer that gives us the utilities we require at an appropriate cost.

To my mind privatisation has worked. Water leaks locally, through thousands of miles of pipes, have been reduced by two-thirds (some 140m litres a day), 20,000 leaks were repaired in our region last year. Nationally over £150bn has been invested in water infrastructure. The average bill in our area for combined water and waste is £1.14 a day and overall customer satisfaction stands at 90 per cent. The industry has a vital role in implementing stricter environmental regimes and fines if they fail can be, rightly, substantial.

It's right that we can set demanding targets for leaks and environmental quality and can, given the nature of the industry, regulate the investors' returns. However having set the terms I believe private enterprise not the civil service will deliver on them best. Of course the Government could buy up the industry and get Whitehall to run it. Water would compete against hospitals and schools for Government investment, a Minister would add "Water" to their portfolio. If you don't like the way water is provided in theory you could vote to change the Government.

This seems to me highly unlikely in practice to deliver improvements for customers - rather the reverse. These companies are largely owned by those saving for or receiving a pension. Buying them out at fair value would be very expensive for the taxpayer. The knock-on impact on investment and confidence of forcing them to sell at below fair value could prove long term even more expensive.

I am surprised to see this debate return but if it must I am sure the pragmatic, practical solution will be seen to make more sense than Government control for its own sake.

 

Photo caption: Visiting the Horsham Waste Water Plant with Southern Water last week.