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In 1988, the Margaret Thatcher-led government privatized England and Wales' water systems through full asset sales. It quickly attracted several multinational water barons including: Thames Water, Northumbrian Water (Suez) and International Water (Bechtel). Reasons cited for this move included that the private sector would be more efficient in running the system and provide better services than the pre-existing government agencies. Though pioneering water privatization, the implementation of privatization has yielded different results for the public.
Prices for water rose over 46% in the first nine years of privatization. This increase has led to low-income households being disconnected from water due to their inability to pay their water bills. The disconnections have raised health concerns: lack of water hinders good hygiene practices (i.e. bathing). Also, some families had to choose between acquiring basic necessities (such as food) and paying their water bill. The companies responded by installing pre-payment meters for customers who had difficulty paying their bills. These customers only received water when the meter was charged with a card. Widespread public disapproval led to the outlaw of disconnections and pre-payment meters in 1998. Due to the price gauging, water rates were cut in 1999 by an average of 12.3%, but are still a heavy burden for low-income households.
The increase in water rates facilitated great profits for U.K. water companies. Pre-tax profits rose by 142% in the first eight years of privatization. These profits were directed to companies’ dividends instead of being used to lower customers’ bills or fund promised improvements to the infrastructure of the system. When profits began to fall in the late 1990s, companies looked to restructure themselves to protect their assets and abilities to make future profits.
The quality of the water system has declined since it was privatized. In 1998, reports by the Drinking Water Inspectorate (DWI), which is responsible for monitoring water quality, “concluded there are still weaknesses in companies’ performance.” This has resulted in DWI lodging a record number of prosecutions against companies for violations of water quality standards. There are also environmental concerns: “The wastewater and water companies are responsible for 1 in 5 pollution incidents.” The Environmental Agency, responsible for monitoring environmental pollution, reported that 14,374 water pollution incidents occurred in 1999.
Water privatization has also had a negative impact on workers. From 1990 to 1999, more than 8,500 water worker jobs have been lost: a decrease of 21.5%. During this same time, executives of water companies received large fees and bonuses, and some of their salaries increased by as much as 200%.
Privatization has benefited the private water companies more than it has the public. Although some legislation has been passed to improve the current situation, many challenges exist. There are still concerns that water companies have little incentive to perform infrastructure maintenance that would reduce leakage and lower the risk of sewer flooding. There are also concerns about how future environmental improvements will be paid for: many think this will lead to another increase in water prices.
In the News:
Water for All initiated a new collaborative website to help coordinate our global campaign focusing on the water transnational, Suez. The website is tri-lingal and collects information regarding the abuses, problematic projects, community protests, and exploitative policies of Suez, Go to:
 Emanuele Lobina for Public Services International Research Unit, UK Water Privatisation – A Briefing (2001).
 Lobina, p. 20.
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