[sandbags]

As the article mentions, privatised water companies have built no new reservoir capacity and relied on drawing from rivers and other sources.

What the article doesn’t mention is that pre-privatisation a new reservoir was built every year up to about 1960 and then every few years until privatisation in 1992.

So we are about 30 years behind in adding capacity to the system. This combined with the inadequate levels of investment in the system leading to enormous wastage, is the answer.

Water should never have been privatised. At least not without a framework for a national strategy for water. I suspect that wasn’t done because it would have made water companies and unattractive source of profit.

[autoexec]

When it comes to things like utilities every penny of profit comes at the expense of the public. Either prices are raised so that a small number of people can stuff their pockets with extra cash above what it costs to deliver the service and maintain the system or they get that extra money by failing to deliver the service or they do it by failing to maintain the system itself.

I think the neglect and failure to invest in infrastructure is the worst because unlike high bills or increasing numbers of people not being served it's more or less invisible to the public while companies and shareholders rake in a lot of money, but doing that causes problems tax payers end up footing the bill for down the road, and it may not always be obvious to the public what the cause was.

A power company who makes profit by neglecting the condition of their power lines can cause a wild fire, but it takes a lot of time, taxpayer money, and luck to identify that the lines were the source of the fire, to discover that the company knew (or should have known) about the problem and done something about it, to get enough proof of those things that a lawsuit is possible, and to fight it out in court in order to hold the company accountable. It's not just the cost of fire the public is on the hook for in that case, but the costs of everything else too.

[krona]

> I think the neglect and failure to invest in infrastructure is the worst

Cumulative capital investment by water companies in England and Wales since privatisation: £250bn.

The infrastructure they inherited was never designed for the things it's being asked to do today, and it has a life expectancy. It would literally cost trillions to upgrade the entire sewerage system.

This isn't apologia, it's just reality. The road network will also face the same fate since much of it was built >50 years ago and has a life expectancy of roughly 50 years. The country simply can't afford to replace it.

[mhh__]

By definition every penny of profit always comes at someone's expense but I don't think we'd advocate for nationalising Tesco's?

[supportengineer]

>> When it comes to things like utilities every penny of profit comes at the expense of the public

I too am a customer of PG&E.

[WillAdams]

Powerful argument for such to be operated as co-operatives if ownership by a non-government entity is called for.

[patanegra]

My provider of water is Thames Water. In the past 10 years, they did cumulative turnover £18,107 turnover, and profit -£1,180. So they in fact operate with a negative margin -6.52%.

In the UK, owning a utility company is nothing easy. Shareholders are definitely not stuffing their pockets. The biggest owner is Ontario pension fund (32%). I guess, poor retired Canadians are not very happy about this investment.

So I would say, your framing sounds interesting, until one digs deeper into facts.

[legulere]

Utilities are very capital-intensive and lining money incurs interest. If you let the state run utilities you will also pay profits in the form of the interest for bonds. The government pays lower rates, but there’s a strong push to keep government debts down while private debts are mostly ignored.

[xp84]

I agree with you in my heart, but I'm worried we both could be overlooking something important, so let me steel-man an argument against:

You said correctly that the private utility monopolist can choose from the menu of raising prices, delivering a subpar (cheaper) service for the same price, or can "defer" (aka skip) maintenance indefinitely. All ways they can extract cash to pay shareholders or even worse, pay management fees to private equity.

But the government-owned utility that we idealize, which provides the reasonable service at a breakeven price, may not be realistic. Government has its own incentives: Some politicians want to take funding from your utility to pay for their pet project. Others (political operatives or even civil servants) may sneak in a corrupt overpriced contract to benefit their corrupt associates. Public unions are known for negotiating unreasonable work rules and contracts that preserve jobs that are not actually needed.

All of the above together create a drain on finances of a government-owned utility, which is the public counterpart of the drain on finances that "the need to make a profit for the owners" places on investor-owned utilities.

I hate my local investor-owned utilities with a fiery passion and can't believe most governments could do worse, but I think we shouldn't overlook how easy it is for nationalized entities to engage in similar amounts of shenanigans.

[BrtByte]

What's worse is how hard it is to create political urgency around invisible decay

[seanalltogether]

The concept of reservoirs and emergency supply seems to be completely at odds with privatisation. What private company is going to spend loads of money to build deep reservoirs that are stressed only once every 5 or 10 years. None. They're going to reach for an immediate supply like a river or aquifer and then raise prices if those sources run low. It's insane to plan out infrastructure on the belief that private companies are capable of building such large buffers.

[tome]

I'm inclined to agree that privatisation is bad for long term planning, but the history of the Abingdon Reservoir proposal seems to be counter evidence:

https://en.wikipedia.org/wiki/Abingdon_Reservoir

Looks like Thames Water (a private company) proposed the development nearly 20 years ago, but it was turned down by the Environment Agency, a government body.

> Plans for a £1bn reservoir in Oxfordshire to supply more than eight million people over the next 25 years have been rejected by the government.

> Thames Water wants to build a site on four square miles of land near Abingdon to help ensure future demand is met.

> The bid went to a public inquiry but the secretary of state said there was "no immediate need" for such a site.

"Abingdon £1bn reservoir plan rejected by government"

https://www.bbc.co.uk/news/uk-england-oxfordshire-12651131

[epolanski]

> It's insane to plan out infrastructure on the belief that private companies are capable of building such large buffers

You can make this a requirement by law.

[qcnguy]

We're talking about the industry that just finished Thames Tideway, fully privately financed? A project that will last for at least 100 years and probably longer? A project that was needed for decades but was ignored by government and only got built thanks to the private sector?

The idea private companies don't invest is just Labour propaganda. Another commenter has already pointed out your belief about reservoirs is wrong, as is the idea they wouldn't make other forms of investment.

And all this has happened despite the government imposing socialist price controls on the industry, a move usually guaranteed to kill investment!

[davej]

Here in Ireland, our water is a public service and we have similar supply issues to the UK (and a similar rainy climate). I'm not discounting your analysis and I'm sure there are lots of other variables but it's always good to compare other outcomes when discussing counterfactuals.

[mrspuratic]

Irish Water/Uisce Éireann have delivered on two new reservoirs in the last few years: Saggart and Stillorgan (technically a rebuild of an 1860s open reservoir). A third, Peamount, is in the planning stage. All of these are around Dublin, the driest and most populated area. Perhaps there are more, their website doesn't make it easy to find them. We still get hosepipe bans, occasional pressure reductions, and frequent "boil notices".

At the other end of the pipe they have opened/upgraded many waste water treatment plants recently too, large EU fines being a motivator, including one in Arklow which took nearly 4 decades to get over the line (its planning predating the existence of IW).

[sandbags]

It's a fair point that nationalised water industries can also be poorly run. But I'm not sure what the argument is that means the amount of money that privatised UK water companies have paid in dividends vs. invested in maintaining and expanding infrastructure isn't a significant part of the UK's problems.

However, as a further point. If national priorities change then a nationalised water industry can respond (relatively) quickly. But what can be done with a bunch of potentially foreign owned profit-seeking companies?

[BrtByte]

It really highlights that governance, long-term strategy, and actual follow-through matter just as much as the ownership model

[graemep]

> Water should never have been privatised. At least not without a framework for a national strategy for water.

State ownership is not a panacea either.

State owned Scottish Water has more sewer leaks than the privatised companies in England and Wales do.

[bilekas]

The responsibility to look after the citizens basic needs such as water is on the government. Not private for-profit companies.

If they can't do their job, then we shouldn't pay our taxes ?

[vondur]

As a counter point, go look at the Los Angeles Department of Water and Power. It's a publicly owned municipal utility and is notorious for its corruption. The DWP doesn't perform any maintenance, lettings things break completely and then having to fix huge issues. They were the group who failed to fill a reservoir in the Pacific Palisades to save some money where firefighters weren't able to use to fight the fires.

[mock-possum]

Ideally, the dwp is accountable to the city, and therefore to voters and the state, in a way that a private company profoundly is not.

[8fingerlouie]

It's fine.

Water companies will build new resevoir capacity, but since the extra money they already bill your for, for maintaining the infrastructure, has been paid out to shareholders, it will of course require an additional fee on your bill.

At least that has been my experience with everything privatized in the past couple of decades. The private investors scoop up every bit of value, and when it's time to pay the bill, it's the customers that must pay (again).

Fortunately we have regulations in place, but that doesn't help when all value has been siphoned from the company and all there's left is debt.

[atoav]

Privatization just means that if you were interested in the outcome before (having water), they are now interested in the money that can be extracted from it.

And that means their interest is to but a modern branding onto an operation that has been stripped for wires as long as it works.

I grew up during a privatization wave in my country and the promise of the proponents always was that private ownership means waste is cut. Now all these sectors that produced decent services before have gone to shit. Be it postal, trains, highways, whatever. Everything is broken, underfunded, services less people for more money.

10 years ago when I said the same thing I would get a lot of counter arguments that all boiled down to: "Trust it bro" or "But governmental is more waste". Now these arguments don't come up nearly as much. Everybody can see it.

The thing is, if you want to avoid waste then literally the best strategy is to go into a desert where there is no service. No service means no waste. But it also means no service.

[fragmede]

Waste and inefficiency should be stomped out, but it doesn't need to be ground down into a fine dust and then vaporized into nothingness. A little bit of waste is fine. You want slack in your system in case of emergencies.

[TheOtherHobbes]

The "waste" argument is standard neoliberal nonsense. There are very few situations where the private sector provides a better service for less money. (See also the UK's NHS, which still provides a very efficient - if increasingly broken - service, while being starved of cash.)

Like most neoliberal nonsense, it's not just a lie, it's a misdirection. What it really means is "Government money is being spent on providing a service for poor people, when it should be handed out to rich people."

It's driven by entitlement, not generosity.

You can see this very clearly in the way privatised CEOs are paid. The water companies quite obviously and literally prioritise CEO pay rises and dividends over service quality.

That's not an accident. It's the true meaning of privatisation.

That is what privatisation is.

The "customer" in privatised industries isn't the public, it's upper management and other big shareholders.

[mhh__]

You're not taking into account how hard it is to get regulatory/planning approval to build anything in Britain.

[epanchin]

The Town and Country Planning Act 1990.

Responsible for putting a pin in development and turning Britain into a museum, with insufficient water or power.

It should urgently be reformed.

[bargainbin]

It shouldn’t be considered a source of profit at all, attractive or not. Water is a fundamental resource for human life. We pay bills to ensure the infrastructure is there to provide it.

If the infrastructure isn’t there, we haven’t received what we paid for. Worse, without EU regulation these companies are now blasting sewage into lakes and rivers. Ofwat can’t do anything.

At this point I feel there’s no solution other than nationalising the infrastructure again and ploughing billions of tax payers money into yet another failed Thatcher initiative.

Of course that will never happen, because we’ve not had a government willing to make sweeping changes like that since Thatcher. Except maybe Liz Truss with her exceptional grasp of economics.

[Hilift]

> privatised water companies have built no new reservoir capacity

Of course not. The water company was in terrible shape (read: lacking funds) before it was dumped on a commercial company that does not have deep pockets like Chevron. Thames Water owes £16.8 billion. That money is already gone.

No one is going to swoop in to save the day. Taxpayers will eat the bill, and invest even more to reverse decades of neglect. All of those hard decisions labour committed to make are unnecessary when nothing is done and they are made for you. The country has limited funds, and is spending funds it doesn't have on things like billions on hotels for 29,000 unauthorized travelers so far this year.

UK external debt is £2.7 trillion, and whats her name said yesterday it may be necessary to ask the IMF for a loan? Water company indeed.

[tome]

> privatised water companies have built no new reservoir capacity and relied on drawing from rivers and other sources

Why does privatisation mean that the government can't build infrastructure? I think the answer is more likely nimbyism than privatisation.

I personally think it makes no sense to privatise infrastructure for which no competition can reasonably take place, and I'd include distribution networks of many sorts in that: water distribution, rail lines, electricity distribution.

But I'm not aware that privatisation means that the state can't take on reservoir projects. The problem is that development of all kinds in the UK is utterly crippled by nimbyism. The article mentions the proposed Abingdon reservoir but links it to the boogyman of data centres rather than call out what the picture obviously shows: it's being stalled by nimbys.

[krona]

Case in point, Thames Water has been trying to build a reservoir in Oxfordshire since 2006[1], but has only met resistance by the local planning authority and environmental campaigners (the two often working in concert when it comes to NIMBYism due to various statutory obligations placed on local authorities.)

A few months ago the government reclassified the project as Nationally Significant Infrastructure Project to allow Thames Water to to take the proposal out of the hands of the local authority, potentially allowing the project to go ahead. [2]

If it goes ahead as planned it will be the second largest reservoir in the UK.

[1] https://en.wikipedia.org/wiki/Abingdon_Reservoir [2] https://www.bbc.co.uk/news/articles/cz9kp2d4d0vo

[PaulRobinson]

"Privatisation" does not preclude government investment in infrastructure.

"Thatcherism" does, however. It is a warped [Ayn] Randian view of capitalism and those who drive it. State intervention into the machinery of capital, even when it comes to essential infrastructure, is considered a corrupting influence.

Nobody able to change national policy within Downing Street or even ministries in Whitehall, at the time - or since - has had the gumption to say it's not working and we need to do something about it.

You are however right, that NIMBYism has also worked remarkably well - the planning process in the UK is the reason we can't build HS2 cheaply or quickly, and that is relatively painless compared to wind farms, solar farms (also often blocked), never mind building a dam and flooding an entire valley, which was the old way of creating new capacity.

[BrtByte]

You can't run a critical resource like water purely on market incentives when the payoff for long-term infrastructure investment takes decades

[c0ax9]

The privatization of water supply is featured prominently in Adam Curtis's new series "Shifty," and paints a similar picture. Profit > infrastructure is ruining so much...

https://en.wikipedia.org/wiki/Shifty_(TV_series)

[komali2]

I was fascinated on my recent trip to the UK to learn how much of their infrastructure they'd privatized semi-recently. Trains, hm, well it kinda works in Japan so maybe not so bad, but, water and SEWAGE??? In what universe does it make sense to have one of the most critical infrastructure systems, the backbone of health for a city, participate in a marketplace? Insanity. Not to mention the fact that at the end of the day only a government could possibly have the ability and authority and budget to run new lines or the motivation to do maintenance. What's next, pay per poop?

[jplrssn]

It’s ironic that after British Rail was privatized, many UK rail services ended up being run by subsidiaries of other European state railways: French SNCF, Dutch NS, Italian Trenitalia, and so on. Turns out the state knows something about running trains after all.

[octo888]

It makes perfect sense. The capitalists can constrain the supply, push up prices.

And we Brits don't revolt – even protesting is highly legally-risky these days.

Is there a better country to do such things? I don't think so

[adornKey]

More likely they'll hand out laxatives and ask people to help solve some fertilization crisis out there in the fields...

And there'll be commercials - Scotland - Heavy rain (horizontal) - A woman totally drenched (with baby in hands) - In panic - Warning about the impending water crisis.

[hopelite]

How can we just ignore the elephant in the room; that not only has the UK population risen by almost a 1/3 since 1960, but the nature of that population has also been changed since that time, regardless of how one feels about it.

The UK (as only one example) is simply not the same thing as it was in 1960. Why would we expect the same results as if it’s just a matter of catching up from being behind, all while the ability to do so has changed?

If the UK wasn’t able to keep up with water storage capacity between 1960–1989, and has not built any capacity whatsoever since 1989; what makes one believe that somehow the UK, with massive headwinds blowing right into its face, could not only maintain the current capacity but expand it by about 50% (pop growth plus backlog), at the same time that the population has increased by ~1/3 and the nature of the people in the UK has changed significantly from a people that was able to do that in the past, but clearly could not do so since 1960, and while the finances of the country are inverting?

It is a gamblers fallacy. It is the aging man who still thinks he is in his prime, but also after decades of neglect and abuse of his body on advice of a devil on his shoulder, the serpent whispering assurances in his ear to indulge in harmful things and to win back his loses.

[Earw0rm]

I'm curious what you mean about the nature of the population?

Age? Ethnic makeup? Urbanisation?

The population is older, less white, more in cities, fewer kids, but I'm not sure what any of that has to do with our water consumption or ability to build for it - other than maybe older people, especially the ones that moved out of the cities to live some LOTR-inspired faux-rural lifestyle, tend to be more NIMBY?

But equally though our appliances and lifestyles aren't the same as 1960. Showers are massively more efficient than baths, but we use them daily instead of once a week. Industry has mostly disappeared, and thermal power stations are on the way out (both extremely heavy water users), but agriculture has become more intensive.

[littlestymaar]

It turns out that “If you put the markets in charge of the United Kingdom, in thirty years there’d be a shortage of water” is the realistic version of the Sahara sand quote.

[ch4s3]

Someone down thread posted that the private company has proposed several new reservoirs starting in 1992 and they've all been blocked on environmental grounds by the government or by NIMBYs.

For example the Abingdon Reservoir has been in planning for 19 years[1]. It is opposed by GARD[2], the Group Against Reservoir Development. It's hard to see how this is the fault of privatization.

[1]https://en.wikipedia.org/wiki/Abingdon_Reservoir

[2] https://groupagainstreservoirdevelopment.org/

[therobots927]

Thatcher would be proud. What a waste

[pojzon]

Nestle CEO:

„Water should not be human right”

[braza]

> Water should never have been privatised. At least not without a framework for a national strategy for water.

But one can make a very fair argument where you can have a strong regulatory framework to ensure investment goals, exit clauses, and penalties in case of missing goals, no?

[rlpb]

That never happens because the appointed regulator has no incentive to efficiently and effectively regulate, either.

[elAhmo]

Yes, but that would make private investment in utilities not attractive as the profits would be low or non existent.

Competing forces

[jmyeet]

So... because capitalism.

People have this propagandized view that the "free market" (which isn't real) is responsible for innovation.

All capitalism does is build enclosures and engage in rent-seeking. With the tendency for profits to decrease, ultimately it comes down to cutting costs and raising prices. So why would a water company invest in a new reservoir? That increases supply. That might lower prices.

The UK is going to neoliberal all the way into being a developing nation.

[oceanplexian]

>People have this propagandized view that the "free market" (which isn't real) is responsible for innovation.

In the last century and a half, we went from candle light and horse and buggy, to the lowest level of global poverty in the last 5,000 years of recorded human history.

If capitalism wasn't responsible then what was?

[manoDev]

Seems fitting, considering it’s the birthplace of liberalism.

[otikik]

"Thanks, Thatcher"