OUR corner of Scotland has not been troubled with heatwaves. In recent days, when the sun occasionally blinked through, our variable climate increasingly seemed like a blessing rather than a misfortune.
One commodity we are not short of is water. Indeed, I’ve never understood why the idea of exporting some of our excess supply to places that need it has never been taken more seriously. A bit of extra investment to ensure local needs are always secure would do the trick.
Inevitably, the southern drought has turned the focus onto the role of privatised water companies in England and Wales. They do not come out of it well. Indeed, as anti-social greed machines they compare unfavourably even with the other privatised utilities.
Twenty per cent of water is lost to leaks while £72 billion has been leaked to investors since privatisation. Eighty-three per cent of the population support public ownership. Chief executives are rewarded in millions while even the Environment Agency has said those responsible for the worst pollution should face criminal charges.
In Scotland, it’s very different and the history which explains why that is the case is well worth recalling. It reminds us of what can be achieved through practical, progressive politics by people whose interest is in securing well-defined positive outcomes rather than exploiting grievance for another cause entirely.
The English and Welsh water industries were privatised in 1989, in the face of intense public opposition. This was both the hey-day of Thatcherism and the seeds of its undoing. For many, water was a step too far; a natural monopoly and essential public service which did not lend itself to the myths of competition and improvement through the profit motive.
At first, the Tories did not push water privatisation in Scotland and it was not until 1993 that they took first steps towards taking water and sewerage out of public hands by passing them to three quangos, serving west, east and north Scotland. It was clear this would be followed by privatisation of the three boards, the same stepping-stone as for electricity.
Strathclyde Regional Council was a mighty body and a very good local authority (and, counter-intuitively, a Tory creation in the 1970s). It came up with the brilliant idea of holding a postal referendum to pre-empt water privatisation. While this could not legally stop it happening, it proved to be an exceptionally effective campaigning instrument.
As with everything useful and progressive, the Scottish Nationalists tried to hijack it for their own single purpose, demanding that a question about the constitution should also be included. That would have been a disaster, turning an instrument which was intended to demonstrate unity into a source of conflict.
Moreover, the Labour leadership of Strathclyde pointed to the legal tightrope they were walking. They were entitled to run a water referendum because it related to a service for which they were responsible. Since they had no responsibility for the constitution, including a question about it would endanger the whole exercise. That didn’t stop Alex Salmond demanding it.
The referendum went ahead and was a huge success. As The Herald reported on March 23, 1994: “More than one million people in Strathclyde, 97 per cent of those who took part in a postal ballot, have voted against plans to take water and sewerage services out of local government control. Fears of possible public apathy were shown to be unfounded. Strathclyde chief executive Neil McIntosh announced amid cheers from scores of councillors and sympathisers that there had been a 71.5% response”.
That effectively killed off water privatisation in Scotland. The plan for three boards (merged in 2002 into Scottish Water) went ahead and there was a reasonable case for creating public bodies with greater access to borrowing than local authorities, in order to meet the capital requirements, particularly for replacing ancient sewage systems. Keeping it public was the key point.
Scottish Water has pursued a largely blameless existence, providing a decent public service and falling prey to none of the excesses or scandals that have come to characterise the English and Welsh companies. Nothing is perfect but I doubt if even the three per cent support for privatisation which the 1994 Strathclyde referendum revealed would be matched today.
Water wasn’t the only privatisation story in which the Scottish narrative was different from the rest of the UK, though I am not sure the outcome has been as positive. Because of the high regard in which they were held, the two Scottish electricity boards were privatised vertically – generation, distribution and supply – whereas elsewhere, these functions were separated.
Particularly with the advent of renewables, largely unforeseen in the early 1990s, this has given two private companies an extraordinary degree of influence over public policy in Scotland. That is an accident of history and it is long overdue for revisiting, as is the role of the regulator, Ofgem. Nobody voted for any of them.
Privatisation of key utilities is less an ideological issue than a practical one and should be judged in that way. The idea that privatisation plus regulation equals a fair deal for the public is long past its sell-by date because the failures are so conspicuous, particularly at present in the energy sector.
Regulation was supposed to promote competition and competition was supposed to deliver value for the consumer. That was always snake-oil since essentially lots of different businesses were selling the same product from the same source. Only the branding was different.
Ofgem was so thirled to its own ideology that it took no interest in the capabilities of fly-by-nights who entered the market in order to enhance the illusion of competition. Now most of them of have collapsed and the only competition among those who remain is how fast they can get out or else how much they can get away with charging – a process facilitated by Ofgem which will require political intervention to stymie.
The logic of the current situation is to return the energy utilities to public hands. That would be one referendum worth campaigning for and if Scotland had political leaders of the same calibre as Strathclyde’s 30 years ago, 97 per cent of us would surely unite behind the demand.
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