Opinion: Water – time to see it as a national interest?

News that one of China’s leading wealth funds has taken a 9 percent stake in Thames Water is significant. The investment comes quick on the heels of a Gulf sovereign wealth fund taking a similar size stake in Thames Water’s parent company, Kemble.

It’s a measure of confidence in Britain’s infrastructure technology and role in the world as a safe haven for long term investment crows George Osborne. Liberal Democrats may be inclined to take a different view.

What Osborne fails to mention is that because of increased water-scarcity throughout the world – including the UK – water is set to become a high-price commodity which will deliver sovereign wealth funds a healthy return on their investment.

Thames Water provides sewerage and water services to London and the South East, Britain’s driest and most densely populated region. With 425 people living per square kilometre, it is much higher than the UK average (220) and even more populated than The Netherlands, Europe’s most densely populated country. And because of the pressure placed on water availability by that population density, London and the South East rank alongside Algeria and Tunisia in terms of level of water-stress.

The problem is exacerbated when you consider that Government plans will provide accommodation for an additional one million extra people in London and the South East by 2026. The pressure that places on water provision is immense; the cost of meeting that demand equally immense.

Yes, sovereign wealth funds may provide the money for that infrastructure outlay, but they’re doing it because they see  mega money to be made.  Have no doubt, it will come at a price.  Water pricing, of course, moderates behaviours and cuts down on waste. However, access to clean water is also a UN human right enshrined by the UN Declaration on Human Rights.  It doesn’t say at what cost.

Water is a fundamental, and time we begin to view it as a strategic national interest. Water scarcity is an enormous challenge which isn’t going away.  So my question is this; as we face significant water constraints, should we be happy about leaving water services to market forces?  The Tories’ appetite for ‘light  touch’ regulation doesn’t provide much reassurance.

Perhaps, it’s time for Chris Huhne and Vince Cable to challenge the status quo and take another look at what really is in the national interest in terms of ensuring  future water provision.

* Andrew Wigley is a public affairs professional who has lived and worked in the US and the Middle East. He began his career working for the Liberal Democrats, first in London and then Brussels. He previously managed community and public affairs for an oil company with facilities near In Amenas.

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7 Comments

  • Andrew Duffield 20th Jan '12 - 6:56pm

    Should never have been privatised.

    In the continuing absence of anything other than monopoly provision of water and sewerage services (I can’t shop around for mine yet – can you?), the water industry should surely be the number one candidate for re-nationalisation or similar public ownership (…”regionalisation”?).

    Monopoly is the antithesis of Liberalism – and the only thing slightly better than a private monopoly is a public one. Although not a lot.

  • Matthew Harris 21st Jan '12 - 9:28am

    I used to work for Thames Water. As a kid in the 80s, I opposed water privatisation. As it happens, the privatised water companies have (in real terms, allowing for inflation, etc) invested far more in infrastructure, etc, then the state-owned companies ever did. They did this because they were investing in pursuit of a long-term profit. Such investment is surely a good thing, and what would be happening today if the money for sewer upgrades, etc, was having to be found by by government? By the way, Thames Water hasn’t been British-owned for years. Sinc 2006, it’s been owned by Kemble Water, a consortium of investors assembled by the Australian investment bank Macquarie. Prior to that, it was owned by the German utilities giant RWE.

  • Daniel Henry 21st Jan '12 - 1:59pm

    As water gets more scarce, perhaps a regulation could come in that would give each household a quota of.cheap water, after which the price rises dramatically.

    That would ensure that each household would at least get the necessities at a cheap price and then those who were being frivolous could pay for it.

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