On Tuesday, after months of delays, the Scottish Government finally announced that the contract to provide water services to Scotland’s councils, which had previously been provided by a publicly owned subsidiary of Scottish Water, had been awarded to Anglian Water, a private company. Last year, Anglian Water managed to pay £180m in dividends to its shareholders, mainly private equity and pensions firms based in Canada and the UK, whilst paying no corporation tax.
Before we go any further, we really shouldn’t need to explain what “water” means – but the technical and legal context of this is (perhaps deliberately) baffling, so here goes. All the actual water is still provided by state-owned Scottish Water but the billing, metering and customer service aspects are subject to “competition” within the retail sector in Scotland….and nothing says “retail sector” quite like a council run school or a prison. The majority of the £350m value of contract awarded to Anglian will actually end up back with Scottish Water via wholesale charges. The state are therefore effectively subsidising the provision of a service to a private company, to allow that company to make a profit by selling it back to the state.
The SNP, who are believed to have delayed the announcement to avoid being embarrassed during the General Election campaign, released a statement, blaming their decision on the previous Holyrood administration and the EU, while their opponents denounced them for privatising water. So what’s the truth, who’s been selling Scotland’s water?
The answer to that is: Scottish Water. They still operate the network and provide water services to every household in Scotland, they also provide “water” at discounted rates to their suppliers, who then sell it on to businesses. Despite deregulation happening back in 2008, Scottish Water’s main customer is still Business Stream, a wholly owned subsidiary of…Scottish Water. As many as 97% of all businesses stuck with Business Stream (as late as February 2014) but their actual market share has declined at a faster rate, as larger business sought cheaper private alternatives.
So why do we have a market for little more than pretending to sell water in Scotland and why did the Government not give a Government contract to a Government firm? It’s all the fault of the EU apparently because they would insist on an open tendering process for any commercial contract. Yet this contract only exists because of legislation which was drafted at Holyrood, the Water Services etc. (Scotland) Bill 2005. The bill introduced competition to the provision of “water” for the first time in the commercial sector. The SNP, who seemed to not like the legislation much on Tuesday, must have had a change of heart since they all supported the bill. The Greens and Labour have also rushed to condemn the inevitable outcome of the deregulation they also all voted for.
The Bill was apparently only needed to comply with a piece of UK legislation, the Competition Act 1998. The work of the Blair Government, the Competition Act was a fiercly neo-liberal piece of legislation which opened up the economy to private firms in a way Thatcher wouldn’t have dared. The official excuse for the introduction of this law was to harmonise UK and EU competition regulations.
So with everyone saying a bigger boy did it and ran away, are we to believe the EU are ultimately responsible? It would seem odd that Scottish compliance with British compliance with the EU could create the situation we’re in, Scotland is the only country in the entire world where this happens. England & Wales won’t be joining the weird and wonderful world of water deregulation for the commercial sector until 2017. Either both Tory and Labour Westminster Governments have been illegally breaching the Competition Act since 1998 (and everyone else in Europe is heading to a legal apocalypse) or there was no need for Holyrood to chose to introduce a market for kind-of-waterish related activities, much less to hand over public contracts to a private firm.
The entire political establishment, up to and including yer Nicola Sturgeons and yer Patrick Harvies, across multiple layers of Government, have failed to resist this slow privatisation. What’s led us here may have been a drip, drip, drip – by Europe, by the Blairites and by successive Scottish Governments – but the dam has now burst. All the politicians are blaming each other and they’re all to blame. The waters only look muddy because when you boil it down, they’ve basically all been at it.