Campaign Against Water Privatisation:

Newsletter No 1: Winter 2005/2006

Hain’s triple whammy – redundancies, rates rises, and water charges:

When the Government announced it was to postpone the introduction of water charges some peple hailed it as a sign that the government was on the back foot. However, this optimistic assessment was punctured by Secretary of State Peter Hain’s keynote speech setting out his vision for the future. Delivered to a meeting of the Institute of Directors in Belfast on 21 September it set out a comprehensive programme for the neo-liberal reform of the local economy.

The basic tenet of Hain’s speech was that the economy was over-dependent on the public sector. He cited the fact that public spending accounted for over 60 per cent of GDP, nearly a third higher than in the UK, and that a third of all employment was in the public sector, compared to the UK average of a fifth.
Privisation

Following on from this premise, Hain set out a number of strategies on how a massive reduction in public spending will be achieved. The first of these is privatisation, with parts of the public sector, and those who are employed in them, to be handed over to private companies. This is euphemistically described as giving the “private sector a greater role in the delivery of public services”. In reality, it is the destruction of public services, and is always associated with a deterioration in the terms and conditions of the workforce. This process is already ongoing in with the expansion of Private Finance Initiatives, particularly in the health and education sectors. Hain’s speech envisaged an acceleration of this with an “ambitious programme of asset sales” (i.e. privatization).

Review of Public adminstration:

The second element of element of Hain’s programme, and probably the most far reaching, is the reorganisation of the Governmental structures, from health and education boards, to local councils. This is being carried out under the Review of Public Administration. It is due to put forward its proposals later in the year. These are likely to include the abolition of boards and councils and the centralisation of services over larger geographic areas. While this is proposed under the guise of the phoney populism of cutting bureaucracy and shifting resources to the frontline, it will actually result in the loss of services and massive public sector redundancies. We can see that already happening with the cuts in the education budget. Schools are losing teachers, special needs assistants and crossing patrols, while parents now have to pay for what were once “concessionary” services such and transport and music lessons. In the health sector, rural hospitals are being stripped of acute services. The recent Appleby Report on the health service envisages this process of rationalisation going further. It also proposes the introduction of regional pay for health workers. The Review of Public Administration will move this process a step further with the complete closure of many schools and hospitals.

Waters charges and rate rises:

The third element of the programme for reducing public spending is an increase in rates and the introduction of service charges. The aim is to raise the level of the household bill for rates and water closer to the average in England and Wales, which is about £1,500 a year. The average rates bill in Northern Ireland is around £600 a year. Key to this is the introduction of the water charge, which will be around £400 a year. Hain signalled that, despite the opposition, the government is determined to introduce this in April 2007. He also repeated the lie that any surplus raised by the water charge can be used to fund other public services. The fact is that any money collected through the water charge will be private money; the newly created water company will own it. Indeed, the point of setting the water charge so high is to build up a capital surplus that will attract investors when the Government owned water company is eventually privatised.

Building an opposition:

An effective opposition to this onslaught must be built at the grassroots level, among trade union members and in working class communities. It is only a mass campaign that will move politicians and the Government. It must also be a campaign that has opposition to privatisation as its foundation. What Hain’s speech makes clear is that this is a general offensive against the public sector, of which the introduction of water charges is but one part. Therefore the response must also be generalised. This is why the CAWP has continued to highlight the importance of privatisation in the anti-water charges campaign. It is the issue that ties all these various attacks together and the basis on which they should be opposed. The positive thing about Hain’s speech is that it clearly lays out the intentions of the Government. It should serve as a shake people out of their complacency. Hain has thrown down the gauntlet; now is the time for us to pick it up and meet the challenge.

Water treatment works handed over to corporate crooks:

In October the government announced that water treatment works would be handed over to a private consortium - Dalriada Water. Despite the local name, this consortium was composed entirely of international utility companies. It included the notorious Tyco International. By coincidence, in the same week of the announcement in the future of water treatment works, the former chief executive and finance director of Tyco were being sentences in a New York after being found guilty of serious fraud charges. During their period with the company they moved the company's registration to Bermuda, then went on to set up 115 subsidiaries in tax haven countries, including eight in the Bahamas, 17 in Barbados, 55 in Bermuda, and five in the Cayman Islands. Most of these companies had nothing to do with real business, but were front companies used in accounting scams to evade taxes and to allow it to issue false accounting reports that hid bad debts and exaggerated assets. Stock prices shot up, investors bought, and Tyco executives made a bundle. In 2002 Tyco chief executive Dennis Kozlowski took home over $71 million, up $34.7 million raise from the previous year when the company laid off 11,300 workers. When the truth came out investors lost their money and Tyco's former top executives were charged with looting the company of $600 million.

Water company director wanted: £1100 a day:

In you were leafing through the jobs sections in the local press in October you may have noticed a job advert for the Department for Regional development inviting applications for the post of Chair and 4 Non-Executive Directors to the Board of Water Service. This is intended to be the new executive board of the Water Service when it is transformed into a Government Owned Company (GoCo) in April 2005. This is the body that will be “at heart of the government’s reform of the water industry”. So how much time do they need to devote to this important task. Well the chair will be required to work three days a month, and the non-executive directors two days a month. For this sacrifice the chair will receive £40,000 pa, that’s about £1100 a day, while non-executive directors will receive £18,000 pa, a measly £750 a day. Of course, these figures may be on the conservative side, as they don’t include expenses. Potential applicants for these posts would certainly agree with the advert that the Water Service is undergoing “dramatic and exciting change”. However, if you are member of the Water Service workforce facing redundancy or the loss of your pension, or a member of a household facing a £400 annual bill you may have a different point of view.
Water bills in England and Wales rise by 13%

One of the argurments in favour of privistaoistion is that it lowers prices. However, in England and Wales, where water utilities have been privatised since 1989, bills have been steadily rising. Under the latest deal stuck between the water companies and the regulator water bills are to rise by an average of 13 per cent over the next five years, from £249 to £282. A large proportion of this increase will be put on in the first year. Even with such a big rise the water companies were not satisfied, they had lobbied for twice this rate.
RVH car park PFI – exploiting the sick

The example of the RVH car park epitomises the abuse associated with privatisation. Built at a cost of £2m through a private finance initiative (PFI), the company that runs it has been able to recoup the cost of its construction after just seven years of a 20-year contract. In 2002 alone, the car park generated more than £500,000 in profits. Yet, the hospital has only received a fraction of this money. Under the PFI contract the company agreed to pay the RVH £25,000 a year for the use of the land and a further £15,000 a year if profits exceeded initial forecasts. These terms have resulted in the hospital receiving less than 5 per cent of the annual profits. Rather than going back into the health service, this money, extracted from patients, their families and hospital employees, is being drained away. This is the reality of private sector “investment” in our public services.

About the CAWP:

The CAWP was set up in November 2004 by socialist groups to oppose the introduction of water charges. We are part of the wider anti-water charges campaign and do not set ourselves in opposition to any other group. Our primary role is to emphasise the issue of privatisation and advocate strategies that we believe can successfully oppose it. Over the past year, our activities have included public meetings, stalls, postering and film shows. We also had a contingent on the Belfast May Day parade. A number of campaign committees have been established across the city. These involve residents organising in their local area to raise awareness of the consequences of water privatisation, and to mobilise public opposition against it.
Contact Us

If you agree with us and would like to find more about the CAWP and its activities, or are interested in setting up a committee in your area, then contact us at:

Phone: 07720091983

E-mail: cawp@lycos.co.uk

PO Box 40,
Belfast,
BT11 9DL