Who should own the water?

The case for selling the water companies was serious. Serious people made it, and it deserves better than the sneer it gets now. It also rested on one condition. That condition never held - and everything that went wrong flows from that.

Here was the case. In 1989 it was arguably the responsible view. The pipes were Victorian. The state was broke. Public ownership had a habit of starving the network, because the Treasury raids the maintenance budget before it touches anything voters can see. So sell the companies. The money for new pipes would come from private markets, not taxes. Shareholders chasing efficiency would discipline costs as no minister ever had. An independent regulator would set prices on the engineering, not the electoral calendar. And the taxpayer would stop carrying the risk. None of that was stupid. Most of it was plausible.

The condition that never held

A market disciplines the people in it through one thing only: the customer who can walk away. Take away the exit and the discipline goes with it. And water has no exit. You cannot switch supplier. You cannot go without. And the state cannot let the company fail, because a city with no water is not a negotiation. It is an emergency, measured in days.

Once the exit is gone, the customer becomes a captive. He has to keep paying, which makes him less a customer than a revenue stream. Market discipline is gone, and something has to replace it. What replaces it is a regulator - a few hundred officials, outspent and out-lawyered by the firms they police, trying to hold the line with paperwork.

Then the risk flips. In a good year, the owner takes the profit out. In a bad year, the failure lands on the public, because the public is the one party that can never leave. Private profit, public risk. Not a slogan. The shape of the deal.

Under that shape, the smart move for an owner is not to build patiently for a century. It is to load the company with debt, pay the borrowed money out, run the assets hard, and trust that the state will always stand behind the taps. Did any particular company do that? Read its accounts - they are public. But you do not need a villain to see the problem. The structure rewards that behaviour. Reward a behaviour for thirty years and you get it.

The other side of our own argument

Now the concession, because it is the privatisers' best card. Public ownership fails too. And it fails in exactly the ways they warned about. The Treasury raids the budget. Prices get set to win elections. The workforce captures the firm instead of the shareholders. Anyone who tells you nationalisation is a free lunch has not read the history. So the real choice was never a broken model against a perfect one. It was two flawed models. The question is which failure you can live with.

That is what settles it. When a public utility under-invests, the voters who own it can force it to invest. The tool is slow and clumsy. But it exists, and it points the right way. When a private monopoly extracts, the customers cannot discipline it, because they cannot leave. The only tool left is a regulator the whole setup is built to wear down. One failure has a democratic remedy. The other has a bailout.

Where we land

So water belongs in public or non-profit hands. Not because markets are bad. Where there is real choice, we will defend private business against almost anyone. But this was never a market. A market needs a choice, and with water there is none. Calling it one is a category error with a shareholder register attached.

The bills are public. The debt is public. The investment record is public. Read them, and ask the one question that settles it: did the structure produce the behaviour it was built to reward?

An opinion of the house. The argument is ours; the record beneath it belongs to no one.