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Interview with Prof. David Hall on water privatisation

23 February 2007

This interview was broadcast on Radio Ulster Good Morning Ulster.  Click here to listen. 

Seamus McKee, presenter:
The Government’s plans for water charges here are at odds with current thinking almost anywhere in the world.  That’s the view of a man who has spent the last ten years talking about the issue to the likes of the European Commission and the World Bank. And last night David Hall came to Belfast to talk to anti-privatisation campaigners; and Will Leech heard from him.

Prof David Hall, Public Services International:
The two most striking thinks about the plans for Northern Ireland.  Firstly, obviously the introduction of this new charge.  In general, around the world, water is paid for either through the local rates, through the councils, or by paying for the water.  In Northern Ireland, traditionally they have been paid for through the rates, now in addition there is the new water charge being introduced.  So however you describe it, however the Government describes it, the simple arithmetic is – this is an extra charge. That there is an enormous new increase.

Will Leech, reporter:
And have your seen that anywhere else?

Prof David Hall:
No, not on this scale. It is quite dramatic.  Water privatisation is a very sensitive issue around the world. There has been a lot of public opposition, political opposition, to water privatisation across all continents.  One consequence of that is water privatisation has been shrinking in recent years.  This isn’t any longer a movement towards the future; water privatisation is the past. In Latin America, in north America, in Europe people have been actually backing away from privatisation.  The Netherlands for example has actually had water privatisation illegal; Italy is considering making water privatisation illegal.  This is something that is deeply unpopular.  One reason it’s unpopular is because it generally brings higher prices. 

Will Leech:
From your point of view then it begs the question why the Government is pressing ahead with it here?

Prof David Hall:
The reasoning behind the Government’s policy is basically to do with trying to impose a higher burden of taxation on Northern Ireland, it is a simple as that. It’s an increase in the taxes and charges that people are paying here for the public services. But in addition to that there is the logic of the policy of privatisation that they now want to encourage within a year of he GoCo being created, and that creates further problems for costs. 

Will Leech:
There has been quite a strong movement against these water charges, as many people are portraying them, extra water charges.  And with an election coming within a matter of weeks, there could be assembly members, if we do get a devolved Government again, who will have to think - “what will we do about water?”  What would you be recommending they look at?

Prof David Hall:
Well, a very simple thing to look at in water is the cost of the capital needed to invest in the system.  It is a very capital-intensive business, two thirds of the costs from the cost of capital.  And if you look mat that a very simple fact hits you in the face. If you borrow capital through Government or through a Government company, it is cheaper in terms of a lower interest rate than if a private company borrows. If you take the case of England for example, if the English water companies were renationalised tomorrow it would save in England £900 million a year.  And so my advice to the new Assembly here would be – do the figures and very rapidly abandon the idea of privatisation because it will only increase the costs and increase the prices.  Keep it in the public sector, the financing of capital expenditure is cheaper that way.

Seamus McKee:
David Hall of  Public Services International Research Unit at the University of Greenwich. 



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