Interview with Prof.
David Hall on water privatisation
23 February 2007
This interview was broadcast on Radio
Ulster Good Morning Ulster. Click here
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.
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.
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.
David Hall of Public Services International
Research Unit at the University of Greenwich.