Those Utility Week spoke to labelled as disastrous the Sunday Times revelations that if the opposition were to gain power it would pay £24 billion less for the companies than the widely accepted “true” market valuation of £44 billion.
But the industry will have long suspected a low figure would be on the cards, that it would be naive to expect a Labour government to stump up full market price. Perhaps the reaction was more down to sector leaders finally being presented with stark evidence of what a new water reality could look like.
Track back to Labour’s election manifesto and the signs were always there – along with myriad figures about the potential cost of renationalising the sector, depending on which methodology was used to do the sums. An array of studies and data put this anywhere between £2.3 billion and £90 billion – the former if parliament were to take into account factors such as public subsidies at privatisation (according to one study, adding up to £12 billion in today’s money).
Meanwhile, by Ofwat’s reckoning, the regulated part of England’s water companies is worth around £64 billion.
Complex financial calculations aside, water companies rightly point to the changes already put in place to deliver a fairer deal for consumers within a developing regulatory social agenda – achieved without bringing water companies back into public ownership and racking up government debt. A Social Market Foundation estimate suggests the sector may need to find more than £100 billion over the next 25 years.
And all this before factoring in the costs of any new regulatory regime.
In truth, there is little water companies (or networks for that matter, who Jeremy Corbyn has just revealed will be line for similar treatment) can do to influence the politics of the day, except shouting about their continued good work and the massive investment they deliver at a low cost to the consumer.
It’s perhaps disappointing then that, notwithstanding the issues raised by the environment secretary, there has been no validation from government of privatisation and its benefits.