page_title: Water privatisation in England and Wales
section_title: Background
hierarchical_section_title: Water privatisation in England and Wales / Background
caption_attribution_description: Joseph Chamberlain (1836 – 1914), British businessman, politician, and statesman
context_page_description: The water privatisation in England and Wales involved the transfer of the provision of water and wastewater services in England and Wales from the state to the private sector in 1989, through the sale of the ten Regional Water Authorities. The potable water supply as well as the sewerage and sewage disposal functions of each RWA were transferred to privately owned companies.
context_section_description: At the beginning of the 19th century, most water works in the UK were built, owned, and operated by private companies. The introduction of various parliamentary regulations led to the government assuming control of the industry, with the responsibility for most water works and sewerage systems being passed to local government by the beginning of the 20th century. One of the earliest proponents for the nationalisation of the water supply and sewerage (WSS) system was Joseph Chamberlain, who argued in 1884 that "It is difficult, if not impossible to combine the citizens' rights and interests and the private enterprise's interests, because the private enterprise aims at its natural and justified objective, the biggest possible profit." 
  Water was considered a public health necessity—rather than a commodity—and potable water was supplied "with the goal of universal provision [priced] on a concept of social equity: household supply was not metered, and bills were linked to property value." Local government subsequently maintained responsibility for most water supply and all wastewater services—assisted by central government subsidies—until 1974, when the ten Regional Water Authorities (RWAs) were created, through Geoffrey Rippon's Water Act 1973 under Edward Heath's Conservative Government.
  These Regional Water Authorities took over the supply of water from 198 statutory water-supply undertakings, entities that included 64 local authorities, 101 joint water boards of groups of local authorities acting as separate legal entities, and 33 private companies. Sewerage and sewage disposal had been dealt with by more than 1,300 country borough and county district councils. Daniel A. Okun, an environmental engineer and internationally renowned figure in the field of water supply and water resources management, regarded the RWAs as "pioneers of their era." This "trailblazing" concept of a single authority, based on a river basin or watershed, being responsible for water extraction, water supply, sewage treatment and environmental pollution prevention, led to "considerable efficiency gains." Despite these efficiency gains, the RWAs were hampered by chronic underfunding and lack of investment from central government. Underinvestment in infrastructure combined with sustained water pollution by industry contributed to a continued decline of both river and tap water quality.
  By 1980, investment in the water sector was just one third of what it had been in 1970. Margaret Thatcher's Conservative government, which had been elected in 1979, had curtailed the RWAs ability to borrow money they deemed necessary for capital projects. Daniel Okun said: "Before, they could borrow money everywhere easily. They could get money at very good rates. Restrictions on external borrowing prevented the [RWAs] from getting capital. They were considered ineffective because they could not borrow money. Thatcher prevented them from borrowing and then blamed them for not building." When the European Union introduced stricter legislation on river, bathing, coastal, and drinking water quality, the sector was in no position to meet the expenditure requirements and the UK was prosecuted for noncompliance. Estimates of the capital expenditure required to achieve EU standards and meet the existing backlog in infrastructure maintenance ranged from £24 to £30 billion.
caption: Joseph Chamberlain (1909)
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