How privatisation is ruining your life and putting the UK out of step with the modern world

Privatisation in the 1980s and ’90s was a flagship policy of the Thatcher era. The country’s utilities, along with two million council houses, have since been sold off. According to its proponents, privatisation would lead to greater efficiency, raise investment, promote competition and ultimately lead to a property owning, shareholding democracy. Unleashing the private sector and rolling back the state was to bring innovation. 

Some 40 years on, water, energy and social housing are all in crisis. Rivers and seas are polluted with sewage, 12 million households (over 40%) struggle to pay their energy bills, and some local authorities are close to bankruptcy due to the cost of temporary accommodation. The consequences can be dire. People die in cold homes.

England has the highest rate of homelessness of all developed countries. An all-party parliamentary group found temporary accommodation contributed to the deaths of 104 children in the past six years.   

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But while many people struggle to make ends meet, at the other end of the system privatisation created some very attractive investments. The world’s largest asset manager, BlackRock, has shares in all these sectors – our water companies, our property developers, our electricity networks. Macquarie, an Australian bank which used to own Thames Water, now owns Southern Water, Cadent Gas and the National Gas Transmission network. CKI, a Hong Kong-based conglomerate, owns Northumbrian Water, gas networks and Superdrug. And so it goes on.

Foreign governments own much of our power generation, and China, Abu Dhabi, Kuwait and Qatar’s sovereign wealth funds have stakes in our energy and water companies. Private equity firms such as Blackstone are expanding their rental portfolio to take advantage of the fact that people will be consigned to renting for longer and maybe will never be able to afford to buy their own homes. 

Read more:

• Why Channel 4 water pollution scandal show Dirty Business is the campaigning TV drama of the year
• Privatisation’s thirst for profit will never be quenched. It’s time to take our water back
• Is it time to nationalise the energy companies, railways and water suppliers?

The ultimate beneficiaries of corporate ownerships are often registered in the Cayman Islands or Luxembourg – light years away, both institutionally and geographically, from those who turn on the taps or the heating. These companies exploit their monopoly positions for profit. Using financial engineering, water companies have hiked up debts and yet failed to invest in sewage infrastructure. Both water and energy networks have paid billions in dividends. Directors are well rewarded, many receiving pay packages in the millions, financed by our bills. 

The government is on board with this system. With a revolving door between regulators and regulated, and corporate lobbying, the interests of investors prevail over those of users. Welfare policy must now be filtered through the private sector lens. More is spent paying housing benefit to wealthy private landlords than providing affordable homes.

New forms of ‘social’ housing have emerged that are better suited to the interests of investors (so-called ‘affordable’ housing and shared ownership) but fail to meet the needs of households. With our water and energy networks now in the hands of powerful global interests, regulators need to be mindful of the way their decisions will impact investors.

We have unwittingly become part of systems that are soaking up wealth and quietly creating a structural and systemic redistribution as the financial extraction, and the social vulnerabilities, join up across sectors.

The problem is not just the deepening inequality but also the narrowing of mindsets that has evolved. Basic human rights have become private commodities, allocated not according to need but to the profit motive. Portraying these systems as markets means that social exclusion is normalised and so is extreme wealth. The market narrative has been a convenient smokescreen for the trickle-up of funds to the world’s richest. 

We have a kind of dystopia where people go without food to pay bills to a system that generates more wealth for the extremely wealthy under the watchful eye of a supportive state. Social equity cannot be achieved by tweaking this model. After 40 years we need to accept privatisation has failed.

Public ownership of water utilities is normal in other countries, as are rent controls. It is the UK that is the extreme outlier with its commitment to deregulation and private ownership. Market logics must be replaced with a new ethos that puts humanity at the centre. This is not some imaginary utopia, but would bring us in step with the modern world.

Kate Bayliss is research partner at the Centre for Development Policy and Research (CDPR) at SOAS, University of London

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