The amount of sewage found on bathing beaches may not seem directly related to privatisation. But the huge improvement in the number of “items a kilometre” on Welsh and English beaches after Britain sold its sewage treatment plants to private firms is a compelling argument in favour of privatisation.
Before privatisation only 66% of Britain’s bathing beaches met European standards. Afterwards, more than 90% complied.
The reason for the dramatic improvement was that before privatisation conflicts of interest prevented the British government from effectively regulating sewage treatment and disposal.
Once it had sold its sewerage works, it was free to assume the role of a tough regulator. It promptly cracked the whip, compelling the newly privatised companies to invest in repairs to the sewerage system, the modernisation of plants and the construction of treatment facilities where none existed before.
These were investments the government, when it owned the sewerage companies, had been unwilling to make. It had other spending priorities and did not want to take the political flak for the price hikes that large capital investments would have necessitated.
Privatisation meant that public pressure on the privately owned sewage treatment firms became relentless. Britain’s public is now involved as never before.
Discharge records, concealed for decades from public scrutiny, are now widely available. One environmental group publishes a guide on how to spot and report river pollution. Another monitors and rates beaches, applying stricter standards than the government.
Yet another group, through persistent and visible pressure, has persuaded several water companies to install sewage treatment technologies far more advanced than those required by government regulations.
The public clearly holds private operators to higher standards than it did their public predecessors.
This huge gain in transparency is an interesting side effect of privatisation.
Yes, our state-owned enterprises do publish annual environmental reports which, to the untrained eye, give the impression that they are effectively policed by government regulators. But independent experts invariably dismiss these glossy brochures as “greenwashes”.
Before privatisation Britain’s utilities engaged in similar public relations exercises. But when government acts as both regulator and polluter, who really expects it to crack down on pollution it causes? Until the sewerage companies were privatised the British were kept unaware of how filthy their beaches were — a blissful ignorance that afflicts South Africans.
Privatisation is one of those polarised issues where two opposing camps have preconceptions about the other side’s view and there is not much middle ground for debate.
Environmentalists tend to be stereotyped as “anti-business” and therefore anti-privatisation. Yet, as the example of Britain’s beaches shows, some of the best arguments for privatisation have been produced by environmentalists.
People in the pro-privatisation camp also tend to assume trade unionists are in the opposition camp. This is not necessarily true.
Like pollution control, workplace safety is a life-and-death issue where it is far from ideal to have government doubling as both factory owner and inspector.
A referee who insists on also being a player creates a game riddled with unfair rules. When government runs a business it invariably exempts itself from the onerous rules it imposes on private firms, like the need to pay income tax. It also generally simplifies things for itself by outlawing competition in the markets it enters.
Some might buy the line that essential services should not be taxed or exposed to competition, but state monopolies have a habit of diversifying from their core business into running restaurants, car hire firms … none of which then pay tax.
These growths would not infuriate the private sector so much if it were not for the viciousness the sector faces if it strays on to a state monopoly’s turf.
Recent history has shown that maintaining state monopolies in the face of technological advances requires draconian laws contrary to everything an open society stands for.
The government has an important job to do: it needs to ensure that industry keeps pollution within acceptable limits, provides a safe working environment with adequate training, and does not conspire to rip off consumers. But its record of fulfilling this role when it doubles as an owner is appalling.
Robert Laing is a freelance financial journalist and researcher