In August, the Macquarie Group – the Australian-led investment bank which acquired Thames Water in 2006 – proposed a levy on each of the utility’s 14 million customers to meet the costs of bad debts and infrastructure projects.
To say this was controversial is something of an understatement. Even the Daily Mail weighed in – ‘£1.7billion profit in five years … but Thames Water still puts £29 levy on EVERY customer to cover extra costs’.(1) In more measured, but equally damning, terms, a former head of Ofwat pointed out that that shareholder dividends – funded by debt – running at 20 to 30 per cent a year meant not only that privatised companies were running short of investment capital but that they paid no corporation tax.(2)
Of course, private ownership of water supply has always been controversial. As far back as 1875, Joseph Chamberlain, speaking in support of the measure that would municipalise Birmingham’s water supply, asserted: (3)
It seems to me absolutely certain that what Professor Simon called ‘the power of life and death’ should not be in the hands of a commercial company, but should be entrusted only to the representatives of the people. I think the supply of water should not be directly or indirectly dependent on the profits of a private association.
In fact, in the Victorian hey-day of high capitalism, this argument had been largely accepted. By 1900, of the major English towns, only London, Bristol, Newcastle upon Tyne, Gateshead and Portsmouth still had privately-owned water supplies.
Ironically, London’s water had once been provided publicly – by the Corporation of the City of London. But in 1609 the private New River Company was licensed to create a new supply. This was an enterprise founded with royal support and money – James I would take half the profits. The 40-mile channel running from Hertfordshire springs to a reservoir in Islington – the so-called New River – was opened 400 years ago.
Other private undertakings followed. Parliament had originally left their boundaries deliberately vague in the hope this would promote competition but the companies soon established their separate territories. Parliament’s intentions were thwarted: (4)
The supply of water to London practically became a lucrative and, in the eyes of many, a dangerous monopoly.
London came again to public ownership late in the game and tortuously. At the end of the nineteenth century, its water was still provided by ten separate undertakings. But dependence on private profit and the goodwill of private enterprise came to seem increasingly anomalous as the metropolis grew.
The Metropolis Water Act 1852 set standards of water purity for the first time. A Royal Commission of 1869 even recommended public ownership but the resultant act merely imposed tighter safeguards.
But times were changing. The London County Council, established in 1889, was a proudly Progressive authority, ambitious to extend its reach and committed – at least in its Fabian members – to ‘gas and water socialism’: municipal ownership of utilities.
This was more than dogma. The private companies were under no statutory obligation to supply water and they lacked the means – or, more accurately, the will – to supply upper-storey dwellings. Nor did they guarantee supplies. In 1891 only 57 per cent of homes connected to the mains enjoyed a constant supply. Moreover, droughts led to severe water shortages, particularly in East London, in 1895, 1896 and 1898.
All this at a time when Londoners paid £2m a year for water which cost, it was claimed, just £900,000 to supply – the difference went on ‘lavish pay and pensions to all the superior employés and handsome fees to directors’ and shareholders’ dividends.(5)
The LCC promoted a series of bills seeking the power to take over the private suppliers but a formidable coalition opposed these efforts. Neighbouring local councils – of a different politics but jealous also of their autonomy – resisted any attempt by London to extend its powers. After 1895, a Conservative government was equally resistant.
At this point municipal dreams took off. Both Birmingham and Liverpool had already secured supplies – under municipal control – from Wales. London looked to the same. To Sidney Webb, ‘an aqueduct from the Welsh hills’ would make ‘the “water lords” see their polluted supply obsolete.’(6)
For Webb, the scheme had the added advantage of employing direct labour. He praised the Birmingham example in which dams, reservoirs, tunnels and ‘workmen’s dwellings to accommodate a thousand people’ were being built, ‘all without the intervention of a contractor’.
The LCC’s Chief Engineer, Alexander Binnie, was commissioned to draw up plans. He envisaged seven new reservoirs in Wales and 16ft by 11ft aqueducts, 150 miles long, which transported 200m gallons of water daily to two new reservoirs outside London – all at a total cost of £38.8m. At the time Britain spent just £28.5m annually on its Royal Navy. It was a bold scheme.
The Conservative government bought time by appointing a new Royal Commission to investigate whether these plans should be sanctioned. And the companies mobilised. They promoted a rival scheme involving new reservoirs around Staines on London’s western borders and they lobbied. ‘The County Council has been captured by the labour party, and a good deal of their administrative work is done on political lines,’ they claimed – with some truth, of course, though, in reality, it was just a different sort of politics.
Webb had foreseen this in earlier struggles:
During the next few months the battle will be fought in the committee-room of the House of Commons against all the forensic talent and expert energy which wealth can enrol in defence of monopoly rights. But water companies have been beaten before and may, in a democratic Parliament, be beaten again.
He was right in the former, mistaken in the latter. Parliament rejected both LCC control and its Welsh scheme. Still, even in this hostile terrain, private ownership of water supply was deemed unsustainable.
The 1902 Metropolis Water Act set up the Metropolitan Water Board. Eight existing private companies – plus the water undertakings of Tottenham and Enfield Urban District Councils – were taken over, with £30m compensation paid to the shareholders. Henceforth, London’s water would be provided by a public utility with an indirectly-elected board comprising 67 members from all the affected local authorities.
The LCC, with 14 members, and the London boroughs, with one representative from each of the 27 new Metropolitan Boroughs, would take the lion’s share of representation. But the LCC condemned this ‘mere mockery of representation’. Even the British Medical Journal ‘favoured a municipal authority directly responsible alike to the water consumer and the ratepayers’ – in practice, the LCC.(7)
‘Water London’ – the area that the new authority supplied – covered 559 square miles and a population of around 7 million. A staff of 3463 provided over 220m gallons of water daily.
The Metropolitan Water Board naturally felt that an enterprise of this scale deserved headquarters of a fitting dignity. They chose, appropriately, to build them at New River Head on the site of the former New River Company offices.
The new building – ‘a modern expression of English Renaissance architecture’ – was designed by Herbert Austen Hall. Construction began in 1915 but was halted by the First World War. The completed offices opened in 1920 at a cost of £324,205.
The building on Rosebery Avenue remains impressive but its most striking feature is the Oak Room, formerly the boardroom of the New River Company and dating from 1693, transferred by the MWB to its new HQ – ‘one of the most remarkable specimens of a late Renaissance room in England’ and the chief reason for the building’s current grade II* listing.
This was retained for ceremonial purposes, a new boardroom to house the much larger board along with press and public was included elsewhere.
But maybe the heart and sinew of the HQ actually lies in the Rental Ledger Hall. Seen below, it looks stately but it was a once a functional space, full of clerks and desks with a large curved front counter for the public at its entrance.
A few steps away to the north is a more spectacular building which better captures the technocratic ideals of the Metropolitan Water Board. The New River Head Research Building, designed in Modern Movement style by John Murray Easton, opened in 1938. It’s a bold embodiment of a belief that progress and the people’s welfare are best served by forward-looking public bodies working for the common good.
That ideal remained though the form of public ownership would be remodelled – firstly, with the creation of the Greater London Council in 1965 and a reconstituted board and, more radically, in 1973 with the creation of ten new water authorities nationwide based on river basins and catchment areas. Thames Water, with a Board of 60 indirectly-elected local authority members, covered an area from Wiltshire and the Cotswolds to the Thames Estuary.
This was still a recognition that the rational organisation of national assets lay best in public hands. And then the world changed. Mrs Thatcher privatised water supply in 1989 and Thames Water became Thames Water Utilities Limited.
The new company moved its head offices to Reading in 1992 and its New River Head HQ was converted into luxury flats. The Research Building followed – another luxury development of 35 flats – in 1998.
But companies as well as flats can be bought and sold. Thames Water was acquired by the German utility company RWE in 2001. They, in turn, sold off Thames Water’s British operations to Macquarie five years later.
Of course, a regulatory framework remains. Ofwat exists to protect consumer interests. But, to many, the arguments for public ownership of water supply remain as potent today as they were when the Fabians campaigned against the ‘water lords’ of the Victorian era.
(1) Sean Poulter, Daily Mail, 12 August 2013
(2) Oliver Wright, ‘Water companies told to stop siphoning off cash to foreign owners’, The Independent, 17 July 2013
(3) Quoted in CM Knowles, Municipal Water, Fabian Tract 81, February 1898
(4) Metropolitan Water Board, The Water Supply of London, 1937
(5) Sidney Webb, London’s Water Tribute, Fabian Tract 34, revised edition January 1898
(6) Quoted in John Broich, London. Water and the Making of the Modern City, 2013. Other detail and some quotations which follow are also taken from this source.
(7) British Medical Journal, ‘The London Water Act’, January 3 1903
My thanks to the helpful staff of the Bishopsgate Institute for access to their early pamphlets on London water and the MWB and for permission to use the images above.