WATER PRIVATIZATION - THE DANGERS AND THE BENEFITS

This article reviews the progress of the British water industry since its privatization in 1989. Taking an historical perspective, it examines the reasons behind the radical move to change the 10 water authorities into independent water companies. The freedom to diversify was one of the main aims behind privatization and levels of diversification between the companies are explored. It is recognized that the freedom given to the companies brings with it costs, as well as benefits. The two main areas of risk identified are those inherent in dealing in the private business sector and secondly, the risks that come with the need to meet stringent regulatory obligations. Hence an assessment of the benefits and costs, that are likely to affect the water companies, will be made. Concluding sections will look at the future prospects for the industry and the implications this has for management.