Saturday, July 30, 2011

Common Ground

In the late 19th century, England’s growing industrial cities began to cast about for clean water in the uplands. Birmingham Corporation and the infant London County Council both coveted the resources of the Elan valley in Radnorshire and in 1892 it was Birmingham that succeeded in obtaining the powers to acquire it and build the first of what are now seven dams on the Elan and its neighbour, the Claerwen. By 1904, water was flowing, entirely by gravity, 73 miles to the Frankley reservoir on the city’s edge. The mountains of Radnorshire drain swiftly into Mercia. Beyond the county’s eastern limit at Hergest Ridge, no higher ground intervenes this side of the Urals.

Though London lost, its ambition can only be admired. From the Cambrian Mountains to the capital is twice as far as to Birmingham. Today, it still seeks additional sources of supply from the Severn and Wye. Bristol too, despite its network of local reservoirs to collect the waters of Mendip, takes half its supply from the Severn via the Gloucester & Sharpness Canal.

Other losers included the communities of the old Elan valley, some 100 inhabitants displaced by the rising waters. The landowners were compensated; the tenant farmers were not. Among the buildings drowned were two small country houses, shown in evocative photographs in the Elan Valley Visitor Centre. One was Cwm Elan, where the poet Shelley stayed after being sent down from Oxford for writing The Necessity of Atheism.

Birmingham became the owner of 45,000 acres of water gathering-grounds in Radnorshire and its three Welsh neighbours, upon which were constructed the dams, control towers, roads, bridges, workshops and all the paraphernalia the project demanded. Including a new settlement, Elan Village. Beginning as an encampment of wooden huts, it had by the First World War become a tiny garden suburb with homes that would not look out of place in Bournville. Birmingham’s most distant council housing came complete with a school (below), the city’s arms carved on the bell-tower and its motto, ‘Forward’, underneath.

All passed to Welsh control with local government reorganisation in 1974 and then in 1989 into private ownership. A group of councils, led by Birmingham, challenged the arrangements for water privatisation, pointing out that they had never been compensated for the loss of their assets because the original transfer had been made within the public sector. They ended up the victims of a very artful conjuring trick. The regional water authorities that were to be sold had first been constituted as bodies made up of councillors from across their areas, then slimmed down in 1983 to bodies with a tighter executive focus, appointed by the Secretary of State, until finally they were described by the Minister responsible as “Companies Act companies in all but name”. An astonishing description of what at that time were not just businesses but public bodies with most of the extensive regulatory powers over water that today are held by the Environment Agency. The judiciary, naturally, ruled that Parliament could do as it pleased and the councils went away empty-handed.

Birmingham ratepayers saw more than their investment in water wiped out. When the electricity and gas departments were nationalised in the 1940’s, the outstanding capital debt was bought out too but not the value of the assets. When the Birmingham Municipal Bank merged with the Trustee Savings Bank of the Midlands in 1976, Birmingham councillors continued to sit on the board of the merged bank. But regional TSBs then combined into one national bank which ultimately floated itself on the Stock Exchange to raise capital for expansion, and to resolve the so-called “problem” that technically no-one actually owned it. Like most privatisations and demutualisations, it was free money, built up over generations, given away in one. On top of all this, the sale of council housing at outrageous discounts created the expectation of political payback and tied millions into debt-based finance.

In contrast, private owners of capital have always been treated with grovelling respect. Almost all of the Attlee nationalisations were funded by issuing Government stock, the interest on which was to be paid from the profits of the industries acquired. Coal was the great exception. The pits were paid for in cash because the mineworkers refused to go on working, even at one remove, for those whose greed had cost so many lives. Elsewhere, the deal was a very good one for investors. The financial decline of British Railways that led to the Beeching report in 1963 was partly precipitated by the need to pay interest on British Transport 3% Stock even in years when losses were made. Shareholders would have had to go without a dividend. Stockholders benefited from a brave new world of ‘heads I win, tails you lose’.

Under Thatcher, a policy arose of attacking every safeguard that prevented nationally, municipally and mutually owned wealth being shovelled into the pockets of the regime’s best friends. As a despotic Parliament repeatedly told equally elected bodies how to organise their affairs, respect for property rights became shamelessly one-sided. The point is taken. Fairness dictates that, when the wheel of political fortune has turned full circle and the common wealth is taken back into common ownership, not a penny in compensation need be paid. Not one penny. It would be unforgivably rude even to think of asking.

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