Thatcher's Water Sell-Off Plan Is Proving Costly

PRIME MINISTER Margaret Thatcher's resolve to privatize the nation's water supply is meeting powerful resistance. It is coming not only from an increasingly confident Labour Party opposition and an array of conservation groups but - most worrying for a leader who prides herself on being on the same wavelength with ordinary people - from a hefty segment of public opinion.

At the same time Britain is under pressure from the European Commission in Brussels to upgrade the purity of the nation's water. Unless excessive lead, aluminum, and other poisons are removed from British water, the Commission is threatening to bring Britain before the European Court in Luxembourg.

In theory, placing water under private ownership ought to be a straightforward matter for a politician as resolute as Mrs. Thatcher. In theory, too, the sale of the country's 10 publicly owned water authorities should reap a healthy financial harvest for the exchequer.

In practice, however, the water ``flotation,'' worth about 6 billion ($9.6 billion), is proving an expensive political exercise. Thatcher's minister for water, Michael Howard, is having to take special measures to encourage investors to buy shares in water later this year when they go on the market. The government will give the newly privatized water companies a ``green dowry'' consisting of a free cash gift of 1 billion, plus a debt write-off worth 5 billion. As a result, the financial profits to the government will be negligible.

Thatcher also decided to go ahead with another highly unpopular measure: allowing the private water companies to increase their prices to the consumer by an average of 5 percent above inflation every year until the end of the century. Part of the price increase is being officially justified by the need to improve water purity standards in line with European Community (EC) directives. The government admits that more than 2 million people live in areas where concentrations of lead in water are excessive. The cost of meeting EC standards is estimated to be between 12 billion and 15 billion.

Labour Party leader, Neil Kinnock, says moving water into the private sector is against consumers' interests. Friends of the Earth and many conservation groups around the country complain that parklands as well as lakes and reservoirs will become the property of the water companies.

A recent public opinion poll by the Harris polling organization concludes that nearly 79 percent of the population is against the sell-off of water; 84 percent say they will not be buying shares in the privatized water utilities.

Despite public opposition, Thatcher sees the water sell-off as a central aspect of a much larger program. Now in her third term as prime minister, she sees completion of industrial privatization as one of the jewels in the crown of Thatcherism.

She is well along with plans to privatize electricity, and plans to put the rail network and many coal mines into private ownership. If she is defeated over water, other aspects of the sell-off program may falter also. Her opponents are going to resist all the way.

John Cunningham, Labour's environment spokesman, has attacked the water sell-off as ``mindless dogma harnessed to undermining the public interest.'' He accuses the prime minister of endangering huge tracts of Britain's recreational parkland. Private companies, Mr. Cunningham says, cannot be trusted to maintain water quality standards.

``By definition, they [private companies] will put profit at the top of their priorities.'' To blunt criticism of her plans for water, Thatcher has moved Nicholas Ridley, her unpopular environment secretary, to another Cabinet position and replaced him with Chris Patten, a youthful left-of-center Conservative. The government also plans to step up an already vigorous national advertising campaign to popularize its water message.

With her parliamentary majority of more than 100 votes/seats, Thatcher is certain to get the water legislation she desires. But opposition leaders promise that when parliament returns next month they will spare no effort to bring the water debate to a boiling point.