Stockholm Water Company threatened by ideology-driven cuts and outsourcing plans

By Jan-Erik Gustafsson

In December 2006 the new liberal-conservative majority of the Stockholm City Council and the Stockholm Water Company Board announced a set of new, fundamentalist market-oriented policies for the water and sanitation provision (the VA-service) in Stockholm. The Stockholm Water Company is the largest public VA-service in Sweden. It is internationally well-known for its holistic and comprehensive perspectives. It serves most inhabitants and companies in the greater Stockholm area, and has a turnover of some 1,1 billion SEK for a billed volume of more than 100 million cubic meters per year. The water tariff is among the lowest in Sweden.

The Stockholm Water Company was one of the main initiators and sponsor of the annual Stockholm Water Symposium, which has taken place since 1991. Throughout the years a great number of water professionals have been introduced to the good competence and performance of the company. In practice, the Stockholm Water Company is a good example of applying the vision and principles of integrated water resources management (IWRM), advocated by the Stockholm Water Symposium.

Now this has to change, according to the new political majority. After a Board meeting in March 2007 the Stockholm Water Company should only deal with the “core business”. According to the politically responsible minister of the City Council, Ulla Hamilton, the company has been a “milking cow” for various projects, and the cost of the administration of some 200 million SEK is too high

From 1^st of April onwards, the Board converted the company into a corporate structure, without presenting any proper impacts analysis. The new mother company, the Stockholm Water Company AB will be a part of the Stockholm City Infrastructure Company (Stockholm Stadshus AB). The mother company will be in charge of two new subsidiaries, taking care of the core business: the Stockholm Water VA AB with the daily responsibility of provision and maintenance of the VA-service and networks, and the Stockholm Water Development AB taking care of side-business activities like the biogas production.

In addition, two non-core business companies have been set up: the Stockholm Water Construction Project AB and the Stockholm Water Laboratory Service AB. The Board has given directive that these two transitory companies should be prepared for out-sourcing. Already from the 1 July the small-scale Henriksdal Waterfront City’s research-oriented sewage treatment work has been out-sourced.

The opposition parties in the Stockholm Water Company (the social democrats, the green party and the left party) have all objected to these changes. In a common statement they write; “The rationale of the proposed changes is still kept in darkness but is supposed to be of ideological, emotional and old-fashioned neo-liberal character”. They criticize the reduction of the maintenance of the networks budget for 2007 by 100 million SEK, from a safety and environmental point of view. Furthermore, they question the reduction of the company’s own staff and loss of competences. The qualified staff has been a key factor for the renovation and maintenance of the network systems, therefor competence reduction implies “unnecessary risk and creating unnecessary dependencies to external consulting companies on a market that is not adopted to such a big purchaser” as the Stockholm Water VA AB. They conclude by saying that the inhabitants of Stockholm will be exposed to unacceptable risks, which threaten “to achieve the goals to deliver good and safe water or handling the wastewater in a responsible way, so that the environment will be protected in a long-term perspective”.

The various trade union representatives in the Board have protested against the lay off of more the 108 staff of the company as a first step of the redundancy policy. Furthermore they consider that the new policies will not deliver any long-term savings for the VA consumers, adding that the consumers will face deteriorated service in a 5 – 10 years perspective.

Embarrassing criticism has come from five professors from the reputed John Hopkins University, among them the first Stockholm Water price winner, David W. Schindler. In a letter to Ulla Hamilton they write that the downscaling of the Stockholm Water Company “is unwise and it will undermine the outstanding efforts to improve the water quality around your city”, and they are especially worried about the downgrading of the environmental control. In a response letter Hamilton claims that the professor’s worries are unjustified, and that the environmental control will continue.

The Stockholm inhabitants have expressed in various consumer polls that they would refrain from the possibility of paying a lower water tariff if it implies risk for less quality or affects the environment. Both private consumers and companies appreciate safety, competence and good customer service, and not lowering the water tariff as advocated by the new political majority.

The CEO Roger Bergström of Swedish VA-service umbrella organisation, the Swedish Water AB, considers that the development in Stockholm goes in the wrong direction. “It is a question of a downgrading spiral of the whole Swedish VA-service sector. As a matter of fact the good international reputation is in danger,” he says.

The new policy favours short-sighted and restrained “core businesses” activities at the detriment of a comprehensive sustainable development of the future the Swedish VA-service and the environment. After the reconstruction of the Stockholm Water Company, the idea is to only work with “demand-driven maintenance”, i.e. to repair when facilities and networks break, but not work with long-term preventive maintenance, development research, environmental protection, public and international information activities. Most of these are claimed to be outside of the “core business”.

The editor of the Swedish water magazine Cirkulation, Erik Winnfors, has understood the link to the Stockholm Water Company, when he writes “The drastic economic cuts in the budgets of the Stockholm Water Company implies an important mutilation of resources for Swedish water conservation. The company will lose influence…The Stockholm Water will inexorably be stripped off all but the technical operation of the VA-service…In a conspicuous way the Stockholm Water Company will now be prepared for an eventual operation contract. The French water giant Veolia must rub its hands for such a good cake.”

A longer version of this article if available at http://attac.se/file_download/791