It is hard to generalise across the gas, electricity and water industries, but it seems to be the case that after an initial burst of activity when spending was indeed dramatically higher than prior to privatisation, the utilities are now falling back into bad old ways. Last year, for instance, spending across these three industries was nearly a fifth lower in real terms than the year before.
Much has been made of apparently poor investment levels in the UK economy. But if the utilities are stripped out, the position actually doesn't look that bad. Progress is admittedly not brilliant, but at least investment in the rest of the economy is rising.
So what is happening with the utilities? Are they under-investing? Both the water and electricity regulators profess themselves satisfied with the situation. What is now happening is characterised as a trough after a prolonged period of high spending. Furthermore it may be the case that the utilities are becoming more efficient in their use of capital. The water industry in particular seems to be getting a lot more for a lot less than anticipated at the time of privatisation. To some extent the benefit of this is already being shared with customers.
But this is by no means the whole story. Price controls were set on the assumption of particular levels of investment spending. As the gas regulator has already pointed out, if spending is not as great as anticipated, it means, in effect, that we are being overcharged. The evidence of this is in the huge repayment of capital to shareholders being undertaken by the electricity and water industries through share buy-backs and special dividends. These companies have got more money than they know what to do with. Rather than investing it, or cutting their charges, they are handing it over to shareholders. Nobody is saying they are breaking the rules, but there may be an element of cutting investment to maximise profits.
In the case of a monopoly utility, there is actually a very reasonable case for arguing that the money should be ploughed into investment whether or not it is commercial to do so, for there is an ill-defined general public and economic benefit in having a spanking new infrastructure. The Channel Tunnel will undoubtedly one day be of great economic benefit to Britain, but nobody would have invested in it had they not been hoodwinked into believing it a commercial enterprise. But perhaps not. Even Labour these days finds the idea of non-commercial investment a pretty heretical one. No wonder it believes the case for a windfall profit tax - an alternative of sorts - has been strengthened by the new investment figures.