Community benefits

'Turbo-consumerism' is implicated in the worst economic crisis for generations. Barrie Clarke asks if it is time for a new definition of the consumer interest

Many of Britain’s decision-makers are in a funk about how to drag the nation out of its economic hole.

There seem to be two camps. One – call them pragmatists – want a return to growth, quickly.

The other – reformers – says it would be crazy to go back to ways that have caused such mayhem. Who should get the vote of public service companies in general and water companies in particular?

From most perspectives, this is easy. Long recessions hurt people and the economy and threaten democracy. The business of public service, like all business, works best in stable conditions. If the main need is swift action (and it is) let us get on and do what it takes. The pragmatists have it, and we can only hope that quantitative easing, car scrappage and the other interventions restore sustainable demand before too much damage is done. And yet if you have even slight misgivings about a rapid return to ‘business as usual’, one theme in the current debate might interest you. It concerns links between the crash, financial markets, and the real economy and offers food for thought about consumer policy. It goes like this.

Flawed economics

The global collapse was caused by flawed economic policy as well as reckless financial doings. Differences of approach between the big economies led ‘creditor’ nations to invest in securities created by banks in ‘debtor’ countries.

The flow of funds kept interest rates low and economies humming. When the securities proved insecure, the house came down.

Confidence in the self-correcting capacity of ‘efficient’ markets was shattered. The

consequences were devastating – for finance but also real-world goods and services.

Loose interest rate policy caused a boom – great for everyone who gained from above-trend growth year after year, but politically almost impossible for the authorities to stop. Rampant consumerism was implicated in the collapse.


On this analysis no wonder there is pressure for reform. What one writer calls ‘turboconsumerism’ is accused of everything from destroying communities and undermining democracy to trashing the environment.

There are calls for a new definition of consumer interest. The only focus now is individual need met by low prices, cheap debt and shopping therapy; in future it should be wider and include the value to individuals of community activity and services.

Even as pragmatists, this version of events may make us think. Everyone in the community has a citizen’s right to clean water, a right of a different order from consumer rights as normally understood. Yet the way the service is presented and promoted makes little of this difference.

Companies, regulators and government are united in putting the consumer at the heart of water service planning and investment.

Customers pay, so this is right and should continue, because despite big achievements, there is more to do in customer service.

Sovereign or divine
But while consumer rights may be sovereign they are not divine. Post-crash this may make a difference. The Consumer Council for Water is

aware of the problem without, perhaps, appreciating its implications. It asks why the industry does not do more to explain how its customers’ money is used. The answer is that a great deal is done, but the task is problematic because much of the work is undertaken for society, not the consumer. It is not an individual service and not easily included in the popular definition of consumer interest.

Perhaps it would be better to put more emphasis on the benefit to the individual of service provided to the community. This may be a big ask for the consumer lobby and politicians used to claiming that people have a right to more and more for less and less. Regulators may have a different perspective, but whatever happens, the industry cannot do it alone. A determination by the whole sector to explain better would be needed.

Short-term, pragmatism may win the day. But the issue is on the table. Last month, the president-elect of the Institution of Civil Engineers explained how he saw the boom.

“We’ve ended up in the last few years on a raft of consumerism and neglected our basic infrastructure. The future is about providing infrastructure for a civilised society and that depends on things such as water supply, wastewater treatment and drainage.”

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