By Anne Penketh

The British charity Save the Children said yesterday that increased involvement by the private sector in supplying basic services would lead to price rises that would harm the world's poorest children.

In a report released before the Earth Summit opens in Johannesburg on Monday, Save the Children UK pointed to the negative effects of opening up to multinationals the ownership of public services such as water distribution in poor countries.

The British Government is enthusiastically backing the policy of extending private capital into countries where water systems do not reach the poor, which will be a central plank of the summit. But the problem was that the companies were not charities, said John Hilary, the trade policy adviser of Save the Children UK. "They don't go into the countries with thoughts of doing the poor a good turn."

Water privatization typically leads to an increase in rates. Such price increases force many people to collect water from untreated sources, exposing their children to water-borne diseases, which already kill more than two million children a year, the report says.

Mr Hilary said the privatization by the French-owned company Vivendi of the water supply in Argentina had led to a rate increase of 100 per cent. Anglian Water increased water tariffs by 100 per cent in the Czech Republic between 1994 and 1997, and by a further 40 per cent in 1999.

Charges for health care and education, as laid down by the private sector, "threaten to exclude the poorest children from access to those basic services, or drive families into poverty through having to meet the extra costs", the report says.

The formation of private-public partnerships to promote sustainable development, including clean water, education and health, is to be a focus of the summit, which runs to 4 September. The British Government is advocating the use of private capital in water facilities because the industry is dominated by firms from the European Union.

Mr Hilary said the summit was rushing to involve the private sector in development. "Where multinationals are involved, they must be carefully regulated to ensure social and environmental benefits are realized. There may well also be circumstances in which private-sector engagement is simply not the best option in the first place," he said.

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