Thames Water

We​ needed a new bathroom, and found some plumbers – interesting, attractive young men with remarkable stories to tell about their lives and travels around the world. The most interesting of them – S.’s sister described him as ‘a hot mess’ – went home after work one evening having forgotten to tighten a nut, which led to a leak and the near collapse of our kitchen ceiling. He also attached the hot water pipe to the toilet cistern, so that every time we flushed, the boiler came on and filled the cistern with hot water. On the plus side, they were cheap – if you don’t count the money we had to pay the other plumbers later to sort out their screw-ups.

There are three things to say about this that have relevance to the sad story of Thames Water, main provider of water and sewerage services to the people of London. One is that although it might not always seem like it, there are plenty of plumbers available, whereas Londoners don’t have any choice in the matter of who keeps drinkable water flowing through the taps and takes our shit away. It has to be Thames – all too often the River Thames, in the latter case. Theoretically, householders are allowed to dig their own wells and install septic tanks, but you’d have to be desperate, moneyed, time-rich or obsessive to do it, probably all four.

A related point is that choosing better plumbers to begin with would have cost more up front, but would have saved us money in the long run. With Thames, we can’t pay them less, but – a crucial point – neither do we, as an individual household, have the option to pay them more. If I complain about the high price of my water bills, it won’t make any difference; I can’t pay less. But it wouldn’t make any difference either if I started paying Thames an extra thirty pounds a month to replace, as opposed to patching and mending, London’s network of pipes and sewers. All the tax cuts in the world cannot empower my family, as consumers, to purchase a new metropolitan water network.

Here’s the third thing about our interesting plumbers. At no point in their adventures in our house did they say: ‘Of course we’ll work on your plumbing for you. We’ll maintain it for ever, for a monthly fee. But for that to happen, you’ll have to give it to us. You’ll have to sign away ownership of your taps and your pipework in perpetuity. We’ll bank the fees, borrow money with your plumbing as collateral, write off the interest as a legal tax dodge, spend the minimum to keep your system going, take the profits, and after a few years, just when you realise our short-term fixes aren’t working, we’ll sell your pipework to some foreign companies who won’t realise the whole shonky structure is about to go belly-up until we’re safely on the beach.’

National versions of the better personal options I had could have been implemented. But they haven’t been considered. When, in the 1980s, under needling from the EEC, the forerunner to the EU, the households and businesses of England were embarrassed into admitting they needed the equivalent of a new bathroom – a deep overhaul of their broken-down old water supply and sewer system – it was Margaret Thatcher’s Conservative government that made the call. They couldn’t have got it more wrong. Eight out of ten people opposed water privatisation, but Thatcher privatised it anyway. In the Conservatives’ haste to dismantle the old state-owned water system and hand it to the private sector, they purged an industry that is only partly a natural monopoly of any user choice whatsoever. England’s plumbing was given to its new owners for less than nothing: the money the Treasury earned from the sale was £5.1 billion, less than the £6.6 billion it lost in debt forgiveness and the take-it-off-our hands dowry shareholders were given as a gift.

Over the following decades, there were many regulatory swerves, but nothing was done by either Conservative or Labour governments to fix the basic idiocy of the original scheme. It gifted the national plumbing to private – now mainly overseas – owners, assets which these owners were allowed to use as collateral to run up colossal debts, knowing they could never be sold to pay off those debts in the usual way. It gave, quite unnecessarily, monopoly rights – the rights to maintain and renew the national plumbing – to exactly the same companies. It permitted these monopolies, partly owned by the governments of China, Singapore and Abu Dhabi, effectively to tax, through water bills, the people of England, and to split the proceeds between dividends for themselves, grotesquely large salaries for executives, and funding for the maintenance of the network, a basic operation using customers’ money which mendacious politicians and lazy journalists allow the companies to present as ‘investment’, as if it were the owners’ gracious gift. If you’re paying a landlord £1000 a month in rent, and he, after months of pleading, does a £50 bodge-job on your broken boiler, is he ‘investing’ in the flat in an exciting way that’s great news for Britain? According to most politicians and financial commentators in the UK, yes he is.

The marvel of water privatisation was its creation of a system that is too expensive and too cheap at the same time. Too expensive, because while it’s not wrong for a universal network – a service that society agrees everyone must have permanent access to – to break even or to borrow to build things, it’s wrong for it to be run as a rent-seeking operation. And too cheap because even if all the dividends skimmed off our bills over the years had never been taken, it’s not clear the amount saved would have been enough to fix the system – the leaks, the water shortages and, most pressingly, the sewers.

‘Consider,’ David Kinnersley wrote in his book Troubled Water, just before the giveaway happened, ‘how much enthusiasm there would be for privatisation in Parliament or the City if it were called sewage privatisation. Although everyone refers to water privatisation, the larger utility service in the authorities to be sold off is, in fact, sewers and sewage disposal.’

There’s a lot more shit out there than there used to be. Between 1989 and 2022, the population of England grew by 20 per cent, or more than ten million people. All of England’s sewage should be treated in waste water treatment plants (WWTPs). But as well as needing to be well maintained and, if they wear out completely, replaced, these plants can treat only so much sewage. Ideally, they would process only human sewage, while rainwater would flow separately down drains into the rivers and the sea. But the private water companies haven’t done the work to separate the flows: in many cases, rainwater and sewage flow into the WWTPs together. Nor have the private water companies done the work to enlarge these combined sewer/drains so they don’t get blocked during heavy rainfall, or to expand the WWTPs so they can cope with the heaviest flow. The result is sewage pouring into rivers and the sea, more often and in ever greater volumes.

It would be convenient for the water firms to be able to blame climate change for this. But a study last year by scientists at Imperial College suggested that increasing sewage releases into rivers and the sea aren’t caused by heavy rainfall but ‘the chronic undercapacity of the English waste water systems’. Their analysis of the data suggested that some of the worst offending water companies were dumping sewage in dry weather to protect WWTPs that aren’t big enough to cope with the increased population. Government stats tell a similar story: some of England’s biggest WWTPs, mostly in the south of the country, report sewage inflows that are, implausibly, exactly the same as their maximum capacity. Rain or not, in other words, they can’t cope.

The prognosis is bleak. The rational outcome of the current crisis at Thames Water would be that the present owners would lose their money (bad news for the UK university pension fund), the creditors would take a haircut, ownership of the infrastructure would pass to a non-profit trust run by and for the citizens of the Thames Water area, and maintenance and operations would be regularly put out to tender, with at least one non-profit bid required. The trust would issue bonds to finance capital spending, underwritten by the taxpayer. But without higher, albeit progressive, bills, would this be, as privatisation fundamentally was, another way of not facing up to the urgency of rebuilding the entire network? As across the whole of Britain’s broken universal networks, the problem is framed not as ‘What must we do, and how can we use our resources to do it?’ but ‘Here’s how little money we have, what shall we spend it on?’