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Thames Water is a stereotype for everything wrong with neoliberalism. Privatised under Margaret Thatcher, the corporation was meant to bring efficiency and innovation to London’s creaking Victorian water and sewage system. It didn’t work out that way. As Gill Plimmer and Javier Espinoza at the Financial Times reported in 2017:
“Floated on the stock exchange in 1989, the group was acquired by German utility RWE in 2001. Since December 2006 Thames Water has been owned by a consortium of institutional investors, including funds from China and Abu Dhabi. It was managed by Macquarie Capital Funds, dubbed by Australian newspapers the ‘vampire kangaroo’ for its allegedly ruthless focus on profits and tax minimisation. It sold its final stake in March to Kuwaiti and Canadian investors, whose 26 per cent stake in the company is the largest single holding.”
By then, Thames Water was in serious trouble with the regulators for its persistent failure to fix leaks in the drinking water system – Thames Water has the most leaks per mile of all of the UK’s private water companies – together with a growing track record for releasing large quantities of sewage into London’s rivers and gutters. Nevertheless, despite being handed a string of £20 million fines by the regulator, the company still managed to generously reward its owners:
“At the same time as raw sewage was allowed to flow into a river lined with weeping willows and daffodils, money was gushing out of the country’s biggest water utility.
“It paid £1.16bn in dividends between 2006 and 2015, according to research by the Financial Times — a return that equates to about half of the £2.3bn of equity paid to buy Thames Water by the Australian infrastructure bank Macquarie in 2006-07.
“The paydays for the investors who control Thames Water coincided with a period when the company often paid no corporation tax, paid executives massive remuneration packages and doubled its debt — all while neglecting its environmental responsibilities on several occasions due to a failure that Judge Francis Sheridan, who presided over the pollution case at Aylesbury Crown Court this year, described as ‘borderline deliberate’.”
While Thames Water took private greed to excess, it is far from the only water and sewage corporation to fail in its basic duties. In 2019, for example, South West Water led the way when it came to pollution incidents; and even the not-for-profit Welsh Water has more than a fair share of sewage dumps.
Neoliberalism made making money a virtue in and of itself; and neoliberal governments were more than happy to turn a blind eye to the damage wrought on an increasingly strained environment so long as the cash kept flowing. But the argument that private ownership is in some way superior to public administration when it comes to the management and development of critical infrastructure like water and sewage fails in practice… and we are about to pay a big price as a consequence.
The Thatcher government can hardly claim to have been unaware of the growing risk of climate change at the time. In November 1989, the year the water industry was privatised, Thatcher made her famous speech to the United Nations. The threat to the global environment which she referred to was, and is, real enough. But the prescription was naïve in the extreme. The wide boys in the recently deregulated banking and finance industry regarded the future as someone else’s problem. Their sole concern was with the immediate maximisation of profit. And since they – or at least the hedge funds they worked for – were the new owners of Britain’s critical infrastructure – sold to them at bargain basement prices – the sole purpose of those new private utilities was to fleece the public while investing as little as possible in the maintenance and development of the infrastructure itself. To all intents and purposes, the privatised utilities became billing agencies which did a few leak repairs on the side.
Although much of the activist and media criticism of the water corporations concerned sewage spills and water leaks, these were merely the simplest of the problems privatisation failed to fix. The much bigger problem – which nobody wanted to address because of the costs involved – was upgrading the water and sewage system in preparation for a warming climate which would inevitably result in higher rainfall. If the system couldn’t cope with existing levels of sewage, what chance was there of coping as storm drains overflowed causing raw sewage to spill over into the streets, streams and rivers?
Add to this the fact that urbanisation never ceased. Another consequence of neoliberalism was that ex-industrial, rundown seaside and small town rural Britain was pushed into decline. The remaining pockets of prosperity retreated into the affluent suburbs surrounding the top-tier universities in the metropolises like London, Birmingham and Manchester. The result was that although Britain had – and has – more than enough housing to meet the needs of its population, the majority of the housing was in the wrong places. In the prosperous cities, demand for housing far outstripped supply as a new generation of university graduates sought to move-in in search of the last of the middle class jobs. And so central government and local councils were obliged to permit massive new housing developments.
These though, did not come with a plan to upgrade the public infrastructure that the new residents would need to use. This was most obvious in the massive traffic foul-ups at the junctions where the new housing estates joined the old road network. Out of site, similar poop-jams were building up at the point where the sewage pipes from the new developments joined an old sewage system designed for thousands less people. As drainage specialists Wildon UK explain:
“Flash floods are becoming more and more frequent across the UK. They cost an estimated £260 million a year and can cause significant disruption and damage to entire towns. Climate change also influences flooding, and will continue to do so over the coming years.
“In an effort to alleviate the UK’s housing crisis, the government are aiming to build 1 million new homes by 2020. While this effort could make things easier for upcoming generations, there are fears that a rush for new homes may lead to increased flood risk throughout the UK… Instead of designing homes with sustainable drainage systems, new builds are instead connected to existing drainage networks. This can overwhelm the drains, leading to a greater risk of flooding…”
Of particular concern is the high number of connected sewage overflow and storm drains which, during torrential rain allow raw sewage and runoff water to flow directly into streams, rivers and into the sea. For householders unfortunate enough to be victims of flooding, this adds an additional public health burden on top of the damage to property and the ensuing financial losses.
Three decades ago, when I researched the impact of the flooding along the North Wales coast, major floods were regarded as “once in a thousand year” events. Since then, we have been subjected to a growing number of incidents in which large scale torrential rain inundates a relatively small geographical area. The Boscastle flood of 2004 was a particularly nasty example in which seven inches of rain fell on the high ground above the village in a little over an hour. However, smaller but increasingly frequent floods of a similar kind have brought British cities to a standstill on several occasions – most recently in London this weekend. As Ivana Kottasová at CNN reports:
“When two London hospitals turned non-emergency patients away after getting flooded over the weekend, it was a brutal reminder that even some of the world’s richest cities are dangerously unprepared for the kind of extreme weather that is becoming more common and more severe because of climate change.
“Climate and infrastructure experts have been warning for years that London, like many other large cities, isn’t ready for climate change, with large parts of the city built on a flood plain and a Victorian drainage system that is unable to withstand this kind of intense rain.”
Torrential rainstorms of this kind are already baked-in; and they are going to get worse as time goes by. The government knew this three decades ago, but left it to voracious profiteering companies to build out the resilient infrastructure to meet future demands. But those companies were interested only in today’s profits not tomorrow’s problems. And so, as is the case for most of our critical infrastructure now that the climate is becoming less benign, we are simply unprepared for the challenges which await us in the very near future.
As you made it to the end…
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