For an insight into how the Green Industrial Complex operates, you need only look at the difference between the latest government guidance to the water industry regulator and the manner in which the regulator and the industry have been treated by the media in the last few days. Nicholas Hellen at the Sunday Times (paywall) led the charge with an article informed by “anonymous sources” setting out the way climate change is affecting Britain’s weather, and how the choice before us is to either spend billions which we don’t have any more on new infrastructure or to make minor changes to the way we use water:
“An official target has been set for every person to cut daily water consumption by a quarter by 2050, from 145 litres to 110 litres a day.”
Anonymous industry insiders point out that while people think of Britain as a wet place, in recent years it has suffered a series of droughts which are likely to continue as the climate changes. The industry regulator, Ofwat raises similar points:
“By international comparison, people in England and Wales use a lot of water. We want to see water companies helping customers to reduce their usage of water by bringing technological and behavioural changes that can help us all to use water wisely. Customers reducing their usage can help safeguard the environment and will mean that supplies last longer.”
If you think that this sounds like a pitch for introducing smart meters for water, with the intention of disconnecting profligate users, then you are probably right. However, the more profound point is that the water companies and the regulators have been able to put climate issues front and centre as a means of deflecting attention from what has to be described as damning guidance from the UK government, which regards the recent string of river and beach pollution incidents as the main issue to be addressed:
“The Environment Agency is today calling for: Courts to impose much higher fines for serious and deliberate pollution incidents. Fines currently handed down by the courts often amount to less than a Chief Executive’s salary. Prison sentences for Chief Executives and Board members whose companies are responsible for the most serious incidents and company directors struck off so they cannot move on in their careers after illegal environmental damage.
“Emma Howard Boyd, Chair of the Environment Agency, said, ‘It’s appalling that water companies’ performance on pollution has hit a new low. Water quality won’t improve until water companies get a grip on their operational performance. For years people have seen executives and investors handsomely rewarded while the environment pays the price. Company directors let this happen. We plan to make it too painful for them to continue like this… We need courts to impose much higher fines. Investors should no longer see England’s water monopolies as a one-way bet.’”
By taking advantage of the recent run of hot and dry weather, primarily impacting the southeast of the country, not only have the water companies buried a negative story, but by making us the problem because we allegedly use too much water, they are able to signal their virtue without mentioning their habit of dumping raw sewage into our rivers.
By making reference to the industry’s investors and CEOs, the Environment Agency opens the door to an alternative way of looking at the story. Because, while it is true that Britain is currently going through a dry spell, it is mendacious to claim that the British Isles – located in the path of both the Gulf Stream and the Jet Stream – are anything but wet. Indeed, even as parts of outer London were spontaneously combusting a couple of weeks ago, the good people of Northern Ireland and northern Scotland were wearing raincoats and carrying umbrellas. Similarly, while London is expected to be basking in 35-degree sunshine at the end of this week, Inverness faces a high of just 22 degrees with bands of rain blowing in off the Atlantic for the weekend.
This suggests that when it comes to the water industry, Britain has an intermittency problem of its own. These Islands get more than enough rainfall to meet our agricultural, industrial and domestic needs. The trouble is that too much of it falls at the wrong time of year, and usually on the Celtic fringe, far from where the majority of the British people live. This, in turn, suggests that Britain has an infrastructure problem – not enough reservoirs – which can also act as pumped hydro for balancing intermittent renewable electricity – in the places where the rain falls, and not enough of a pipe grid to pump the water from where it is stored to where it is needed.
On top of this lack of what ought to have been critical infrastructure there is the secondary problem that Thames Water – the company which supplies London and most of the southeast – is by far the leader when it comes to leaks and to failing to modernise its network of pipes. Even Ofwat concede that this is a problem although they focus on those companies that have taken action rather than highlighting the ones that have not:
“A reduction in leakage is also key to ensuring that we have the water we need for the future. At Ofwat, we’ve tasked water companies with cutting leakage by 16% in the five years to 2025.
“Last year, 13 of the 17 water companies met their leakage targets and we saw an overall reduction of leakage by 4%. Since 2017-18, leakage is down 11%. Companies are on the right path, but there is a lot more to do.”
So here’s the thing, when water was privatised in July 1989, and in the face of 80 percent opposition from the British people, the promise was that the supposedly more effective private sector would invest in precisely the kind of infrastructure which the companies are now telling us that we can no longer afford to build. The supposed reason why we were asked to pay additional charges so that the companies could attract investors was that this would save us from a repeat of the summer of 1976, when domestic water supply was turned off and people queued for their water ration at a local standpipe.
Those water investors did very well out of the deal. As Sandra Laville at the Guardian reported a couple of years ago:
“English water companies have handed more than £2bn a year on average to shareholders since they were privatised three decades ago, according to analysis for the Guardian.
“The payouts in dividends to shareholders of parent companies between 1991 and 2019 amount to £57bn – nearly half the sum they spent on maintaining and improving the country’s pipes and treatment plants in that period.
“Critics say while continuing to pay huge dividends they have failed to carry out significant national infrastructure works to improve the water and sewerage system.”
A report by the Public Services International Research Unit (PSIRU) at the University of Greenwich raises the same complaint, claiming that the water companies have acted like an ATM for shareholders:
“The 40% real increase in English water bills since privatisation in 1991 has not been due to higher investment, as claimed by OFWAT and the companies themselves, but is a result of ever higher interest payments on £47 billion of debt, accrued due to £50 billion paid in dividends to shareholders…
“The companies could have funded all of their operations and investments from customer bills, without taking on any debt whatsoever. The £47 billion of debt, and the interest we pay on it, is simply down to a systematic extraction of shareholder payouts far in excess of any available cash surplus.”
Britons facing a ban on watering their gardens are hardly about to draw sympathy from the millions of people around the world who only have intermittent access to clean drinking water. And it is certainly true that we all too often take the privilege of abundant drinking water for granted – so much so that we defecate and urinate into it. On balance, it is likely true that we can save a considerable volume of water by such simple means as taking a slightly shorter shower, showering slightly less often, and only using dishwashers and washing machines when we have a full load. This said, the very last people to be lecturing and hectoring us on this are water companies which have been scamming us for decades and a regulator that has happily turned the other way while they were doing it.
As you made it to the end…
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