Endless Sewage and Massive Unjustifiable Profits: Renationalise the Water Industry Now!

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Two weeks ago, a revenue collector from Thames Water rang me to remind me that I was overdue paying the first two instalments of my £500+ annual bill, and I spontaneously went into a rant about how it is not a water company, but an extortion scheme for providing profits to its shareholders while failing to provide the service for which it ostensibly exists — to provide us with clean water and to manage sewage.

Last week I received an automated call demanding payment, and I’ve now paid it, because there’s no solidarity movement of other Thames Water customers, in vast numbers, also refusing to pay, and I have no choice of supplier. This is a privatised monopoly, as well as an extortion racket — although I note that anyone wanting to tackle it through concerted customer action might take heart from the fact that Southern Water customers, who are “refusing to pay their wastewater bills in protest at sewage spills by the firm”, are meeting with some success in their campaign, as the BBC reported just two weeks ago. 

Like all the water companies, privatised by Margaret Thatcher in 1989, Thames Water makes vast profits while failing to do its job. In December, it announced six-monthly profits of almost £500m, and its CEO, Sarah Bentley, was paid a staggering £2m last year. Last month, responding to mounting criticism of the water companies’ profiteering, Bentley, along with the CEO of Yorkshire Water and the owner of South West Water, stated that they would be forgoing their bonuses this year, with Bentley explaining that it “just did not feel like the right thing to take performance-related pay this year.”

Just today, however, the Guardian reported that Bentley will, nevertheless, receive around £1.5m this year, with her remuneration apparently “swelled by one-off payments … as part of a ‘golden hello’ incentive package used to lure her from rival Severn Trent”, even though it is now three years since she moved to Thames Water from Severn Trent.

As the Guardian explained, “Thames Water reports show she received £548,780 last July as a ‘final buyout payment’ to compensate for share awards she forfeited at Severn Trent, and £178,000 relating to Thames Water’s performance in the first two years of her tenure”, to add to “her £750,000 salary and a £90,000 cash pension payment.” The Guardian added that she “also receives a car, travel allowance and other benefits such as healthcare cover.”

£1.5m would be an unjustifiable amount even if Sarah Bentley was presiding over a company that provided clean water and didn’t endlessly spill raw sewage into our rivers, but it is made even more unjustifiable by the fact that her remuneration is solely for providing profits to the company’s investors, who include “the Chinese sovereign wealth fund CIC, Britain’s pension fund for academics USS, the BT pension scheme Hermes, and Canadian and Australian investment giants”, as the Guardian explained.

In January, the company bowed to pressure from campaigners and produced an interactive map showing the extent of its raw sewage discharges. The link to the map no longer works, funnnily enough, but as Ash Smith, a co-founder of the campaign group Windrush Against Sewage Pollution (and also an angler and a retired police detective) explained to the Guardian, “nothing has changed, the rivers are still being used as a toilet.”

Fairford, in Gloucestershire, is just one of numerous places whose rivers are being killed by the companies that are supposed to look after our water and sewage. As the Guardian described it after visiting in January, “the storm overflow from the town’s sewage works had been discharging diluted untreated effluent into the burbling and beautiful limestone River Coln for 745 hours in a stream of effluent that first began on 23 December last year.“ Andrew Doherty, a local resident and Liberal Democrat district councillor, said that “the problem was a long running one and was down to a lack of investment by Thames Water over many years”, and it’s a problem repeated across the country.

Thames Water: the tip of sh*tberg of unaccountable private ownership

In November, the Guardian ran a commendable series of article based on detailed investigations into the ownership of England’s water companies, revealing that “[f]oreign investment firms, private equity, pension funds and businesses lodged in tax havens own more than 70% of the water industry in England”, and, as Dr. Kate Bayliss, a research associate with the department of economics at SOAS explained, “The ownership structure is such that transparency and accountability are limited.”

Of the investors identified, 17% are US firms, including BlackRock and JP Morgan Asset Management, 15% are Canadian (primarily two pension funds, Ontario Municipal Employees Retirement System and Canada Pension Plan), 11% are Australian companies, including the Macquarie Group and IFM Global Infrastructure Fund, and other investors include the Qatar Investment Authority, a subsidiary of the Abu Dhabi Investment Authority, various Chinese companies, and “the Cayman Islands-registered CK Hutchison Holdings Limited, the business empire of Li Ka-shing, Hong Kong’s richest individual.” Only 10% of the investors are based in the UK, while 18% couldn’t be identified.

Accurately describing the privatisation process 34 years ago, Ash Smith said, “The smell of privatisation and weak regulation reached far across the globe and attracted the most powerful and clever shareholders’ funds. The deal was unbelievable — buy a refundable stake in a water monopoly and feast on the guaranteed annual bills from captive customers in exchange for nothing.”

The results, disgracefully, tell their own story. Since 1989, as the Guardian explained in December, “the nine main water and sewerage companies have run up net debts of almost £54bn and paid out dividends of £65.9bn while overseeing a lack of investment.” 

Renationalise water now!

Renationalising our water supplies is essential, no matter how much it costs, because the privatised model shows how the maintenance of clean water supplies, and the management of sewage, cannot be entrusted to private companies whose purpose is to generate profits for its shareholders and its bloated, overpaid CEOs.

There’s a reason that no other country privatised its water, and, in some countries, civil unrest was required to stop it going ahead. The British walked into this blindly, as part of a sustained propaganda campaign to suggest that public ownership was bad, and private ownership was good, and that, as a result, basic utilities that we all use should be run for profit.

This lie has been exposed in every sector in which it was implemented — and it’s currently disembowelling the NHS by stealth — but it does seem that, at present, there is no bigger disaster than the privatisation of our water supplies.

I’m also pretty sure that, although city dwellers remain largely oblivious to the impact of the sewage crisis, the death of rivers, and the beaches off-limits because of sewage spills have much more resonance in the countryside, where people can see — and smell — the effects first-hand, and where they are crying out for politicians to take re-nationalisation seriously. Shamefully, only the Green Party has committed to do so, but it’s surely impossible for the current debacle to continue.

Three weeks ago, as the Guardian explained, “Water UK, which represents 25 companies across the UK, issued an apology on behalf of [the] English companies and said the public was ‘right to be upset about the current quality of our rivers and beaches.’” The industry pledged to spend £10bn throughout the rest of the decade, tripling their existing investment plans for the modernisation of sewers, with the intention being to “cut the number of overflow incidents by up to 140,000 each year by 2030, compared with 2020.” 

As figures from 2022 showed, however, that would only address half of the problem, because “Environment Agency figures earlier this year showed there were a total of 301,091 sewage spills in 2022.”

In addition, although it was announced that “[s]hareholders in water companies will initially fund the investments”, outrage greeted the additional information that, as the Guardian described it, “the costs will be recouped from customers through unspecified increases in their bills determined by regulators, in a move which threatens to add further pressure to household costs” — as well as, the paper should have noted, being an outrageous imposition on customers from an industry that has spent the last three decades “run[ning] up net debts of almost £54bn and pa[ying] out dividends of £65.9bn while overseeing a lack of investment”, as noted above.

Two weeks ago, the Guardian revealed that, in 2002, “[m]inisters were warned about the risks of private equity entering the sector but did nothing”, and, in an editorial, concluded that the only ways forward were either to “empower regulators to restrict financial engineering and prevent companies that load firms with debt from entering th[e] market”, or to “nationalise the water supply.” The editors concluded that the government seemed “unwilling to do either”, but the notion that the privatised system can be adequately regulated seems fanciful, to say the least.

Instead, surely, re-nationalisation is the only viable option, as a rather bolder Guardian article recognised in December, reporting that, according to campaigners, “Parliament could renationalise the water industry in England without being obliged to compensate shareholders, according to previous UK court judgments.”

As the article explained:

Supporters of nationalisation cite rulings from the high court, court of appeal and European court of human rights (ECHR) on shareholders’ general rights to compensation in a nationalisation.

The rulings were made in cases involving Northern Rock shareholders, who were paid zero compensation when the bank was taken into public ownership during the 2008 financial crisis.

The court of appeal ruled against the shareholders, saying: “The court would only interfere if it were to conclude that the state’s judgment as to what is in the public interest is manifestly without reasonable foundation.”

When the case was taken to the ECHR, the court ruled there was no general right to full market-value compensation. Judges said: “Legitimate objectives in the ‘public interest’, such as those pursued in measures of economic reform or measures designed to achieve greater social justice, may call for less than reimbursement of the full market value.”

As the Guardian proceeded to explain, estimates of the cost of renationalising the industry, based on research, range from £14.7bn to £90bn ”if company debts are included.”

That latter figure is a large amount of money, although, noticeably, it’s less than the cost of the government’s pojntless HS2 rail project. More to the point, though, the question of affordability can’t really be allowed to obscure the uncomfortable truth that, when it comes to water and sewage, the only acceptable ownership system is one that is committed to providing clean water and preventing sewage spills, and that is run on a fundamentally non-profit basis, as opposed to a privatised system that, however much it is monitored, still has only one overarching purpose: to make profits for its shareholders.

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Andy Worthington is a freelance investigative journalist, activist, author, photographer (of an ongoing photo-journalism project, ‘The State of London’), film-maker and singer-songwriter (the lead singer and main songwriter for the London-based band The Four Fathers, whose music is available via Bandcamp). He is the co-founder of the Close Guantánamo campaign (see the ongoing photo campaign here) and the successful We Stand With Shaker campaign of 2014-15, and the author of The Guantánamo Files: The Stories of the 774 Detainees in America’s Illegal Prison and of two other books: Stonehenge: Celebration and Subversion and The Battle of the Beanfield. He is also the co-director (with Polly Nash) of the documentary film, “Outside the Law: Stories from Guantánamo” (available on DVD here, or you can watch it online here, via the production company Spectacle, for £2.50).

In 2017, Andy became very involved in housing issues. He is the narrator of the documentary film, ‘Concrete Soldiers UK’, about the destruction of council estates, and the inspiring resistance of residents, he wrote a song ‘Grenfell’, in the aftermath of the entirely preventable fire in June 2017 that killed over 70 people, and, in 2018, he was part of the occupation of the Old Tidemill Wildlife Garden in Deptford, to try to prevent its destruction — and that of 16 structurally sound council flats next door — by Lewisham Council and Peabody.

Since 2019, Andy has become increasingly involved in environmental activism, recognizing that climate change poses an unprecedented threat to life on earth, and that the window for change — requiring a severe reduction in the emission of all greenhouse gases, and the dismantling of our suicidal global capitalist system — is rapidly shrinking, as tipping points are reached that are occurring much quicker than even pessimistic climate scientists expected. You can read his articles about the climate crisis here.

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