The Stinky Problem: Polluted Waterways and Privatisation

During the summer, a local park was engulfed by an unbearable stench for weeks without end, worsened by hot weather. Passing the bridge over the River Moselle, the water was deeply polluted – oozing with a milky substance that seemed vomited with scattered plastic laying dead still. It was an ugly scene that I could not bear for longer. Not only was it visually revolting, it was so repelling that you could not enjoy the park. I did what any other responsible citzien would do, of course, I contacted the council (I don’t have all the time in the world, I just care more – in my defence). I think that if nobody makes a squeal, then local authorities who are responsible will be far too lax.

Meanwhile, I dived in, finding out that plumbers accidentally interconnect separate pipes, causing sewage to flow out into our rivers. Occurring when rainwater drainage pipes are connected to foul water drainage pipes during renovations, new constructions, or extensions. You only had one job! The aim of combining the pipes in parts was so that during heavy rainfall, the surface water would sink into the sewage water to dilute it. Now, it is happening the other way round due to ageing infrastructure. It’s estimated that 1/5 properties have misconnections – washing machines account for 35%, sinks (10-15%) and toilets form a small yet considerable 5%. The pollution can increase the concentrations of E. coli bacteria (as recently identified to be up to x10 higher than the safe amounts in the River Thames). For those who bathe, swim, paddle, canoe or fish in the river, they have been warned of the serious health consequences, such as kidney failure or sepsis.

To my dismay, a response came a few months later, but it seemed that responsibility rested elsewhere (*cough cough Thames Water).

“Thames Water are responsible for delivering a Surface Water Outfall Programme which systematically traces misconnections on private properties e.g. where plumbing has happened into surface water sewer rather than foul sewer, which can then result in cumulative pollution in the outfall and in return into the River Moselle. This programme seeks to engage with property owners in order to rectify misconnections in Haringey and mitigate pollution into the catchment.

The Council are collaboratively working with Thames Water and other key organisations Environment Agency, Haringey Rivers Forum, Thames 21.”

– Nature Conservation Officer

Our overburdened ancient sewage system due to an increased population has not seen major investment since its inception in the mid-1870s. After a century and a half, a super sewer has just recently been constructed, due to start operations next year. The objective is to capture more than 95% of sewage spills that enter the rivers, hoping to significantly improve water quality, improving the environment for wildlife survival.

New building developments will increase the demand for better sewage capacity, whilst increasing the risk of flash flooding due expanding concerete and tarmac. Last year was named the 6th wettest year by the Met Office since records began in 1836, contributing to a doubling from 1.75 million to 3.6 million hours of raw sewage spilt into rivers last year compared to 2022.

Due to austerity, there has been reduced funding to the Environmet Agency, water sampling falling by 50% between 2013-2019. Although there is good news that now 100% of storm outflows have been fixed with a monitor – helping hold water companies accountable for the reckless spillage of sewage, only 60 prosecutions against water companies have been given since 2015. The Industry and Regulators Committee in Parliament approved improved monitoring measures, and linking executive pay to performance. Water company bosses are reported to have profitted over £25 million in bonuses over the past few years. The Government claims that unlimited fines are now introduced and OFWAT’s increased powers will ensure enviromental performance is linked to dividend pay.

The Committee noted that OFWAT has failed to ensure companies invested effectively in infrastructure, choosing to prioritise keeping bills low over the sufficient amount of funding required to maintain environmental standards. It is now a well-established fact that water companies have been overly fixated on financial returns to shareholders at the expense of the environment, operational performance and long-term financial prospects.

However, the prospect of increasing water bills by 6.2% in England and Wales this year depends on OFWAT’s decision. By 2030, companies are asking for increases up to 70% to deliver improvements to infrastructure, which is unaffordable and hard-hitting for struggling families. Disproportionately, Welsh households have spent 27.2% of their household disposable income on paying water bills. In Scotland, 97% of household water and sewage charges are collected by local authorities for Scottish Water (the UK’s only publicly-owned water supplier), linked to Council Tax’s banding system, where discounts for poorer families also apply to their water utility fees.

What could be done?

Immediate changes:

• Government should help resolve the trade-off between balancing water bills during a cost-of-living crisis for worse-off customers and meeting the urgent demand of improving infrastructure that perpetuates the problem.
• Social tarrif schemes are currently limited and relies on public consultations that ask wealthier customers to approve subsidising for poorer customers. The Consumer Council for Water suggested that companies should use funds from their investors, shareholders, or parent companies to support struggling customers instead to ensure help. The Committee recommended that a baseline social tarrif for all customers is in place to protect from price rises, regardless of who supplies their water.
• Giving OFWAT the powers to bar directors of companies that are responsible for serious pollution incidents from working in the sector, necessitating individual responsibility.

Time to rethink privisation:

Sold to the public to promote investment, efficiency, and its ‘democratisation’, in 1989, the UK became the first (and still is one of the only countries) to return to water and sewage company privisation that was unseen since the end of the 19th century. A nationalised model for water and sewage was seen as lethargic and incapable of improving service quality due to a lack of incetivisation by profits, a market-based approach seemed to be the solution to everything.

It was never realised that compeitition would be non-existent as these companies operated in regional areas (they are natural monopolies) and the breakout of newer water companies would be unnecessary and thus unprofitable, contributing to underinvestment and the exploitation by these companies due having guaranteed customers. Unfair bills became commonplace due to no alternatives for locals and now household bills have increased by 40% since privatisation.

Despite criticisms regarding an increase in sewage outflows, Scottish Water tops the list out of twelve British water and sewage companies based on customer satisfaction. The state-owned model tends to have better transparency and independent, high-level scrutiny – with the public verdict on performance given through the ballot box. However, there is the risk of politicising water bill costs rather than being reflective of industry needs. Moreover, it must be stated that significantly less water is monitored in Scotland – at a dire 4%.

Thames Water is creeping towards bursting, renewing fresh discussions in regards to the future of our current model of water utilitisation. If fresh capital isn’t injected to cover the £18.3 billion debts, the failure to repay would mean the company will enter temporary renationalisation under OFWAT. The existing investment will be wiped out, meaning the shortfall will be paid by shareholders (rather than the taxpayer, hoorah!), though British university lecturers’ pension fund is their second biggest shareholder (as an example of its potential effects and how muddled it all has become). Though it is only 8.5% of UK pension funds that own these companies.

Nationalisation is thought to be in the best interest of consumers – lower bills in the long-term are not that straightforward, but can allow for greater consumer surplus, especially at a time of dipping household disposable incomes if the state properly invests. In public hands, the government would be able to borrow with lower longer-term interest rates than the private sector to plug the investment gap. Right now, talks of renationalisation can act as a deterrent to overseas investors betting on funneling money into our utility sector when the state itself is lacklustre when it comes to spending commitments due to a strained Treasury, especially when the takeover value was at £90 billion in 2018.

There is also doubt whether public ownership could match the increase of productivity by 64% since 1994 in the water and sewage industry. There are other options to consider, such as Glas Cymru, which bought Welsh Water for a £1 after its financial demise, and operates as a company ‘with no shareholders’, run for the sake of public benefit – reinvesting any profits or keeping a slice as an equity buffer. How is it different from nationalisation? Well, under this model of ‘mutual benefit’ (not-for-profit), public sector debt would not increase, but losing shareholder accountability would need to be replaced by alternative mechanisms to ensure efficiency, such as appointing members that hold the Board to account in Welsh Water.

Mutualisation of English water and sewage companies would entail transferring the debts and assets of current companies to trusts that will use bond issues to buy out equity investors’ stakes, or through local authorities being minority shareholders, owned directly by customers. The money shipped abroad to shareholders will thereby be returned back where it belongs.

No matter what happens, this topic is endlessly recycled by the water wheel, and has the potential to become an election debate if it isn’t already a common disgruntling matter. Although sewage spills are often painted as a local issue, it is most definitely a national one, but often doesn’t get the attention it deserves by Westminster.

Whatever you think about it, we’re all in deep shit anyway.

Edit:

*Mistakenly claimed that water companies are raising prices (but this is determined by OFWAT after factors are considered).

*Scottish Water has significantly lower amounts of water monitoring in comparison to England – did not shed light onto such a fact.