On the day the election was called, I turned on the tap but nothing came out. The sudden stoppage was hardly a surprise: I live in a ‘Thames Water hotspot’ and can’t drive ten minutes in any direction without encountering at least one road closure as the water pipes are dug up. It’s got to the point where I mutter, ‘ah, Thames Water’ every time I hit traffic. More often than not, the plastic barricades and temporary traffic lights duly appear, accompanied by signs bidding me not ‘to overtake cyclists’ in the narrow portion of road left.
With Thames Water likely heading for collapse, government takeover looms
Such closures punctuate the London suburbs, from the big operation which caused delays at two junctions for four months, to countless little digs at roadsides. I call them ‘digs’ rather than ‘works’: actual workmen, after all, can be hard to spot.
Thames Water, which serves nearly a quarter of England, is in crisis. The recent advisory notice to the residents of a Surrey village not to drink tap water was just the latest in a series of operational failures. The company’s ageing infrastructure leaks around 600 million litres of water a day and its failing systems have led to the dumping of billions of litres of untreated sewage into our waterways. Henley town council has just issued a vote of ‘no confidence’ in the company.
The company’s operational failings are matched by financial mismanagement on a vast scale. Despite being billions in debt – now over £18 billion – it has paid over £200 million in dividends to other companies owned by its parent group in the last five years. Investors are refusing to inject more capital, so the company has been lobbying government and the regulator to allow it to increase both customer bills and dividend payouts, the former by as much as 59 per cent over the next five years.
What does the public think about all this? If the conversation I had with local residents last week is anything to go by, they have no idea of the scale of the problem. A big hole had been dug in the street next to mine, plastic barriers and a big red sign announcing that the road was CLOSED. My suspicions were immediately aroused, but the three people staring into the hole assured me the road was being ‘fixed’ by the council.
Then we spied a ‘TW’ painted on the ground in bright blue. It was the footprint of the beast. ‘Margaret Thatcher wouldn’t have allowed this,’ someone remarked as we looked in vain for a sign detailing the duration of the works.
Thames Water was privatised by Thatcher in 1989 on the advice of the investment bank Rothschild, which is also advising the company on its current difficulties. The company’s largest shareholder is a Canadian pension fund; other investors include the Chinese government and the UK’s university pension scheme. Between 1990 and 2022, it paid out over £7 billion in dividends.
What seems likely is that British consumers will pay ever-larger amounts for less-than-potable water. With Thames Water appearing to be heading for collapse, government takeover in the form of special administration looms. Its potential collapse is one of the big crises a Labour government might have to deal with after the election. But the major parties are keen to avoid re-nationalisation. Instead, hopes are pinned on the ‘recovery regime’ Ofwat – the water regulator – is concocting for Thames Water and other debt-laden water companies. Those close to the discussions say that companies with ‘recovery regime’ status would be given more ‘realistic’ targets for reducing sewage and water leaks and outages, along with lower fines or no fines at all.
The official reasoning is that companies need ‘help’ to break the cycle of fines for breaches and under-investment. But it looks as if Ofwat is behaving like the father of the dissolute young aristocrat of yesteryear, and bailing him out again. The regulator is so enamoured that it has awarded Thames Water a prize: nearly £17 million of taxpayers’ money for ‘innovation’.
Ensuring a safe, reliable water supply for the population is one of the prime functions of government and yet the parties proposing to govern the country could hardly have any less interest in our failing infrastructure.
Is complacency part of the problem? In Britain, we tend to assume that development and GDP will underwrite our access to life’s necessities for evermore. But having spent time in less-developed countries, I think such a conviction is unfounded. Living in Lisbon – a much poorer place than tourists believe – I learnt to keep a stock of mineral water as the supply could go off without notice. In Tirana, the Albanian capital celebrated for its hipster recovery from communism, apartment blocks are decked with water tanks to compensate for the lack of a city-wide supply.
For me, the message of London’s blockaded streets is clear: maintain it or lose it. Water and sanitation depend on politics and economics in Britain, just as they do in Africa.
Meanwhile, the disruption in London looks set to get worse. In my borough alone, ten roads are to be closed for up to eighteen months. No one will be allowed to drive or park on them, and additional streets will be closed if Thames Water says so.
No one has appeared to fix the hole in the street next to me. Residents have dismantled the barricades and are driving around it. And I’ve decided to set up a rainwater harvesting system. It’s better to be safe than sorry.
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