Nationalisation. IMO there are certain essential services which should not be run for the financial benefit of shareholders.
Absolutely. The argument for privatisation was that the private sector would run this stuff more efficiently. Turns out that's horseshit, apparently, and was the justification for the effective asset stripping of our networks to give money to shareholders.
although, part of me thinks they’ve always pumped this much shit into the rivers and sea, its just the reporting of it is better than it used to be.
I don't think it is because the reporting is better now, it's because as the Tory MP says it was considered more acceptable in previous times. His suggestion that it didn't really cause any harm is nonsense though.
You can't justify poor public health standards today by claiming that standards were worst in the past.
The reason that the Victorians built an efficient sewage system for London (a public sector project carried out by the local council and paid for with public money) was because the Great Stink of 1858 offended the noses and sensibilities of parliamentarians as they sat in the Palace of Westminster.
You've got to rub their nose in it.
I keep reading about beaches losing blue flag status, which, while not a definitive indicator, is certainly not a sign of progress.
The problem with going straight for nationalisation is that we'll have to pay the shareholders.
Privatisation should have been done like the railways (still not good but better). You get the "franchise" with conditions. If you don't meet the conditions, you don't get the "franchise" renewed.
That didn't happen so the fines need to go up to a point that the companies either meet their obligations or the value of the company goes down to something sensible for nationalisation.
The problem with going straight for nationalisation is that we’ll have to pay the shareholders.
You have to assume that shareholders have only invested in the water industry because they see it as a sound investment, whatever the cost of the shares. Therefore it would also suggest a sound investment for the government.
Although I'm liking your suggestion of fining the industry to the point where the companies become worthless. Unfortunately they would pass the cost of the fines onto their customers, as they intend to do with the cost of the necessary investment.
Straightforward nationalisation is needed, as occurred under the Victorians. Margaret Thatcher claimed to have admired Victorian values and in turn the current UK Prime Minister claims to admire Margret Thatcher, so there should be a wide consensus.
I don’t think it is because the reporting is better now, it’s because as the Tory MP says it was considered more acceptable in previous times. His suggestion that it didn’t really cause any harm is nonsense though.
You can’t justify poor public health standards today by claiming that standards were worst in the past.
i'm not trying to excuse the behaviour. I've been surfing and kayaking in the sea and rivers for the best part of 30yrs. I don't think water quality has got significantly worse in that time but the public awareness of it has increased massively. this is a good thing.
it should have got significantly better but chronic underinvestment means it hasn't, and there is no motivation for the water companies to invest. as above, they need to feel the fear of losing the franchise if they don't measure up.
although, part of me thinks they’ve always pumped this much shit into the rivers and sea, its just the reporting of it is better than it used to be.
Its definitely increased. You probably all already know this but one of the problems is how CSO's (combined sewer overflows) are/have been used. Traditionally the sewerage systems in the UK have been designed based on long duration, low insensity rain fall, so CSO's didn't get used that much, as large flood events were not that frequent.
Nowadyas we have lots more short duration, high intenensity rain fall events which means the CSO's end up being used more often. As time goes on and we continue to remove surface water from combined/foul water networks this will improve, but that will take major investment and freakin years to do it!!
I agree with all the above and Water companies should not be shoving this back on us.
That didn’t happen so the fines need to go up to a point that the companies either meet their obligations or the value of the company goes down to something sensible for nationalisation.
+1
Although it is slightly more complicated in reality as the companies are limited in what they are allowed to charge and thus spend on repairs and upgrades. If you want to undertake a project that's beyond the normal budget for repairs and maintenance you have to to go to Ofwat and get permission as it will impact on peoples bills.
Secondly, a lot of the water companies are massively in debt. Between bonds and bank loans Thames Water has about £12Billion in debt on it's accounts. That's 10x it's turnover.
Thirdly, Thames Water hasn't paid external dividends for 5 years, although it has made payments to it's parent company circa £3-£33million a year.
Fourthly, Thames Water's record profit last year wasn't down to water bills apparently, but down to "financial instruments". I'd have to dig into the accounts beyond the summaries to see what that actually means but I'd guess either it's either to do with the debt or to do with the energy prices either they've benefited from what they generate or they had long term contracts with suppliers that meant they had energy below the market rate.
The problem with going straight for nationalisation is that we’ll have to pay the shareholders.
One of the myths surrounding nationalisation is that the government would have to pay market value for the shares, or even a premium.
Truth is, the government could legislate to acquire these companies for a penny. It wouldn't do this, but it can still pay what it thinks is reasonable. Given the level of debt it would be acquiring, the share price probably massively overvalues the asset, as it is propped up by the fact that the only thing these companies do consistently is take the money you're paying them to provide the service, and hand far too much of it out in dividends.
Even if the government was considering paying 'market value', the suggestion that it might not should be enough to bring that market value down significantly...
Truth is, the government could legislate to acquire these companies for a penny.
There is a credible case that the government doesn't need to legislate at all and that it can nationalise, whilst offering zero compensation, under existing legislation:
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.”
I think that would still be subject to a messy challenge in the courts based on whether the crisis facing the water industry is as existential as the one facing NR in 2008. Emergency measures vs prudent stewardship.
the sale/control of single use wipes would be a big help. 30 years back as an apprentice sewage fitter, wipes were really not an issue (just the std jam rags, johnny's, cotton buddies, fat and hair) - rarely saw wet wipes, now they dominate.
I think that would still be subject to a messy challenge in the courts
The wording used by the court of appeal is interesting though : "what is in the public interest is manifestly without reasonable foundation.”
'Manifestly without reasonable foundation' sets the bar incredibly low. It should be very easy indeed to prove that there is a public interest case for water nationalisation, even if some might claim that it is flimsy.
I'm not opposed to the idea, but probably the government has to limit the extent to which it rides roughshod over private investors because it needs to maintain confidence in those industries that will remain in private hands. Doesn't mean that water shareholders should get full value though, I don't mind them getting a bit of a haircut.
So have the companies not be fined over the last few years to not adhering to regulation on dumping waste, or was that the problem that waste wasnt regulated tight enough?
Also if you nationalise the companies again, doesnt that wipe big values off pension pots?
Also if you nationalise the companies again, doesnt that wipe big values off pension pots?
Debatable:
Either - everyone pays in through their water bills, improvements get made, those with assets get richer.
Or - everyone pays through taxation, improvements get made, everyone is better off*.
*just not as better off as the asset owners would have been if they owned the asset, but they wouldn't get dysentery from swimming in the river/sea in which case they'd probably agree that being not-dead trumps not making money from public services.
I don't know what the answer is, the water companies were terrible when they were state run, poor service levels and no investment, been the same since privatisation, maybe a bit better. Even if they could be renationalised without paying the shareholders there would be massive costs and upheaval to effect the transfer which would just kick improvements further down the road.
Either way the state (government) failed to have a strategic vision for upgrading and renewing our water systems and some way of funding it. Until that is addressed nothing will change regardless of whether it's privatised or not. This was why they were privatised in the first place, give the public a bogeyman to blame and get the government off the hook.
If you are joe public, you go to prison for damaging the waterways. Water companies are doing far worse on a far greater scale and there is very little repercussion.
I don’t know what the answer is, the water companies were terrible when they were state run
No they weren't, for a start water was essentially seen as a "free" and unlimited as there was no such thing as a "water bill", until Margaret Thatcher came along.
The cost was included as part of the council rates in the same way as road maintenance, education, policing, etc was. It wasn't even listed as a separate item on the ratepayers bill until Thatcher insisted that it was, despite it being a tiny amount.
The council rates system was incomparably cheaper and more affordable than council taxes are today.
The idea of privatisation of water was not sold to the public on the basis that the service was "terrible", no one at the time thought it was. It was sold to the public on the basis that it would be more efficient and therefore reduce the cost to customers.
So have the companies not be fined over the last few years to not adhering to regulation on dumping waste, or was that the problem that waste wasnt regulated tight enough?
Yeah water companies have had massive fines over the years. The problem seems to be that they just see it as an occupational hazard, and that the cost of doing what they are supposed to do exceeds the fines they receive for not doing what they are supposed to do.
One of the issues like the railways, is that the investment plans that each water company has to submit to Ofwat are only for a short 5 year period, for each of the asset management plan periods - we are currently in AMP7 which is 2020-2025.
5 years is far too short a period for this type of infrastructure.
Ok Ernie youre right* there were no Victorian sewage systems over flowing into rivers, dumping raw effluent into the sea wasn't seen as normal practice (yet alone illegal) and there was already a national water grid in place to ensure security of future supply.
* you're not.
Whatever they may have told the public the truth was the system was completely screwed and needed massive investment, it was basically still a fundamentally Victorian system and on the verge of collapse.
Whatever they may have told the public the truth was the system was completely screwed and needed massive investment, it was basically still a fundamentally Victorian system and on the verge of collapse.
That had absolutely nothing to do with the reason for privatisation and everything to do with deliberate underinvestment by the Thatcher government. By the time water was privatised Thatcher had been prime minister for 10 years and investment was a fraction of what it had been 20 years earlier...... when people didn't even get bills from the water companies!
It is like the deliberate trashing of the NHS today and in 30 years time, when people are complaining of the failures of American-style healthcare, saying well the NHS was in a mess which proved that 'socialized medicine' didn't work.
Although in the case of the water industry at no time were the public told that the industry was in a mess which needed to be sorted out. If you want to claim that was a primary reason provide some evidence.
The reasons for privatisation were clear, a neoliberal ideological commitment, at least publicly claimed if not in reality, to a 'share owning democracy', to privatise profits, undermine trade unions, and to generate income to pay for the massive Tory government failures, such as mass unemployment.
One former, and rather successful Tory Prime Minister, very aptly described it as "selling off the family silver".
It was exactly that and designed to pay for the staggering economic failures caused by a severe recession, despite the UK at the time being one of the very few oil exporting countries in the world.
The public were told that privatisation would bring in greater efficiency and consequently their water bills, which didn't even exist before Thatcher became PM, would come down.
They were also told that it would help them to become rich.
This professor of economics and public policy at King’s College London, and a former senior civil servant, explains it all here:
The reasons for privatisation were clear, a neoliberal ideological commitment, at least publicly claimed if not in reality, to a ‘share owning democracy’, to privatise profits, undermine trade unions, and to generate income to pay for the massive Tory government failures, such as mass unemployment.
I think there is something else too. Prior to privatisation the sewerage network down as far as treatment works was managed, maintained and paid for by local authorities not the water boards. By handing over these assets to private companies central government could reduce its financial support of local government.
During the time I spent as a civil engineer in Manchester City Council's main drainage department a great deal of time and money was being spent updating the Victorian era network. Much of it was over 140 years old at the time and yet a lot was in remarkably good condition but under capacity. That lack of capacity led to increased discharge to water courses from storm overflows. Part of our work was to improve/replace those old overflows.
As far as I can tell, that work stalled following privatisation and along with the increasing intensity of storms we are now in a situation worse than that prior to privatisation. Perhaps part of the issue is that Water Companies are not as responsible to local communities as the local councils were.
No they weren’t, for a start water was essentially seen as a “free” and unlimited as there was no such thing as a “water bill”, until Margaret Thatcher came along.
I am no fan of a privatised water industry at all but…
At the time of privatisation large volumes of sewage was discharged directly to the sea with nothing but rough screening and maybe basic settlement, we had no idea how many times CSOs were spilling and sludge from some of those discharges that were treated had only just stopped being dumped at sea.
In Wales at least, CSO discharge frequencies have been falling significantly over the last decade. It is only recently that we have had accurate measurements of the number and duration of spills so a lot of the current discussions have been sparked by the release of this information when in the past we lived in blissful ignorance.
I agree that shareholder dividends and senior manager bonuses are excessive and I would prefer a public owned industry. But nationalisation alone would not be a panacea. Large investment would still be needed and the savings made by ending excessive salaries and bonuses wouldn’t cover the cost of improvements. Remember that the industry is in public hands in Scotland and the situation there isn’t rosy. As far as I understand they don’t even have spill frequency monitoring on most of their intermittent discharges.
But nationalisation alone would not be a panacea. Large investment would still be needed and the savings made by ending excessive salaries and bonuses wouldn’t cover the cost of improvements.
Absolutely and precisely why I said:
That had absolutely nothing to do with the reason for privatisation and everything to do with deliberate underinvestment by the Thatcher government. By the time water was privatised Thatcher had been prime minister for 10 years and investment was a fraction of what it had been 20 years earlier
None of that undermines my comment that water and sewage provisions were essentially seen as "free" before Thatcher's premiership, as the costs were buried in people's local authority rates bills. Today I know people who seriously struggle paying their water bills.
Privatisation has not brought cost savings to consumers as it was very clearly stated that it would.
As far as CSO discharge is concerned privatisation was never offered as a solution to the problem at the time. And why would it be? Where is the evidence that privately own companies are more sensitive to environmental issues than publicly owned ones?
The report being withheld from publication predicted the state of the privatised water industry today, and warned against private equity being allowed to move into water firms.
It was prepared for the Competition Commission (now the Competition and Markets Authority, CMA) in 2002 and has never been published in full. It should have been released under the 20-year rule last summer, but despite repeated attempts to have it published it is being kept secret.
Today, as private equity dominates ownership of the water sector in England, bringing with it high levels of debt and underinvestment leading to sewage pollution, water shortages and leaks, the author of the report has called for full disclosure of his warning two decades ago.
I would honestly deter anyone from swimming in UK rivers and the sea at the moment, especially in England. It will make you ill.
It's a combination of factors coming to a crescendo:
Privatisation - taking the money and not investing
Crap govt - Rishi doesn't care, so gave us Therese Coffey
Bad local decision making - unregulated number of agri/industrial discharges
No enforcement by EA - too focused on flood management
Climate change, increased population, old pipes, wet wipes. These are minor issues which can build over time, if ignored.
BUT, the water companies can invest - Thames Water are building a new huge pipe in London, for example. They need us to make it happen.
One way is to separate surface run-off (gutters etc) from sewage. That would reduce the pressure in heavy rain but i'm not sure how workable it would be in practice.
One way is to separate surface run-off (gutters etc) from sewage. That would reduce the pressure in heavy rain but i’m not sure how workable it would be in practice.
It is workable. Separated systems (foul and storm) are the norm these days but there is a huge stock of old combined systems. Converting them all to separated would be an enormous task. Cheaper and less disruptive to upgrade existing storm overflows to reduce foul discharge to watercourses. Still a huge task but it is feasible if there is a will.
But nationalisation alone would not be a panacea. Large investment would still be needed and the savings made by ending excessive salaries and bonuses wouldn’t cover the cost of improvements
Government can always pay.
It doesn't need to save or obtain money to spend large amounts.
You are, as are lots of people a victim of the deceit of successive governments claiming they can run out of money.
Water is a fantastic example of the con-job that has been done on us all about private v state-ownership.
This stuff is done to transfer wealth from the state to a few people at the detriment of us all. That's the only purpose it serves.
The water companies are excellent examples of being wrong footed on the lie that is the private sector allocating resources more efficiently (by not allocating them) - which when you consider our it's our life blood - should be a crime.
I think we will get there on this one. Just need some politicians with spines that aren't ideologically wedded to being led by failed markets.
No enforcement by EA
Good reason for this.
Over the last decade the EA have had their funding reduced by approx 60%, with a decline in staffing of 25-40%. In that same period the number of prosecutions they've brought against offenders (of all sorts) has dropped by 88%.
The only body in place to police the issues has literally been rendered powerless by the same government that blames them for not doing enough and they're now almost completely reliant on citizen science to follow up on issues.
You'll now only see very prominent black and white cases of legal action from the EA as they will only go to court if they're 100% certain of a win - they can't risk losing as there's just not the funds.
