From polluted waterways and dead fish to price hikes and hosepipe bans, a lot has happened to make Thames Water less than popular of late.
And it’s not just vocal environmental campaigners who have harsh words to say about the business – YouGov stats show that its consumer popularity metrics have dropped across all counts; reputation, value for money and net quality.
Last week the water company’s former boss Sarah Bentley stepped down as it was left dealing not just with stinking sewers, but less than perfect finances.
Thames Water remains in crisis talks with regulation body Ofwat, which governs the privatised water sector, over its ability to continue operating without a cash injection. The regulator described the industry as “resilient”, but there’s still been concern over whether it can continue to function without a bailout.
Earlier this week, news for the privatised water firm went from bad to worse, as it was once again told to clear up its own muck – receiving a £3.3 million fine from the UK’s Environment Agency for misleading an enquiry over the death of thousands of dead fish after a Gatwick equipment malfunction.
It’s clear that Thames Water has significant issues to address – but where can it go from here?
Thames Water: a broken system?
Former Undertones’ singer turned clean water campaigner Feargal Sharkey tweeted: “You’d think at some point the idea would sink in but no, too greedy, too complacent, too stupid, and I’m not sure if I’m talking about Thames Water or Ofwat”.
“Thames Water fined £3.3m after rivers turn black with sewage killing 1,400 fish.”
You’d think at some point the idea would sink in but no, too greedy, too complacent, too stupid and I’m not sure if I’m talking about @thameswater or the regulator @Ofwat.https://t.co/Gq6Et7h2nG
— Feargal Sharkey (@Feargal_Sharkey) July 6, 2023
Campaign group Surfers Against Sewage also spoke out against the company, saying: “For too long, water companies, regulators and the government have been presiding over a broken system. It’s time for them to make the reforms needed to end sewage pollution”.
Civil engineering industry expert and consultant Richard Shennan said the company is missing a ‘holistic approach’.
“With the UK water industry struggling to raise the money for the investment needed to address the problem of pollution of rivers and coastal waters from sewer overflows, it is more important than ever that money is spent in the most effective way possible,” he said.
“A holistic approach that combines civil engineering works with blue and green solutions not only offers optimum value for money but has multiple co-benefits in terms of ecosystems, so would make sense in any territory.”
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Privatisation, profits and payouts
As the drawbacks of privatisation in the water sector are a hot topic awash with discussion of senior figures getting sizeable payouts, Sheffield University accountancy practise professor Richard Murphy examined the figures behind UK water companies.
He found that Thames Water was not alone in having “environmentally insolvent” accounts and shared some startling data.
“Firstly the operating profit margin in this industry is 35%. That is staggeringly high, and it goes up to 38% when other income is taken into account. 38p in every pound you pay for water is operating profit i.e profit before the cost of borrowing,” he explained in a Twitter thread.
Of the £25 billion Thames Waters has made in profit over the years Murphy said they have “paid out every penny, and more, in dividends”, explaining that this means shareholders have been given 15p of every pound consumers have paid for their water.
“There was nothing left for reinvestment, at all,” he added.
“No wonder the water industry is in trouble. The income statement shows that the public is being fleeced by these companies who are simply treating the fact that the English consumer has had no choice as to who to buy water from as a means to extract profit from them”.
There has been much discussion about the likely failure of Thames Water in the last day or so. I’ve been looking at the accounts of England’s water companies for the last twenty years. My conclusion is that they are all environmentally insolvent. So, a thread…..
— Richard Murphy (@RichardJMurphy) June 29, 2023
The other side of the story
Former Thames Water employee and current CDP global technology and operations director Martin Ridley also took to LinkedIn last week to highlight what he sees as the positive and underheard side of the story.
“As a former employee I have had a number of people chat to me over the last 48 hours in regards to the breaking news at Thames Water,” he said.
“Reflecting on the news and organisational turmoil which must be in progress it’s worth remembering that there are thousands of genuine, committed and talented people there working their socks off to try and improve the quality of service and environmental standards which they meet.”
He said he was “proud” to have worked with such people and added that “there have been brilliant achievements since the advent of privatisation”.
“At the end of the day these people should be both celebrated and supported for delivering an essential service in often very trying circumstances.”
Is that fair for what is a huge environmental challenge ahead, or will it take more than positive words to dislodge the fatberg-sized level of discontent? If you’re in the water industry or an academic with insight let us know what you think at [email protected].
