A Perfect Shit Storm

We’ve known for 30 years that London’s Victorian sewerage network required serious upgrade. Combined with EU legislation and a smattering of free market dogma, this fact justified the industry’s costly (£5bn) privatisation in 1989 with taxpayers writing off the debt needed to make our water utilities suitably attractive.   

Although compliance with the Urban Waste Water Directive was meant to be achieved by 1998, the UK has spent 14 years avoiding unlimited fines via infraction proceedings due to 39 million tonnes of shitty water spilling into the River Thames every year - half of which was picked up by the Lee Tunnel in time for the Olympics, at a cost of only £635m.

Thames Water has been working with the Environment Agency since 2000 to deliver our EU Directive-complying future and apparently the answer is a second, 32km tunnel costing £4.6bn at 2011 prices.     

Of the £5m ‘strategic study’ budget that helped reach this conclusion only £12k was allocated to examine options for sustainable urban drainage (SUDs) with no consideration given to the possibility of a hybrid scheme, contrary to the findings of the Ofwat commissioned Independent Review carried out by Jacobs Babtie in 2006.

This was only one issue raised by the Thames Tunnel Commission set up by five London Borough’s whose million plus residents will not only pay an additional £80-£120 per year forever on top of their existing water bills - along with every other Thames Water customer - but who can also look forward to a decade of construction and the destruction of local amenity space and property values should the preferred option get its rubber stamp.   

Despite the Jacobs Babtie review, despite completion of the Lee Tunnel and despite no scientifically definitive assessment to support their position, the Environment Agency is of the opinion that alternatives to the 32km tunnel are ‘too difficult’.    

Instead we’re creating such a money making bonanza with our taxpayer guaranteed shit chute that both Chinese and Abu Dhabi’s sovereign wealth funds have acquired a slice of the action, safe in the knowledge that Thames Water customers will foot the bill while the risk is underwritten via Osborne’s ‘infrastructure guarantee scheme’ – surely missing the point of either private ‘investment’ or privatisation, George?   

The truth is that building this infrastructure will enrich a debt laden non-taxpaying Thames Water’s private equity owners, effectively rewarding the company’s £8bn debt burden and pisspoor performance. Despite meeting Ofwat targets, Thames Water still tops the national leak table, pissing away 665 million litres a day, enough water to fill Wembley Stadium every 36 hours.    

But the greater scandal is that a £4.6bn shit chute isn’t needed, at least not in the ‘preferred option’ state promoted by Thames Water and our watch-poodle Environment Agency. While the latter claim to take an ‘evidence based approach’ to decision-making, the Commission “call[ed] into question the scientific rigour and validity of the[ir] whole assessment exercise” in relation to the combined sewage overflows (CSO’s) used to justify their support for Thames Water’s ‘gold plated’ turd tunnel.  

One senior Agency manager in the London Team responsible for overseeing the Thames Water-led plan went so far as telling a junior colleague that “we are not to get into any analysis or debate on the impact SUDs may have on the proposed Tideway improvements or other CSO's not picked up by the Tunnels”. Why are Environment Agency managers so keen to avoid ‘analysis or debate’? 

Information obtained via a Freedom of Information request shows the Environment Agency Pension Fund holding direct assets in Macquarie Group prior to and for two years after RWE sold Thames Water in 2006. While these direct asset holdings were effectively dumped two years after the acquisition, the Environment Agency is now clueless with regards its pension funds indirect investments in Macquarie Group, helpfully stating that they, ‘are unable to provide information about indirect investments made in Macquarie Group on behalf of the EAPF as neither we nor our global custodian hold information or have access to the detailed holdings in the underlying pooled funds.’     

While the Environment Agency Pension Fund’s interest in Macquarie Group could be entirely innocuous it brings into focus the close relationship between government departments and private utility owners.

The fact that Thames Water pay for at least one full time Environment Agency salary in support of their project appears to serve no discernable business function beyond mutual back scratching. 

Potential conflicts of interest aside, the Commission’s findings suggest a hybrid scheme, as described in the Jacobs Babtie review, could not only solve the crap crisis at less cost but would be more comprehensive in tackling the problem at source, helping to ensure London copes with increased flood risk and drought.  

The Environment Agency had a duty to ensure that every option was adequately defined and tested at the feasibility stage but instead squandered the opportunity based on crude assumptions of ‘difficulty’  and a pisspoor assessment of the problem.

But as we have seen with political lobbying elsewhere, increasingly cash strapped government departments will dance to whatever tune is played by their paymasters and Environment Agency support for the Thames Tunnel is perhaps no exception.