Profiting from pollution

By Maya Evans

Last year UK water companies spilled raw sewage into coastal bathing waters more than 5,500 times. Over 1,000 homes have had toxic chemicals pumped into their water supply, while whistle blowers at the Environment Agency report the budget for environmental protection has been slashed, and they are now instructed not to attend to “lower impact pollution incidents”, leaving the EA “toothless” to hold polluters to account.

Meanwhile, three of Britain’s biggest water companies failed to pay a penny in corporation tax last year. The Government’s own Environmental Audit Select Committee last month published a damning report saying English rivers are the most polluted in Europe, with water companies regularly dumping untreated or partially-treated sewage into rivers. The arguments for nationalising water have never been so urgent, the groundswell of protest has never been so great, the limited time to clean up the planet has never been so short. But will the Tory Government stop protecting big business and for once put people and the environment first?

Every day we wake up to yet another headline about a sewage leak, the latest being last weekend in Eastbourne, which saw tons of raw sewage spilling into the sea over a two-day period. The “electrical fault” (with no back-up system in place) meant multi-million-pound Southern Water had to wait for a portable generator to arrive at the site. Last year Southern Water released waste water into Eastbourne seas 20 times. At the time of this leak, seawater bathers were urgently called back to shore after likely swimming in raw sewage.

For water companies it is cheaper for them to pay fines for dumping pollution into our rivers and seas than it is to treat the water or stop the source of pollution. Southern Water was sentenced to pay a record £90m fine for widespread pollution after pleading guilty in 2021 to 6,971 unpermitted sewage discharges. Despite the size of the fine the company still reported profits of £138.8m. Southern Water CEO Ian McAulay is currently on a £1m annual salary, and, in spite of the whopping fine, received a £500,000 bonus at the end of the year.

Southern Water are one of three companies, alongside Yorkshire Water and Thames Water, which, according to a Mail on Sunday investigation, last year failed to contribute a penny in business tax to the Treasury’s coffers. These water companies are controlled by wealthy overseas investors and foreign governments who have been allowed to build up vast debts, use complex smoke-and-mirror financial accounting systems to avoid tax, and siphon billions out of the country. That’s billions of pounds which could have been spent on our sewage infrastructure, going straight into the pockets of private companies.

Last year Southern Water was bought by the Australian bank Macquarie, which gained notoriety for its role as the owner of Thames Water between 2006 and 2016. Between 2007 and 2010 Thames Water borrowed £2bn which, according to a BBC investigation, was used for the benefit of the bank and its investors who extracted billions in dividends, with share returns averaging between 15.5% and 19% a year – double what would normally be expected.

All of this was in apparent contravention of conditions laid down by the regulator when Macquarie bought Thames in 2006. Macquarie finally walked away from Thames Water in 2017, leaving it £2bn in debt.

In 2017, Thames Water was fined a record £20m for dumping untreated sewage into the River Thames. Between 2012 and 2014, under Macquarie management, there were repeated illegal discharges of sewage into the River Thames and its tributaries, resulting in “major environmental damage including visible sewage along 14 kilometres of the river, and the death of birds, fish and invertebrates”. It was the biggest freshwater pollution case in the Environment Agency’s 20-year history.

Three anonymous Environment Agency whistle blower officers say cuts and operational decisions have made England’s regulator “toothless”. Government grants to the agency are currently £1.05bn; however, government funding for the agency’s environmental protection work has slumped from about £170m in 2009-10 to a low of £76m in 2019-20. According to the officers, who fear being sacked for whistleblowing, funding is not being directed towards protecting or improving the environment, making the EA increasingly unable to hold polluters to account.

Environment Agency’s water quality standards findings for 2021 gave a seemingly impressive 94.7% of beaches and inland waters achieving ‘excellent’ or ‘good’ rating. However, the results directly conflict with the House of Commons cross-party Environmental Audit Select Committee who, after a year of examining all the evidence and visiting various locations in England, found that monitoring is underfunded and pathetically inadequate.

The CHEM Trust says monitoring shows only the tip of the iceberg in terms of chemical pollution. Not a single river in England has received a clean bill of health for chemical contamination. The MPs’ report is damning and unforgiving.

In 2018, the Labour party called for the sector to be returned to public ownership. Without a doubt this is the key priority, but in the meantime the following steps should be immediately taken:

  • tougher punishments for polluters that could lead to custodial sentences for the worst offenders, as well as more power to regulators to enforce large fines.

Over the more than thirty years since 1989 when nine water companies were privatised, water bills in England and Wales have increased by at least 40% above inflation while shareholders and executives have pocketed billions – a racket spread across our beaches, waterways and kitchen taps. Over £50bn that could have been invested in modernising, infrastructure, including 1960s storm overflows (it is not all Victorian), was given to shareholders, many of whom live abroad, and who have no interest in clean water in our rivers and seas.

In Scotland, where water is publicly owned, we see a completely different picture with 99.9% quality drinking water, no pollution problems, strong dams and, no surprise, high overall satisfaction. While Tories allow their crony chums to dodge tax, Labour demands a return of water to public ownership. While Tories protect the polluting profiteers, Labour demands tougher punishment for the worst offenders. While Tories sit back and allow raw sewage to be dumped into our seas and rivers, Labour demands regulators are given funding and powers to throw the book at these unscrupulous private profiteers.

Maya Evans is Cabinet lead for Environment and Climate Change at Hastings Borough Council.

Image: Sunset over Hastings pier, c/o author.

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