The Water Company Scam

Let me tell you how some people have figured out a way to get free money through water companies.

The Tory government privatised water companies in 1989, and in the process they wrote off £5bn in debt and gifted a further £1.5bn of public money to them. Further, they were sold below their true value.

While initially 2.5m people bought these shares from a total population of 57m, they were eventually largely sold to private equity, pension funds, and large infrastructure firms, some of which operate in tax havens.

Today ~72% of water companies are owned by foreign investors, while the UK owns ~10%. For example, the American investment company BlackRock owns ~10% of Severn Trust, Abu Dhabi owns ~10% of Thames Water, China owns ~9% of Thames Water.

From the fresh start of privatisation, water companies have taken on ~£54bn in loans, and paid £66bn in dividends to shareholders.

The accumulated debt means ~20% of a typical water bill goes just to paying it off.

Additionally, top executive and non-executive roles at these companies can be paid over £1m in total with year-on-year increases well over the typical for their own employees. For example, United Utilities chief executive Steve Mogford’s pay increased by 8% every year since 2013 to a total of £2.3m in 2018.

Further, about 33% of an average person’s water consumption is wasted by the water company. For example, 24% of the clean drinking water is leaked in Thames Water’s pipe network before it reaches homes.

Finally, water companies are responsible for significant water pollution caused by dumping of raw sewerage into rivers and beaches. For example, there was raw sewage discharged over more than 44 days on to Tankerton beach in less than a year.

Water companies are natural monopolies, and bill-payers cannot switch to a cheaper or better supplier.

So let me get this plan straight.

First, buy out British water companies being sold cut-rate. Then, take out billions in loans and give the cash to yourself. Further, do not take responsibility for poor infrastructure such as leaking pipes and raw sewage being discharged onto beaches. You can pay the water company bosses lots of money so they don’t feel bad playing along. Make your captive customers pay through their water bills for the interest on loans, the wasted water, and any fines.