Ross Clark Ross Clark

Water woes: who’s to blame for the shortages?

For residents of the London borough of Islington whose homes were flooded this week by a burst water main, Thames Water’s decision to announce a hosepipe ban the following day must have come across as a sick joke. Just a few days before the flood, the company sent out an email asking its customers to be a ‘hot spell hero’. ‘Every drop you save really is another drop more in your local river or reservoir.’ But Thames Water seemed unable to follow its own advice: five million litres of water were lost during the leak.

The episode neatly encapsulated much of what is wrong with Britain’s water industry: crude, 1940s-style rationing on the one hand and a failure to prevent much of the product leaking away on the other. Last year, Thames Water lost 600 million litres a day – 250 Olympic pools’ worth of water. Over England as a whole, three billion litres of water are lost a day: a fifth of the total supplied.

It wasn’t supposed to turn out this way when the water industry was privatised by the Thatcher government in 1989. It was promised that privately owned water companies would unleash a wave of investment, and that they would introduce competition, reduce consumer prices and make the industry more responsive to demand.

It is hard to see how any of these objectives have been fulfilled. Nor, indeed, has the water industry become as private as critics feared. Thames Water, which services 15 million people, is still largely owned by public sector entities, just not entirely British ones. Among its largest shareholders are the Ontario Municipal Employees Retirement System, the UK Universities Superannuation Scheme and sovereign wealth funds of China and Abu Dhabi. Almost 10 per cent of Thames Water is owned by the Chinese government.

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