Fines won’t cut it: Henley Mermaids call for Thames Water to be placed in
Special Administration and brought back into public ownership
The Henley Mermaids have joined groups including We Own It and Save
Windermere calling for:
1. Thames Water to be placed in Special Administration under s242) of the
Water Industry Act 1991;
2. A prohibition on the bailing out of water company shareholders and creditors;
3. Amendments to the Water Industry Act 1991 removing the duty to secure
“reasonable returns on capital” for water undertakers and including a
requirement that water and sewerage undertakers provide clean and
wholesome drinking water, deliver bathing waters of excellent quality and as
far as reasonably practicable, the elimination of sewage, waste and other
pollution from waterways, the conservation of water resources and reasonable
water bills;
4. A change to the governance structure of water companies requiring that
employees, local authority representatives and bill-payers be represented on
the board
The calls come as grass-roots campaign groups joined We Own It at a session in
Parliament to mark “Cost of Privatisation Day” – every penny paid by bill-payers from
today until the end of the calendar year will fund dividends and interest. On average,
around a third of UK water bills are spent on interest and dividends.
The Mermaids today responded to Ofwat’s consultation on a financial penalty for
Thames Water following an investigation into law-breaking by the water and
sewerage undertaker. The Ofwat report details widespread and persistent breaches
of the law by Thames Water and proposes imposing a fine of 9% of turnover from the
sewage business, amounting to £104.5m.
“This report is a vindication from the regulator of what campaigners have been
saying for years: Thames failed to invest in and maintain its sewage infrastructure for
years and this has led directly to persistent and chronic sewage dumping in breach
of the law,” said Mermaid Laura Reineke.
In determining whether to impose a penalty, Ofwat has had regard to a range of
factors outlined in its Statement of Policy including the seriousness and duration of
the contraventions, whether the contraventions have damaged the interests of
customers, whether a penalty would be likely to create an incentive to comply, any
damage to the environment, whether the failure was of a trivial nature and whether
the contravention would have been apparent to a diligent company.
“As river swimmers and community campaigners, we have first-hand experience of
the appalling impacts of Thames Water’s sewage dumping on our local community’s
enjoyment of our river,” said Mermaid Jo Robb.
“The proposed fine of 9% of relevant turnover, or £104.5m, is significant but, in our
view, inadequate to incentivise the company to do better. As the report states, the
breaches identified in this latest investigation took place despite Thames Water
being fined in 2018 for a failure to meet its regulatory obligations and despite Ofwat’s
imposition of formal undertakings. The breaches took place even though Thames
Water was informed of a similar investigation and fine imposed on Southern Water,”
said Jo.
As the report points out (6.37), the failings identified in this investigation, occurred
despite the existence of this precedents. We agree that Thames Water did not act
like a diligent company, but we would go further and argue that it acted like a
company with a reckless disregard for regulation and for the environment. It has
acted like a company with no fear of being held to account.
The report states (at 6.17) that from at least March 2017 onwards, Thames Water
was aware of potential non-compliance at a number of its WWTW (waste water
treatment works) and adds “the evidence shows that a number of WWTW sites were
rated red or amber in the company's 2017 and that the failure to limit pollution from
storm overflows has persisted for several years.” The company was in breach of the
law for years and it knew it.
Thames Water has identified 157 sites of concern which would require additional
investment on top of that already allocated if these are to be brought back into
compliance by the end of AMP8. The company has set out plans to invest more than
£1 billion in its sewage systems, but as the report states, “these are costs that
Thames Water has avoided incurring in the past by failing to address issues at its
WWTW in a timely manner.”
Thames Water did not seek further investment to enable it to address compliance
risks and failed to avail itself of funding available to address issues at its high spilling
sites.
The report points out that (at 6.31) that Thames Water “has repeatedly told us that its
inability to identify potential noncompliance on the scale it now has is due, primarily,
to a lack of accurate FFT data,” but this lack of data is itself due to the company’s
failings to properly instal and maintain EDM monitors.
We and others have been fighting for years to get accurate EDM information. We
know, from our own observations, that the real-time sewage map that we
campaigned for, is often inaccurate or that the monitors are not working properly.
When we have raised concerns about discharges, we have been informed these
were caused by faulty monitors rather than sewage events. It feels like a vindication
to read at 6.31: “Regardless of the absence of data from monitors on its sites,
Thames Water's processes and controls should have been robust enough to ensure
that it had a full understanding of its assets and how those assets were performing –
particularly given the fact that other sources of information, including mounting
complaints from stakeholders, was clearly suggesting that things might be going
wrong across is WWTW estate and network.”
The fine of 9% of relevant turnover – equivalent to £104.5m is the highest levied
against any of the water companies in this latest investigation but, in our view, is still
inadequate in reflecting the systemic scale and seriousness of the breaches and
Thames Water’s disregard for the regulatory regime.
Our overriding concern is that this proposal doesn’t go far enough. We believe that
the issues outlined in the consultation speak to a company that has been in
persistent breach of the law, that has wilfully blinded itself to the scale of the decay of
its assets, and that has sought to evade regulatory scrutiny. It has been only through
the diligence and dedication of organisations like Windrush Against Sewage
Pollution that the scale of these breaches has been exposed.
It is our view that the breaches by Thames are so serious, so widespread and so
systemic that only a fine of the maximum allowable – 10% of relevant turnover –
would be acceptable.
In a wider sense, this detailed investigation confirms what many campaigners have
long known - that Thames Water is unfit to be a water and sewerage undertaker. The
breaches identified raise deep and very grave concerns about Thames Water’s
fitness to hold a licence to provide water and sewage services to some 16 million
people in London and the South East.
The report paints a picture of mismanagement, disregard for the law, systemic
neglect of the company’s sewerage assets, a lack of urgency when it comes to
environmental breaches, and a corporate culture of concealment. The litany of
breaches outlined in this latest investigation happened despite Thames having been
fined by Ofwat in 2018.
We believe, therefore, that Thames Water is not fit to hold a Water and Sewerage
Undertaker’s Licence. The company should be put into Special Administration
pending a full-scale public inquiry into its mismanagement and a restructuring as part
of its renationalisation.
Jo Robb
Laura Reineke
Joan Fennelly
Susan Barry
The Henley Mermaids
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