Water, Water, Everywhere
Like all Great British traditions, the hosepipe ban, which Londoners have now been belatedly subjected to, has always puzzled me – how on earth is it enforced?
More conspiratorial corners of the internet enjoy speculation that a sinister panopticon of garden-monitoring drones is on the verge of deployment, a move Anglian Water were comically compelled to deny last month.
But the reality is far more prosaic: hosepipe bans depend on a culture of social consciousness that’s engrained in us Brits from the crib.
But for newly appointed Prime Minster Andy Burnham, the summer wave of hosepipe bans leaves little room to ruminate on the delightful oddities of the British psyche. It’s a stark reminder of the critical decisions Burnham must make on England’s water industry which, incredibly, hasn’t built a major reservoir since 1992.
Top of the to-do list is Thames Water, which stands on a pecuniary precipice. It only has the cash to operate until November and, although creditors have pledged to support the company for a further 12 months, the future of Britain’s largest water company remains under “material uncertainty”.
But as the chorus calling for the company’s nationalisation grows louder, Thames Water presents one of the most troublesome conundrums for Burnham that could well define his premiership: succumb to public pressure in his first months in charge, and Burnham could, much like Starmer’s ill-fated winter fuel U-turn, hole his premiership below the waterline in its infancy.
By all measures, nationalising Thames Water is simply unfeasible. Even a temporary Special Administration Regime, which would see court-appointed administrators step in to run the firm, would cost the public purse at least £4 billion. True costs are likely to rise even higher.
That’s not to mention the even greater costs associated with full nationalisation. Thames Water requires more than £20 billion in infrastructure upgrades over the next 5 years, before even accounting for the significant compensation payments Thames’ current creditors will require.
When you speak of the UK’s water sector more broadly, the figures skyrocket: it’s £100 billion to nationalise Britain’s water, according to Defra’s estimate, which requires an eye-watering additional £290 billion in upgrades by 2050.
For a country that could barely scrape together £14 billion to address the alarming investment gap in its armed forces, these figures are a fantasy. But the more fundamental issue with nationalisation is that it simply transfers the burden of Thames Water’s multitude of problems onto the public sector.
The astronomical cost of nationalising Thames and delivering its urgent turnaround and investment plan would be transferred onto the public balance sheet, likely spooking bond markets and raising interest rates even further. It would open the government up to multiple high-profile legal challenges, which would be fought at the expense of the taxpayer.
And even on the environment nationalisation offers no way forward. Nationalisation simply transfers liability for environmental breaches to the taxpayer, leaving Thames further than ever from fixing the infrastructure at fault.
For all his rhetorical flair, Burnham’s mayoralty of Manchester is often misread. The city’s impressive growth over the past decade was built on partnering the state with private capital.
That makes it all the more important that Burnham trusts the tried-and-tested programme that has allowed Manchester to flourish rather than appease public opinion. That means accepting nationalisation is unfeasible, and forging ahead with a mutually beneficial deal with the private sector.
The deal may not fit with Burnham’s self-styled persona, but voters have never doubted the charismatic English graduate’s ability to tell a story. They’re concerned instead by the economic credibility of a Burnham government.
For the country’s sake, let’s home pragmatism prevails over more misguided ideological decision-making.
James Price is a Senior Fellow at the Adam Smith Institute, who previously served as a Government Senior Special Adviser across five departments. He was Chief of Staff and Senior Special Adviser (SpAd) to the Chancellor of the Exchequer, the Chancellor of the Duchy of Lancaster and the Chairman of the Conservative Party. He also served as a SpAd to the Education Secretary and to the Leader and Chief Whip in the House of Lords.
