It’s a crowded field, against a backdrop of greedflation and sexual-misconduct scandals, but water utilities have a strong claim to be considered public enemy number one in the British corporate world. Spilling sewage into rivers and coastal bathing waters hundreds of thousands of times a year is no way to win friends and influence people, whatever the mitigating factors or arguments over the relative quality of UK beaches. The industry apologized last week and pledged to triple investment in sewer modernization this decade to £10 billion ($12.4 billion) — only to provoke further outrage when the companies said they will recoup this later through higher customer bills.
Much of the case for the iniquity of water companies’ behavior has focused on their generous dividends and high levels of debt. There’s a questionable logic at the heart of this narrative. Governments put essential public services into private hands, as Margaret Thatcher did with the water companies in 1989, in the hope they will be operated more efficiently, benefiting consumers and saving the state money. In turn, providers of private capital expect a return. Otherwise, why should they take part?
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