Raw sewage didn’t usually preclude profit

The news that Southern Water has received a fine of £90m for pumping untreated sewage into the sea was shocking enough in itself.

But there is more…

It transpires that three Southern Water directors are appointed by JP Morgan; one by UBS and one by Hermes. These directors know much, much more about financial engineering than anything about water and sewerage engineering. A good slug of financial institutional debt is always good for business – just not the water business.

See page 16 here.

Oh and the Southern Water holding company head office is in Jersey – I wonder why?.

Interestingly there are only two British owned water companies in England: United Utilities and South West Water.

The last even recently offered £20 off your bill or £20 in free shares.

They said at the time “this innovative scheme is about doing the right thing” and certainly it was a step in the right direction and, indeed, is even likely to continue if targets are met.

Welcome though it is, I feel that as a minimum, the Welsh Water not for profit model would be a better solution to providing what is essential to life.


    1. Peter May -

      Fair point!

  1. Andrew -

    Southern Water continued its illegal practices for at least six years. So we have any guarantee that they are not continuing?

    The £90m fine appears to be about (indeed, in several years much less than) one year’s profit. It should be be five to ten times greater, and the company should be compensating those who suffered as a result of the pollution. The cost should be borne by the shareholders not the customers.

    What consequences are there for the directors and managers, whose decisions prioritised company profits over compliance with the law?

    1. Peter May -

      I agree. And my ‘headline’, on reflection, wasn’t the best but I imagine the fine was limited in order to avoid customers paying. Although I see the regulator says they are going to ensure customers do not pay.
      And as you say it would be a very good idea if the directors could actually themselves pay – they have at a minimum been reckless with their responsibilities not to endanger life.
      As a start it might well be time to require a special duty of care of the community to all directors of former public utilities.

  2. Steve -

    This is a very interesting report from the PSIRU of University of Greenwich in 2018.


    “We find that
    the public-owned sector in Scotland delivers the service just as efficiently, albeit at a lower cost to
    consumers. Our econometric analysis suggests that the 40% increase in real household bills since
    privatisation was mainly driven by continuously growing interest payments on debt, contrary to the
    regulator attributing them to growing costs and investments. Finally, we show that the accelerating debt
    levels are primarily the result of disproportionate dividend pay-outs, which exceeded the privatised
    companies’ cash balances in all but one year since 1989. We conclude that the way the industry operates
    may no longer be sustainable and seems to disadvantage consumers greatly without their knowledge,
    as there is a fog of misleading statements by the companies and the regulator.”

    1. Peter May -

      Many thanks for that.
      Looks as tho’ the regulator will have a difficult job in ensuring that Southern Water customers will not in fact end up paying the fine…

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