THE crisis engulfing Thames Water is a symbol of failing corporate Britain, where greed at the top is matched by contempt for the needs of the public.
With its monopoly position and its guaranteed revenues from its huge base of 14million customers, the giant utility company should never have been in trouble.
But through epic mismanagement and reckless borrowing, it now stands on the verge of collapse.
Nationalisation could be the next stage, three decades after it was privatised.
Yet public ownership is no answer. Lumbering monopolies do even worse in the state sector.
From Whitehall to town halls, from the NHS to National Rail, so much of our institutional fabric is fraying.
Bureaucracy and waste are endemic.
Low productivity is matched by outdated working practices and a culture of grievance, diligently cultivated by the trade unions.
Such a mess
A key part of the problem is that the very bodies who should be looking after the public interest in their oversight of these corporations have proved equally useless.
As watchdogs, they have been feeble and toothless.
Similarly, in their extravagant empire building, they mirror the costly structure of the officialdom that they are meant to be improving.
Perversely we have ended up with the worst of all worlds: The sclerosis of the government machine without any of its supposed spirit of public concern, allied to the boardroom excess of some commercial operators without any of their efficiencies.
That helps to explain why Britain does not seem to be working any more.
Our supposed guardians have not protected us from potholed roads, soaring interest rates, savage energy bills or record-breaking hospital waiting lists.
There are now entire neighbourhoods in Britain where the police did not solve a single theft in the last year.
Yet a plethora of police watchdogs do nothing about it, just as the Office of the Immigration Services Commissioner seems silent on the breakdown in our borders.
In the same vein, we could ask why the water industry regulator Ofwat has allowed Thames Water to get into such a mess.
But the answer is not complicated.
Ofwat is in the classic mould of today’s regulators, always drawing up new action plans, always indulging in impressive rhetoric, yet never able to deliver real change for the consumer.
Ofwat’s weakness is partly the reason why the water companies feel free to release raw sewage into our rivers 1,000 times a day and why so much of our water supplies drain away in leaks.
Thanks to Ofwat, investment in the industry’s infrastructure has been pitiful.
Since 1991, not a single new reservoir has been built despite a rise in the population of more than ten million.
And during that time, the privatised water companies have dished out more than £50billion to shareholders.
Stuart Singleton-White, of the Angling Trust, which campaigns for a clean-up of our rivers, has said that Ofwat is, “Complicit in our broken water sector and seems to be acting as an apologist for the situation that it bears responsibility for creating.”
Ofwat’s inadequacy is not due to lack of resources.
Indeed, the company spent £32million in 2021/22 and in that same year it had nine senior managers on over £150,000 a year, including chief executive Rachel Fletcher on a package of £260,000.
She subsequently left to join the energy supplier Octopus.
Indeed, ties between the regulators and the utilities are often close.
One recent study found that nearly all the major water companies in England employ former government regulators, which some argue undermines independence and impartiality.
Dieter Helm, the Oxford professor who has advised the Government on energy and water regulation, has expressed his worry that “the revolving door” in regulation has led to a “rather cosy world of close relationships” where even serious wrong-doing goes unpunished.
Ofwat is not unique. The energy regulator Ofgem has been woeful in protecting the public from rocketing bills or preventing the collapse of 29 energy suppliers, the latter was a failure which is estimated to have cost consumers £2.7billion.
As Dame Meg Hillier, the chair of the Commons Public Accounts Committee, put it, “Problems in the energy supply market were apparent in 2018, years before the unprecedented spike in prices that sparked the current crisis and Ofgem was slow to act”.
But they were not slow to expand the size of their workforce, taking it from 1,187 in 2021 to 1,246 in 2022, while its budget rose from £121million to £130million the next year.
Failure is no barrier to rewards in the world of regulation.
The Bank of England, effectively the nation’s economic watchdog, dished out staff bonuses worth £23million despite its dismal ability to tackle inflation.
Nor did the Health Security Agency distinguish itself in handling the Covid pandemic, but that did not stop it having — according to its annual report — ten managers on packages worth over £155,000 as part of a workforce of 6,600.
More navel-gazing can be found at the Equality And Human Rights Commission, currently embroiled in a vicious row about transgender rights, while the Care Quality Commission has been notable for presiding over scandals like the collapse of the private hospital Winterbourne View, the crisis in care homes and worsening public healthcare.
Regulation, the accompaniment to privatisation, was meant to usher in a new age of corporate accountability.
Sadly, as we look at the shambles on every front, we can see that it is part of the problem, not the solution.