LSE IQ Podcast – Why Are Our Rivers and Seas Polluted by Sewage?

London School of Economics and Political Science
Release date: January 7, 2025
Host: Joanna Bale

Brief Overview

In this episode, Joanna Bale investigates the alarming state of the UK’s waterways, asking: Why are our rivers and seas polluted by sewage? Through interviews with affected individuals, social scientists, and economists, the episode explores how widespread sewage dumping has occurred, the consequences for public health and the environment, and the structural reasons—economic, regulatory, and political—behind the crisis. Experts dissect the impacts of water privatisation, how the industry became a financial asset rather than a vital public resource, and what solutions may exist moving forward.

Key Discussion Points and Insights

1. Personal Impact of River and Sea Sewage Pollution

• First-hand Experiences:

  • Cold water swimmers Jo Bateman and an unnamed rower discuss health threats and distress caused by sewage in swimming waters.
    • "I would be swimming along and realized that ahead of me on this lovely, flat, beautiful looking water was a slick of filth..." (Jo Bateman, 00:04)
    • Explains mental and physical health impacts: Jo Bateman credits cold water swimming for alleviating depression, but is now restricted by pollution (04:04).

• Growing Public Outcry and Legal Actions:

  • Jo Bateman’s personal legal battle against South West Water over persistent sewage spills becomes a national campaign (07:15–09:34).
  • Use of apps like Surfers Against Sewage to check pollution levels before swimming (05:35).

2. The Health and Environmental Crisis

• Health Risks:

  • Bacteria (Salmonella/E. coli), viruses (Hepatitis A), and parasites (Cryptosporidium) pose risks to swimmers and the public, culminating in events such as Brixham’s drinking water contamination (04:30).

• Environmental Damage:

  • Sewage discharges devastate ecosystems—Lake Windermere’s toxic algae, chalk streams turning murky and grey (09:34).

3. How Did We Get Here? The History of Water Privatisation

• Background on Privatisation:

  • Water privatised in 1989 under Margaret Thatcher’s government, aiming to improve efficiency and attract investment by introducing the profit motive (11:30–12:23).
  • "Privatised water is a better deal than nationalised water..." (Margaret Thatcher clip, 10:12)

• Neoliberal Assumptions in Question:

  • Professor Gwynne Bevan explains that water is a "natural monopoly"—unlike bread, you can't have multiple water suppliers, so competition and market dynamics fail (13:34, 14:06).
    • "The water company is classically the exemplar of where markets won't work..." (Bevan, 13:34)

4. The Financialisation of UK Water Companies

• Changing Ownership and Incentives:

  • Initial public share ownership replaced by takeovers from global investment funds, private equity, and tax haven-registered vehicles (16:32–19:13).
  • Companies increasingly seen as low-risk, high-return financial assets rather than public utilities (19:13).
    • "Their sole purpose is to make as much money as possible for the investors..." (Bevan, 19:21)

• Regulatory Shortcomings:

  • Ofwat and the Environment Agency expected companies to “self-regulate” and report on their own pollution; under-resourcing and political decisions undermined oversight (20:37–22:47). - "You ask these companies to mark their own homework..." (Bevan, 22:07)
  • Political pressure kept bills low, at the expense of environmental stewardship (23:11).

• Financial Engineering and Underinvestment:

  • Companies finance infrastructure through borrowing, with most profits going to shareholders as dividends—raising debt to over £60 billion and payouts since privatisation to £78 billion (24:17).
  • Thames Water as a poster case: huge debts, fragile business structure, and problems exacerbated by inflation and rising interest rates (26:46).

5. Ongoing Scandal and Regulatory Response

• Criminal Investigations:

  • Companies under investigation for possible misreporting and unpermitted discharges; only recently have monitors been installed to assess true spill volumes (25:13–25:48).
    • "What was happening with self monitoring maybe wasn't entirely accurate." (Baylis, 25:29)

• Government’s Position:

  • Labour initially promised renationalisation but now rules it out as too expensive and disruptive, opting instead for tougher bonuses and criminal penalties (27:52).

6. Can the System Be Fixed?

• Experts Skeptical About Tweaking Regulation:

  • Dr. Kate Baylis doubts that regulatory tweaks alone can solve the embedded problems; new rules on dividends and debt came too late (29:12).
    • "We can patch things up and limp along, but I think there'll be another disaster down the road..." (Baylis, 29:22)
  • The UK model of private, for-profit water utilities is unique and unreplicated worldwide (29:50).
    • "Nowhere in the world has copied our system. Public water is absolutely normal in the rest of the world." (Baylis, 29:50)
  • Both academics point out the need for public management of such essential resources:
    • "This is a public resource and needs to be publicly managed." (Baylis, 29:50)
    • "You have to look upon this as an experiment that failed." (Bevan, 30:18)

• Renationalisation as a Solution:

  • Restoring state ownership would improve transparency, align incentives with the public good, and ensure accountability (30:18–32:41).
  • Financial interests of global shareholders seen as fundamentally incompatible with careful stewardship of a critical resource (31:53).
    • "We're just putting the wrong people in charge...that layer at the top of the financialisation and the shareholders just creates the wrong incentives." (Baylis, 31:53)

Notable Quotes and Memorable Moments

• On personal motivation:

  • "I'm suing South West Water basically because I'm sick of the endless sewage dumping into the sea where I like to swim." (Jo Bateman, 02:29)

• On privatisation's core flaw:

  • "The water company is classically the exemplar of where markets won't work because you’ve got a natural monopoly." (Prof. Gwynne Bevan, 13:34)

• On regulatory failure:

  • "You ask these companies to mark their own homework and report to the regulator, who's then massively under resourced to check that. This is like a gaping hole." (Prof. Gwynne Bevan, 22:07)

• On the financialisation of water:

  • "We're just putting the wrong people in charge. These shareholders are only going to try and make money for their investors. That's the reason that they're there. And that's really incompatible with the supply of this essential resource that we need to manage so carefully." (Dr. Kate Baylis, 31:53)

• On renationalisation:

  • "Nowhere in the world has copied our system. Public water is absolutely normal in the rest of the world." (Dr. Kate Baylis, 29:50)
  • "You have to look upon this as an experiment that failed." (Prof. Gwynne Bevan, 30:18)

Timestamps for Important Segments

• [00:04] – Jo Bateman’s initial realization of swimming with sewage
• [02:29] – Jo Bateman’s motivation for legal action
• [04:30] – Health and environmental threats explained
• [09:34] – Wider environmental devastation (Lake Windermere, chalk streams)
• [11:30–12:23] – Dr. Kate Baylis: context on state of water sector pre-privatisation
• [13:34] – Prof. Gwynne Bevan: why markets fail for water
• [16:32–19:13] – Dr. Kate Baylis: transformation of company ownership
• [22:07] – Prof. Gwynne Bevan: failings in regulatory oversight
• [24:17] – Dr. Kate Baylis: scale of debt, dividend payouts, underinvestment
• [25:29] – Self-monitoring issues and criminal investigation
• [26:46] – Thames Water’s debts and business fragility
• [27:52] – Steve Reed (Environment Secretary): government’s current approach
• [29:50] – Baylis and Bevan: case for renationalisation
• [31:02] – Environment Agency’s investigation and potential for public ownership

Conclusion

This episode exposes the multi-layered “scandal of huge national significance” clouding England and Wales’s water systems. It connects the personal impacts on swimmers and residents to complex historical, economic, and political processes, led by privatisation and compounded by regulatory and financial failings. The experts are direct: privatisation and global financialisation of water services have fundamentally undermined their remit as providers of a vital public good.

While government seeks incremental regulatory improvement, the consensus among the featured researchers is clear—only returning water to public ownership, as is standard internationally, can guarantee clean, reliable and publicly accountable water for the future.