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- [00:04]
Jo Bateman
I would be swimming along and realized that ahead of me on this lovely, flat, beautiful looking water was a slick of filth, a slick of dirty, muddy, mucky water with kind of with bits in it. And I didn't know, I had no idea what that was.
- [00:22]
Cold Water Swimmer / Swimmer affected by E Coli
We've had a few guys go down pretty badly with the E Coli strain. So, I mean, this morning I was throwing up and I really wasn't sure that there was going to be a chance for me to be in the boat. But yeah, it would have been ideal not to so much so I should poo in the water.
- [00:35]
Professor Gwynne Bevan
I'm not exaggerating. Somebody is going to die because of this pathogen levels we have in the rivers and nobody seems to be interested in it.
- [00:47]
Joanna Bale
Welcome to lseiq, the podcast where we ask social scientists and other experts to answer one intelligent question. I'm Joanna Bale from the IQ team. We work with academics to bring you their latest research and ideas and talk to people affected by the issues we explore. In this episode, I ask, why are our rivers and seas polluted by sewage? Clean water and effective sanitation is essential to human life. Yet every water and wastewater company in England and Wales is under criminal investigation amid allegations of widespread illegal sewage dumping. Some have already paid out millions of pounds in fines and the biggest, Thames Water, is on the brink of financial collapse. It's a scandal of huge national significance that affects every single one of us because it's threatening our water supply and devastating our rivers and seas. I wanted to find out why this crisis has developed and how we can clean it up. We'll find out who really owns our water, the difference between bread and water when it comes to selling them in an open market, and why government plans to tackle the crisis might not work. But first, let's hear from Jo Bateman, a physiotherapist from Devon. You heard her at the start describing how she used to swim near raw sewage without realising what it was. When she found out, she launched an extraordinary one woman legal battle against her water company.
- [02:30]
Jo Bateman
I'm sewing south west water basically because I'm sick of the endless sewage dumping into the sea where I like to swim. And I moved here specifically to be by the sea six years ago. I lived in the Midlands. I just took literally a week's holiday from my full time job, which I loved, and walked the southwest coast path from Poole to Lyme Regis and I just fell in love with being by the sea and I literally went home, put my house on the market, handed in my notice and I moved down Here, but I didn't swim at that time. My sister's always been a cold water swimmer and she was visiting one weekend, wanted to go swimming in the sea, it was in the winter and she persuaded me to go in with her and I was absolutely bitten by the bug from that first swim.
- [03:15]
Joanna Bale
You swim all year round, sometimes in freezing conditions and without a wetsuit. Why do you think you and many others love it so much?
- [03:23]
Jo Bateman
What I discovered was, and this happened the very first time that I went in, is the enormous buzz that it gives you, the boost that it gives to your mental state. That's huge. And if you talk to anybody who regularly swims in cold water, it's the one thing that everybody says is that it's just so good for their mental health. I can stand on the beach and there I am in my swimming costume and the weather's awful and the sea looks gray and horrible and. And I honestly every time think, why on earth am I doing this? But I know that I will love it. And so I just go in and swim. And I've never, ever regretted it.
- [04:02]
Joanna Bale
How has it helped your mental health?
- [04:05]
Jo Bateman
I've suffered from depression for many years and I've been on antidepressants for many years. But since I started cold water swimming, for quite a long time now, I've been on the lowest dose of the antidepressant that I'm on. I've basically halved my dose down to the lowest level, but I don't need to be on any more, which I did need to be before to maintain my sort of mental health stability.
- [04:30]
Joanna Bale
Water companies are legally allowed to discharge untreated wastewater into rivers and seas during exceptional rainfall. This stops sewage backing up into people's homes, but they are suspected of using sewage overflows more than they should, causing dangerous levels of pollution. This can expose swimmers, surfers and rowers to bacteria such as salmonella and E Coli, which cause diarrhea and vomiting, or viruses like hepatitis A, which can lead to liver infection. Sewage has even polluted our drinking water. In Brixham, Devon, last year, residents had to boil their tap water after an outbreak of a diarrhea like illness caused by the parasite Cryptosporidium found in faeces. Before she swims now, Jo checks an app run by the campaign group Surfers Against Sewage. This tells her when sewage is being discharged into the sea near her favourite South Devon beaches. I was talking to Jo back in July when rainfall was relatively low.
- [05:35]
Jo Bateman
So in Exmouth last year, there were over 120 days when I Couldn't swim. And that was across the year. It happens more in winter because it is related to heavy rain. But it isn't only caused by heavy rain at the moment in Budley Salterton, which is where I have swum but won't swim this year, there have been discharging dumps of raw sewage in Budley constantly. I mean, with breaks, but like almost every day this year since January, that are still going on now because I believe it's due to a problem with the holding tank.
- [06:14]
Joanna Bale
Water companies are accused by campaigners of failing to invest in infrastructure. This has left sewage systems unable to cope even in normal weather. Campaigners argue that customers money is being used instead to pay billions of pounds in bonuses to company bosses and in dividends to shareholders. Ofwat, the body that regulates the water industry jointly with the Environment Agency, refutes those claims. It insists that over £200 billion has been invested since the industry was privatised more than 30 years ago. It does agree, however, that change is needed. The water companies say they can fund the necessary improvements by increasing bills, but proposed price hikes have outraged consumer watchdogs and campaigners like Joe.
- [07:04]
Jo Bateman
Literally millions and millions of pounds paid every year in dividends, in bonuses. That money should have been going into the infrastructure and it hasn't been happening.
- [07:15]
Joanna Bale
So why did you decide to pursue a legal case? It's a bit of a David and Goliath battle, isn't it?
- [07:20]
Jo Bateman
It is. It didn't really seem like that, but the more time has gone on, it does seem like that. Early last year, I decided to stop paying the sewage element of my water bill. And so, of course, I was then threatened with county court judgments and bailiffs and all of that sort of thing. So I, I actually gave into it because it was quite frightening. Like, you know, I didn't want those things. And I thought, okay, you know, pack it in, you've made your point. But I then went through the summer, and even though it was summer and it didn't rain as much, there were still sewage spills. Not as many, but they still went on and they, you know, so towards the end of the year, I thought, right, don't, you know, don't, don't be a wuss, go for it, do it again, don't cave in. So I decided again, I would stop paying the sewage element. But it just wasn't enough. It just. I felt. I still felt something bigger needed to be done. At that point, it was really only about me. It didn't seem like this huge thing And I finally, like, issued my claim just through the small claims court.
- [08:27]
Joanna Bale
It cost Jo 50 pounds to make the claim, asking for 379 pounds 50 pence compensation for not being able to swim due to sewage. She says it's obviously not about the money, but about making a stand. Her case, which is ongoing, soon attracted national media attention and thousands of supporters on social media.
- [08:48]
Professor Gwynne Bevan
After moving to Exmouth five years ago.
- [08:50]
Dr. Kate Baylis
Jo Bateman found that a daily dip.
- [08:52]
Joanna Bale
In the sea had a transformative effect on her mental health.
- [08:55]
Dr. Kate Baylis
Yeah. But after a swim society become frequently.
- [08:57]
Joanna Bale
Disrupted by sewage spills, she decided to take action. She now has backing from the legal campaign group the Good Law Project and leading law firm Leigh Day. She has also inspired a group of residents in Exmouth, her hometown, to launch their own legal action against southwest water.
- [09:15]
Jo Bateman
I have never in my wildest dreams anticipated anything like that happening. So it is sometimes stressful, but at the same time it's happened and I feel like I just have to keep going with it for as long as it takes. Now I'm not. Yeah, I'm not backing down now.
- [09:34]
Joanna Bale
As well as threatening our health, sewage pollution is also causing environmental damage to our waterways, devastating many areas of natural beauty. Lake Windermere in the Lake District has turned green in some parts due to an overgrowth of toxic algae. And the once crystal clear waters of many of England's rare chalk streams are now murky and grey. I wanted to understand more about how this extraordinary scandal has developed. The story begins with Margaret Thatcher back in 1989, insisting to a rowdy House of Commons that privatising water will be a success.
- [10:12]
Margaret Thatcher
Privatized water is a better deal than nationalized water that the water privatization, I believe, will go very successfully indeed. That will go very successfully indeed. And perhaps, therefore, we had better wait and see so that we can pontificate in the light of the fact.
- [10:31]
Joanna Bale
To find out what happened next, I arranged to meet two academics in the LSEIQ studio. It's a small room on top of a 12 story tower block with spectacular views across London. It was a clear, bright day and as I waited for my guests to arrive, I could see the River Thames glistening in the distance. It was a sobering thought that Thames water had pumped 14.2 billion litres of sewage into it the previous year. Joining me in the studio were Professor Gwynne Bevan, an LSE policy expert who whose latest book is called How Did Britain Come to a Century of Systemic Failure of governance? And Dr. Kate Baylis, an economist from the School of Oriental and African Studies University of London. She has been researching the UK water industry for the past 10 years. I started by asking Kate how well the state owned system had been operating before Mrs. Thatcher's radical programme of privatisation.
- [11:30]
Dr. Kate Baylis
These regional water authorities were facing financial problems. There was a huge need for investment in the sector and there was considerable pollution. So we needed investment in the water sector. But the government was reluctant to commit more government borrowing or to increase taxes. So privatization was happening in other sectors. And so privatization of water came to the fore as a suitable policy. It was supposed to make companies more efficient because of the profit motive and private companies would then borrow to invest and it would take the debt off of government's books. But also there was a political agenda to create a sort of new class of conservative voters that would be share owners because some of the shares were reserved for water company customers. So it was like a deeper cultural shift in the economy that the water privatization was part of.
- [12:24]
Professor Gwynne Bevan
Gwyn, you talk about this in your book about neoliberalism and the radical changes made to public services.
- [12:31]
The key idea of neoliberalism at the heart of Margaret Thatcher's governments is that the best form of organizing things is private ownership in markets. And she firmly believed that state run enterprises, you know, and public services, they lack the incentives for efficiency. The confidence trick that neoliberalism performed is to persuade people that markets and private sectors, private ownership are the solution. But actually there are very stringent conditions, which is what my book explains, where markets work, I mean they work really well for simple commodities like bread. We buy often, it's cheap, you don't write a contract. If quality is terrible, you stop buying it. Failing providers exit the market, a whole set of things. And the key thing that makes markets work is competition and failing providers exit. Now, the water company always classically the exemplar of where markets won't work because you've got a natural monopoly. And of course water and sewage are vital for health and life and health.
- [13:34]
Can you just explain what the whole natural monopoly, basically, you know, the water.
- [13:39]
Comes from one set of reservoirs through one set of pipes. And if you wanted to have competition, another company have to, you know, develop new reservoirs and a new set of pipes and it would be hugely expensive. So we just see that as a natural monopoly. It's unlike say in private markets where, where a firm manages to achieve a monopolistic position, but actually there are other firms that could easily enter the market.
- [14:06]
Dr. Kate Baylis
Plus the fact it's water and it's homogenous water's water you can't have, other than having good quality water. It's not much to define different types of water.
- [14:18]
Joanna Bale
We all need water and sanitation in our homes, but there is only one company in each region that can provide it, so it's a monopoly business with captive customers. This means there is no competition, so less incentive to invest in infrastructure and provide the best service. It seems obvious now that this might create problems, but at the beginning it all ran smoothly. Gwin told me that privatisation seemed to work at first. Each water company in each different region appeared to be operating responsibly, overseen as they are today by the regulator Ofwat. But it didn't last long.
- [14:58]
Professor Gwynne Bevan
In the early 1990s, I was working for a firm of economic consultants that was doing really well on the back of consulting for privatization. And they described Ian Byatt, the regulator of what, as chief executive of UK Water plc. And it's felt he had this iron grip on those companies. There were these ground rules for financial probity of those companies that then disappeared through prior private equity.
- [15:24]
So can you explain what changed and why?
- [15:28]
Dr. Kate Baylis
Initially there was a lot of investment, but since, since privatization we've seen a major change in ownership structures. So we have 10 regional water and sewerage companies in England and Wales. I have to emphasize we're not talking about Scotland or Northern Ireland. They have their own separate public companies. So initially these were all listed on the London Stock Exchange, so we had a dispersed set of shareholders. So ordinary people, anyone could buy a share? Yeah, so. So anyone could buy a share. But since then, initially there was a golden share held by the government until 1994, which was specifically to guard against hostile takeovers.
- [16:02]
Professor Gwynne Bevan
What does golden share mean?
- [16:04]
Dr. Kate Baylis
It's not a controlling share in terms of value, I think it was 15%, but it has properties, which means that they can have a say in takeovers. So it was to protect against hostile takeovers. So that was in place for the first five years, but after that was sold, there was quite a quick process of consolidation. So quite a few companies were taken private, meaning that all the shares were bought by one investor or a consortium of investors.
- [16:33]
Joanna Bale
The government had prepared the water industry for privatisation by cancelling its debts and injecting cash into it. So even though it was sold for 7.6 billion pounds, the net proceeds to the treasury were roughly zero. Polls showed a big majority of the population were opposed to the policy. But that didn't stop more than 2.5 million people applying for shares. The offer was nearly six times oversubscribed and the average gain to investors on the first day of trading was 40% in line with the large premiums from previous privatisations as small investors sold their shares to cash in their big profits. The water companies were bought up by global enterprises. They are now owned by a complex web of foreign investment firms, wealth funds and tax haven based businesses. A guaranteed income from customers and light regulation has made the industry very attractive. It has enabled investors to load the companies with debt and pay out large dividends to shareholders rather than invest in sewage infrastructure. Kate and Gwynne say water companies have become financial assets for global private investment rather than operations for the delivery of a vital resource. They call this the financialisation and securitization of the water sector.
- [17:57]
Dr. Kate Baylis
So now the 10 big water and sewage companies. We have one, Welsh Water which is owned by a not for profit company. Three are still listed on the London Stock exchange that it's 7 Trent, United Utilities and Southwest Water is owned by a company called Pennon and that's listed on the stock exchange. We have two that are owned by what I call Asian conglomerates. So Wessex Water is owned by a Malaysian company called ytl. So this is a sort of family controlled big company with a global portfolio in utilities and Northumbria and water similar is owned by CKI which is owned by a Hong Kong family based company but a huge global company. And then we have four of these water and sewage companies owned by consortia of financial investors. So these are pension funds, private equity funds, sovereign wealth funds. These come together for the specific purposes of buying the wood company. They set up what's called a special purpose vehicle spv. So they set up this company out of the four of them. Three of these are registered in Jersey. So this company is set up just for buying the water company. And these types of investors have led to a different type of financialisation I suppose of the water sector.
- [19:14]
Professor Gwynne Bevan
At the beginning, you know, ordinary people bought shares and then it all changed. So is that what normally happens with these things? Has that happened with other privatizations?
- [19:22]
I mean that's the trend that happens, Yes. I think the criticism made of the OFWAP as a regulator is they assumed that these companies would be looking after their financial balance sheets. Therefore they would only pay out dividends if they could afford to do so. And they would also make prudent capital investments so they would be run the way a normal trading company would. And the point about this securitization specialist purpose vehicles is you've got these enterprises, they're not interested in supplying clean water and, you know, doing a good job on sewage. In Britain, their sole purpose is to make as much money as possible for the investors and you can do that by paying out dividends and running up debt and not investing in pipes or sewage. And so you get this horrendous thing about the sewage is everywhere now, rivers and seas. I mean, it's still privatized, we still have the regulators. So from the outside it looks, if nothing's changed, but this securitization financialisation has fundamentally undermined what was set up.
- [20:33]
But why don't the regulators do something about it? What's going on?
- [20:37]
Dr. Kate Baylis
So obviously private ownership of water, it's such a vital resource. Regulation is absolutely crucial if it's going to be managed in the public interest. Since 2009 we've had a system of operator self monitoring where companies are required to report their own pollution leaks and then the Environment Agency is supposed to audit this. They also provide a set of metrics on environmental performance and then this feeds into the price setting process, which is part of which is the remit of ofwat. OFWAT is the economic regulator. So the main focus of regulation is this process of setting prices.
- [21:14]
Joanna Bale
I was talking to Kate and Gwynne last year when OFWAT was still deciding on prices that water companies can charge customers based on their performance. They recently announced that bills will rise by 36% on average over the next five years. It's the first major increase in 15 years.
- [21:32]
Dr. Kate Baylis
So prices are set in advance every five years. So at the moment we have what's called a price review, PR24, because it's 2024, they're going to set prices for 2025 to 2030. So this goes on every five years. And the two main elements of setting prices are the anticipated costs and the performance against a whole set of targets, which includes pollution, which includes water quality.
- [21:57]
Professor Gwynne Bevan
But it just seems to be more biased towards the finance rather than the quality of the product that they're producing. I don't really understand why that is. Can you explain that?
- [22:07]
I think there are two issues here. One is that, I mean, the Environment Agency, when Liz Truss was Secretary State responsible, savagely cut the budget. And the thing that Kate says about is this thing where 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 really. And the other thing that comes through in this is that basically what you're asking these regulators to do is to make political Judgments over how much you're prepared to pay for investment, you know, to stop leakage in reservoirs and protecting the environment.
- [22:48]
Joanna Bale
According to Gwin, the Environment Agency has lacked the resources to properly monitor pollution, so the water companies were able to freely discharge sewage. And ofwat has been under political pressure to prioritise lower bills. So there has not been enough money to encourage water companies to invest in infrastructure when their priority has been to pay dividends to investors.
- [23:11]
Professor Gwynne Bevan
And these are political judgments, and you can't ask regulators to do that. And what the regulators have done, particularly of what is, of course, you know, you're in the firing line. Increasing prices is extremely unpopular. So the easy thing for them to do is to let prices, you know, keep prices low and to hell with the rest. And of course, if you've got a damaged, vulnerable environmental agency, that's, you know, what's happened is perfectly predictable from that.
- [23:41]
So in a nutshell, you're saying that the regulation is underfunded and, well, they don't want to increase prices. So therefore they're making political decisions. And the companies, all they're concerned about is profit and borrowing, mortgaging their assets and paying out huge dividends.
- [23:58]
Dr. Kate Baylis
We had this idea, as Gwyn's saying, of this kind of benign company that will increase productivity and the gap between revenue and costs, that'll be the profit, and that will shape what they pay shareholders. But we've had them operating in a really different way, completely unanticipated.
- [24:14]
Joanna Bale
Why wasn't it anticipated?
- [24:15]
Professor Gwynne Bevan
Wouldn't any economist be able to predict that?
- [24:18]
Dr. Kate Baylis
With hindsight, you think? It seems so obvious. So what we've had is companies have financed all investment pretty much through borrowing. Pretty much all surplus funds has gone to shareholders. Huge increase in debt. Debt for the whole sector is now over 60 billion. 78 billion has been paid to shareholders since privatization, and not enough investment in sewage infrastructure. But the failings in the environmental side, I think are slightly different in that we didn't know the Environment Agency wasn't doing the audits it should have been and companies were not reporting. So now we have this criminal investigation that's been going on for two years. So ofwater and the Environment Agency is looking to see if companies have been deliberately misreporting. Oh, I didn't know. That's a new one there. You say it's been ongoing for some time because the sewage only really came to light through environmental containers and people checking to see it's realizing something was wrong. From what they observed after the scale.
- [25:13]
Joanna Bale
Of the sewage dumping Scandal began to emerge. The Environment Agency instructed water companies to install monitors on thousands of sewage overflow pipes by the end of 2023. So it's only recently that we've been able to calculate how much is being spilled.
- [25:30]
Dr. Kate Baylis
Now that this has come to light, it's become clear that what was happening with self monitoring maybe wasn't entirely accurate. And there's various informal whistleblower accounts of things being manipulated to suit to suit the figures and the targets. So this criminal investigation is huge in these companies.
- [25:49]
Professor Gwynne Bevan
Do they have a defence?
- [25:50]
Joanna Bale
Do they say, well, you know, we're.
- [25:52]
Professor Gwynne Bevan
Hamstrung by whatever the sewage situation.
- [25:56]
Dr. Kate Baylis
It's pretty much all down to underinvestment in infrastructure. Water uk, which is the industry body for the water system, actually issued an apology for this last year and they said they're going to Invest, I think, 96% billion pounds in sewerage infrastructure, which is great, but investment that they put in is financed by bills. We mustn't forget that. They say they're going to bring investment. We will pay for it and we will be paying. We're paying for debt service for these highly indebted companies. We're paying for dividends, we're paying for chief executive salaries in the millions.
- [26:27]
Joanna Bale
I asked Kate why Thames Water, our biggest water company, is on the brink of collapse. It is owned by a group of investors spanning four continents. She explained that it is largely down to inflation and the rise in interest rates. This has raised the costs of servicing the company's huge debts.
- [26:46]
Dr. Kate Baylis
I just worked with the Guardian looking at the share of revenue going on debt service, and it was highest for Thameswater. About 28% of revenue was going towards debt service costs. So there's a kind of fragile structure was put in at a time of low interest rates, which maybe would not have been so disastrous if we hadn't had the increase in interest rates and inflation that followed. But it was obviously quite a fragile structure if it's not able to withstand these external events. So of what's trying to push them to perform better, put in more shareholder funding. But the shareholders are reluctant because they want to see that they're going to make returns on investors, so they want to be allowed to put up prices, as he would as an investor. So, yes, we have the regulator attempting to push them to perform better, but it's not working. That's the problem with regulation. It's a fine line that you're treading. You start trying to squeeze companies more to perform better. This is completely unraveling with trends.
- [27:38]
Joanna Bale
So how do we clean up the sewage crisis? Keir Starmer ran for leadership of the Labour Party, insisting that the water industry should be re nationalised. But this has now been ruled out. Here's Steve Reed, the Environment Secretary, explaining why.
- [27:53]
Steve Reed
Well, you see the state that the economy is in and frankly, it would cost tens of billion of pounds to nationalize the water sector. And if we were to decide to spend that amount of public money, which we won't, it would also take years to unravel the current ownership model. And during those years, investment would dry up and water pollution would get worse. And I think the public expect their government to get on and clean up the waterways, not make the situation even more difficult.
- [28:19]
Joanna Bale
Instead, the government has introduced legislation to give regulators new powers to block the payment of bonuses to executives and bring criminal charges against persistent lawbreakers. I asked Kate and Gwynne if they thought this will bring about the change that's needed.
- [28:35]
Dr. Kate Baylis
Well, as I was saying about Thames, it's difficult because you want investment. We rely on private investment in infrastructure in this country. And as quite a few investors have been saying, we don't have to invest in UK water, we can take our money anywhere in the world. So if we get too tough on companies, there is this kind of perceived threat that companies will just go elsewhere. So I don't see that tweaking regulation is going to make very much difference. The other problem with regulation, I just wanted to say, is that we've only started acting on sewage once it's become visible and it's become visible and the problems are huge and we didn't know this was going on.
- [29:12]
Joanna Bale
Kate then explained that rules introduced by OFWAT to try to stem borrowing and huge dividends to shareholders also came too little, too late.
- [29:22]
Dr. Kate Baylis
Got new rules now about financial controls, but only once. Companies have become massively indebted. So the private sector surprises us and we don't know what's going to come next. And what we're doing now is thinking of putting on regulations to stop what we've seen, but we can't put in place what might be down the road because we don't know. So we can patch things up and limp along, but I think there'll be another disaster down the road with the current system.
- [29:47]
Professor Gwynne Bevan
If you were running the country, would you just bring it all into public ownership?
- [29:50]
Dr. Kate Baylis
Well, one indicator of this is that nowhere in the world has copied our system. Public water is absolutely normal in the rest of the world. So people say all nationalisation would be like going back to the 1970s but absolutely not. It would bring us in line with the rest of the modern world. So there's good reason for that. This is a public resource and needs to be publicly managed. I mean, public ownership might not always work perfectly, but at least it's a starting point where we know what's going on, we know what the issues are.
- [30:19]
Professor Gwynne Bevan
I just think you have to look upon this as an experiment that failed. So putting it together under state ownership, with ministers responsible for what they're doing, making judgments about how much we're going to increase prices for these trade offs, that just seems to me the natural way of doing things.
- [30:38]
Joanna Bale
Kate and Gwynne say government plans to tighten regulation on private water companies could deter investors and push up prices. They argue that the only way to clean up our waterways and keep prices reasonable is to re nationalise our water industry. This would mirror government policy for the railway network and to a lesser extent energy, where a state energy company is planned.
- [31:02]
Dr. Kate Baylis
The Environment Agency is currently conducting its largest ever criminal investigation to assess whether there's been widespread and serious non compliance of environmental permits of wastewater treatment works. I think that's potentially quite significant in what happens next because these companies seem to quite clearly be in breach of their. So we should really be on solid ground to just revoke their licenses and take them into public ownership.
- [31:24]
Professor Gwynne Bevan
The temptation is to keep these flawed systems in place. I mean privatisation of British Airways made sense, they're competing in international market, but there are things like water, railways, energy that are so fundamental and which these markets have failed. We've learned a lot from how you regulate and assess these companies and we can develop systems to hold state nationalized companies to account.
- [31:54]
Dr. Kate Baylis
We've tried this model and it really hasn't worked because we're just putting the wrong people in charge. These companies, 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. But I don't think that much has to change. I think we have, you know, we have really great people working in these companies. They do brilliant stuff. It's just that layer at the top of the financialization and the shareholders that just creates the wrong incentives for operation. So that's, I think all that would need to change and then we could end up with something that works far better for the environment and for society.
- [32:42]
Joanna Bale
This episode was produced and written by me, Joanna Bale, with script development by Sophie Mallett and editing by Oliver Johnson. If you'd like to find out more about the research in this episode, head to the Show Notes and if you enjoy iq, please leave us a review. Join us next month when we ask, do we need to drive? If you like this podcast, you might like the LSE Events Podcast, which features talks by some of the most influential figures in the social sciences. A recent lecture by Jim Muir of LSE's Middle East Centre explores the challenges faced by journalists reporting on the war between Israel and Gaza.