When Sarah Bentley and Sarah Albon met at Beckton sewage treatment works in east London, the choice of location was designed to underline Thames Water’s predicament.
The site is Europe’s largest sewage treatment operation, with Grade II-listed parts of the site dating to the 1860s. It is now connected with the new Thames Tideway super-sewer, but insiders say several parts of the site are simply crumbling. The site is also riddled with asbestos.
At the meeting in July 2022 the then chiefs of Thames Water and the Health and Safety Executive (HSE) discussed how assets at the water company had deteriorated so much that some now posed a risk to public safety.
Bentley was trying to garner support for negotiations with the regulator, Ofwat, which had been resolute that Thames could not increase water bills unless services improved.
This presented a “catch-22”, according to insiders, as poor performance was symptomatic of decades of underinvestment, as well as years of financial mismanagement that could not be fixed without a substantial injection of fresh cash.
Bentley’s gamble was that convincing the health and safety watchdog would help to drive home the urgency of the request.
She painted a picture of gas digesters that could explode in densely populated areas and near train lines; and of creaking trunk mains that passed through or near the most sensitive streets in Westminster and which could flood basements in minutes, potentially drowning people living in basement flats.
Albon was sympathetic to the risks involved, according to sources familiar with the meeting, but in her view it was a matter for Thames and Ofwat to resolve.
The HSE had penalised Thames before: a death at another big Thames site, Coppermills in Walthamstow, in 2010, resulted in a fine of £300,000 from the HSE in 2014, and an incident in 2017 when three workers were caught in a flood of sewage while working in a tunnel resulted in a fine of the same sum.
But, in the eyes of senior staff at the HSE, these were discrete incidents compared with the gargantuan, systemic issues across a vast array of sites in London and the Thames Valley that Bentley outlined.
It was simply too big a problem for the HSE to navigate, so leaving it to Ofwat was the best approach, they decided, according to sources.
It was illustrative of the byzantine regulation that governs – or is supposed to govern – England’s water monopolies. Water companies, privatised in 1989 by Margaret Thatcher, are policed by an acronym soup of regulators with supposedly distinct but in reality overlapping remits, which claim or abdicate responsibility as they see fit.
Meanwhile, Thames’s executive team was scrambling to try to get a clearer picture of the state of the company’s assets and the risks they posed. But they were up against not only the public mood and in Ofwat, a regulator frustrated by years of failure to maintain assets at the company. Sources claim that there was also resistance to some health and safety spending, with some internal figures who apparently viewed safety concerns as “excuses to throw away money”.
An effort to get on top of the escalating cash-burn at Thames Water was led by Alastair Cochran. He joined Thames in 2021 and served as an interim co-chief executive between June 2023 and January 2024 before resuming the role of chief financial officer. But Cochran has been criticised by several current and former staff for an approach that they believe slowed down time-critical decisions needed for basic functions.
Sources claim that they could not make independent hiring decisions, or spend sums of more than a few thousands pounds in some cases, without approval of senior managers, including Cochran. This had a severe impact on the company’s operations, they claim.
Thames declined to comment on the record to some of the Guardian’s detailed questions. A source at the company said Cochran’s signature was required only on sums greater than £10m.
A Thames Water spokesperson said: “We take a rigorous approach to financial discipline throughout the company in order to operate within budget, as any business in turnaround would be expected to do.”
Several sources told the Guardian that they felt they had no choice but to press ahead with purchases without signoff from Thames’s top staff. These included safety critical chemicals needed to clean water.
“My primary responsibility is to keeping the water safe, not to try and win favour with people who don’t understand that,” said one.
“We can’t cut our way out of these problems; the hollowing-out that’s been happening for decades,” they added, noting that shoe-string budgets had been long established even if decision-making had become blocked in recent years.
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Sources claimed that it appeared to them that some senior figures at the company were often reluctant to accept how dire the state of some of its assets are. . They cited examples of reservoir tanks with significant cracks. These had to be taken out of service, but not before conversations in which staff claim that they were asked if images taken detailing the condition of the tanks, with large cracks, had been manipulated.
Fresh costs are mounting, adding to the existing public figure of £19bn for repairs to Thames’s assets, with about £5bn extra needed so far, sources told the Guardian and documents suggest.
Some of the urgent repairs include reservoirs, such as in Putney Heath, without which Thames does not believe it could sustain supplies in a period of relatively moderate but extended drought or during extensive periods of flooding.
Digesters, which hold gas generated by waste and can be explosive if not properly maintained, have had to be taken offline. This includes sites such as Mogden, in west London, as they presented a risk of explosion in densely populated areas. There are also concerns about seals of other digesters at this and other sites, including near some railways.
A spokesperson for Thames Water said: “The wellbeing and safety of our colleagues and customers is our highest priority. We supply 2.6bn litres of water every day, rated among the highest quality of drinking water anywhere in the world.
“We’ve been very open about the ‘asset deficit’ we face, and the challenges we will have meeting future demand if it’s not addressed. That’s why we have set out an ambitious plan for 2025-30 which asks for £20.7bn of expenditure and investment with an additional £3bn through gated mechanisms, so that we can meet our customers’ expectations and environmental responsibilities.”
A spokesperson for the HSE said: “The meeting with Thames Water was a routine engagement with a major stakeholder. Sarah [Albon] undertakes many similar visits in her role as chief executive.
“Whether HSE would be involved as a regulator would depend on the type of incident – namely one that would fall under remit. There has been no enforcement action from HSE regarding Thames Water since the incident on 29 August 2017. There is no ongoing investigation.”
An Ofwat spokesperson said: “The Guardian has raised a number of serious allegations about Thames Water. We will take action if there is evidence of breach of the company’s obligations.
“We have been pushing Thames Water to make significant improvements in its operational performance and financial resilience for some time. It is of course essential that all water companies provide a safe and reliable water supply. The company has made a request for a substantial increase in expenditure, including to address issues of asset health, as part of the current price review process. We are reviewing that request and the supporting information provided, and will announce our final decisions in December.
“In assessing the business case put forward by companies and in our enforcement work, we work closely with other regulators where needed and seek their views. This includes the Drinking Water Inspectorate in regard to security and cyber measures related to water services, and the Health and Safety Executive and National Cyber Security Centre on matters relating to safety and cybersecurity.”
A spokesperson for the Drinking Water Inspectorate said it considered supply of clean drinking water to be “the highest priority” of a water company, which was a duty under the regulations.
It added: “Where there are any circumstances which give rise to a concern to drinking water, the company are required to notify the inspectorate. Similarly, water company staff are able report matters directly to the inspectorate. In both cases the inspectorate will carry out an investigation and will take action as necessary to maintain the high standard of drinking water in England. The inspectorate carry out a programme of risk-based audits to identify, monitor and verify areas of concern, and take enforcement action based on our enforcement policies.”
Source: theguardian.com
