2nd Mar 2017

Why our Government and their agencies like the Department of Environment and Food & Rural Affairs Cannot be Trusted

The Defra spokesman is not telling the truth when he says “London desperately needs an updated sewage system fit to deal with its growing population.” The population of Inner London has actually been declining since the early 1900′s!

1. The driver of the tunnel project is the EU 1992 Urban Waste Water Treatment Directive and not population growth.

2. Inner London (the old Metropolitan Water Board area) is the only part of London served by combined sewers that the tunnel is meant to address. The Victorians built the combined sewers to cut the cost of laying both foul and rain water pipes. Now we are having to pay a price for their cost saving.

3. “Bazelgette”, the erstwhile tunnel owner, issued a Base Prospectus dated 31 May 2016 to issue bonds to a value of £10 Billion. Why £10 Bn for a tunnel with a construction cost of less than half that sum?

4. The tunnel is designed as a detention tank to hold up to 1.24 million cubic metres of water. This volume equates to 7mm (about ¼”) of rainfall on Inner London’s impermeable surfaces (primarily roads and roofs). When that 1.24 million cubic metres volume is exceeded, the excess is designed, as now, to discharge to the Tideway. Thames Water estimate over three quarters of a million cubic metres of raw sewage will continue to be discharged to the Tideway each year.

5. London Land Use data shows that the Inner London Borough’s land area is 44% gardens, green spaces and open water yet Defra claim there is insufficient space for the other, modern options to address the rainfall issue. They have ignored established techniques for adaptation of the 56% impermeable areas; roofs and highways to resolve rainwater run-off that is the cause of Combined Sewer Overflows and declined to investigate the EU 2000 Water Framework Directive requiring assessment of “a combination of measures” and solutions that cost less than the tunnel.

6. The actual cost of the tunnel to Thames Water’s 5.5 million domestic bill payers will be over £17 Bn with businesses forking out an extra £3 Bn. Operation and maintenance costs are estimated by Thames Water to add a further £1.7 Bn. EU fines for non-compliance with the Directive add a further £2.28 Billion (more if not completed on time). The actual bill, excluding inflation is over £24 Bn; far exceeding the estimated £4.2 Billion construction cost and dwarfing Defra’s fiddled benefit estimate of £12 Bn. To make their cost benefit figures work, Defra included the whole of the UK population as beneficiaries of the tunnel! Deception has taken many forms throughout the Defra processes.

7. Throughout the rest of the world including North America, Europe, Africa, Australsia and the far east, countries have adopted Integrated Water Resource Management and are using green infrastructure to resolve exactly the same problem as Inner London has.

8. The government and the regulator, OFWAT, are in “regulatory capture” by Thames Water. Under the privatisation legislation, Ofwat’s priority is not to customers but to set tariffs at levels so that ‘the utilities can fund their activities’. Macquarie (an Australian merchant bank) has replaced capital with debt since buying TW from RWE and claimed they could not afford to pay for the tunnel thus asking the government for a bail out. Like Bazelgette, they raise their finance in the money laundering centre of the Cayman Islands.

9. Under the privatised Regulatory Asset Base model, in effect, the construction and completion risks of the tunnel (and utility infrastructure spending in general) are being passed on to customers, who cannot manage and control such risks, whereas the underlying principle of privatisation in the first place was that the private investor should carry such risks.

10. Privatisation of monopoly utilities has been an expensive failure for bill payers. This applies to gas and electricity too. Legislative reform is urgently required but with a Conservative government, politically, that would amount to an admission of failure. Throughout the world, many municipalities who adopted the privatisation of water services have since re-municipalised their water services and have thus reduced customers bills.

11. Defra can not be trusted.