The Fight To Save England’s Rivers

Gill Plimmer writes:

When government inspectors turned up at Peter Rowbottom’s workplace in July 2016, it came as a shock. Such visits were rare at the Southern Water sewage treatment works in Kent where Rowbottom was employed as a site manager. The UK government mostly relied on the water companies in England to self-report sewage outflows from their plants, and several of Southern’s treatment works hadn’t been inspected in a decade.

Rowbottom’s job was to make sure the plant was working properly; managing maintenance and keeping the site diaries, which record sewage outflows. When the inspectors appeared, he handed over the diaries, which were placed in plastic bags on a table, with a promise they would be photocopied and returned. Just as they were preparing to leave, Rowbottom’s line manager called to discuss the issue with the inspectors. Panicking, Rowbottom lunged forward, snatched the diaries from the table, fled the room and locked them in a nearby cupboard.

I learnt of the incident in 2019 when a lawyer who had been following my reporting on the water companies tipped me off about an upcoming court case. Rowbottom and four other employees across various Southern Water sites had been prosecuted for obstructing data collection by the Environment Agency (EA). The regulator was investigating illicit sewage spills into oyster beds near Whitstable, a popular seaside town in the south-east of England.

The employees said they had been under pressure from management or solicitors not to co-operate. This did not change the outcome. Rowbottom and the other employees were convicted, though two were overturned on appeal. Southern Water, which was also charged, escaped conviction because the court couldn’t prove that it was criminally liable for the actions of its employees.

At that time, awareness of sewage pollution was starting to gain traction. People were beginning to connect localised failures to a broader, systemic nationwide scandal. I had just written a piece that revealed that nearly all of the rivers and beaches in England and Wales were polluted.

Rowbottom’s case was an anomaly. While most of my previous reporting had focused on distant institutional investors and faceless corporate entities, this was about ordinary, frontline employees accused of deliberately obstructing state officials.

The case struck me as fundamentally absurd. Why would relatively low-paid, low-ranking staff go to such extreme lengths to aid their bosses in obstructing access to data? A 2019 report into Southern Water by the industry regulator Ofwat provided the answer, confirming a pervasive top-down culture of “data manipulation” engineered to mask maintenance and investment failures. The watchdog also detailed a culture where potential whistleblowers were systematically silenced with threats of disciplinary action.

Some time after the court proceedings, I tried to contact the employees. Although a few confirmed that the ordeal had been harrowing, all ultimately declined to speak on the record.

Over the past decade, my reporting has frequently targeted financial engineering, corporate secrecy and the severe failure to maintain and invest in the UK’s ageing water infrastructure. Yet Rowbottom, an ordinary employee following instructions, remains one of the exceptionally few individuals held personally liable in connection with a company’s failures. As such, his story stood out as an example of all that had gone wrong since the privatisation of the water utilities in 1989.

Margaret Thatcher’s wholesale sell-off of the regional water monopolies was pitched to a sceptical public on the premise that market forces would introduce private-sector discipline and vital capital investment into the ageing water and sewage network. Yet more than three decades later all of the large water and sewage monopolies have been routinely caught breaching their permits, dumping millions of gallons of raw sewage into the nation’s rivers and coastal waters, while some are even struggling to provide essential tap water to customers.

Rowbottom’s fate illustrated how the companies sought to pass the buck and escape responsibility. Their behaviour has evolved into one of the biggest corporate scandals in British history, galvanising thousands of citizens to join anti-sewage pollution protests at beaches around the country. Yet far from suffering the consequences, the opaque network of foreign pension, sovereign wealth and private equity funds that own these utilities has remained insulated from the financial and environmental devastation of their actions.

I was researching my piece on rivers and beach pollution when I first met Ash Smith and Peter Hammond. Smith was a former anti-corruption policeman, and Hammond a computer scientist whose data analysis has exposed the true extent of sewage outflows. Both are well known these days for their influential campaigning. A Mr Bates vs the Post Office-style TV drama about their sleuthing on the water companies, Dirty Business, was screened earlier this year.

When I met them in 2019 near their homes on the banks of the River Windrush in Oxfordshire, there was still a lot that Smith and Hammond didn’t know about the pollution. They could see the grey water and dead fish and were telling people to soak any fish in water for three days to make sure it was safe to eat. But they didn’t know why the river was dying.

We wandered through fields to a pub where we sat under an apple tree and discussed the water industry. Their decision to cancel a small, annual charity rafting event on the Windrush became the opening hook for my investigation. Though a minor local tradition, its cancellation pointed to a wider crisis: the 24,000 combined sewer overflows that allow utilities to dump untreated waste into rivers and coastal waters around the country. Designed as emergency safety valves for extreme rainfall, they were being used more frequently because the ageing sewage treatment facilities hadn’t been expanded sufficiently to cope with the growing population. We were later to discover they were routinely spilling raw sewage during dry weather.

Separating human waste from drinking water is arguably the single most crucial factor in protecting public health and the environment. But almost none of England’s rivers are safe enough to swim in because of the risk of people getting sick with E coli, salmonella and other harmful bacteria.

The state of the rivers was coming under increased scrutiny but that was only possible because of the work of earlier campaigners. In 2010, Fish Legal, a group of frustrated anglers, went to court to argue that water companies must disclose sewage outflows in the public interest. Astonishingly, the UK government legally backed the private utilities’ “right to secrecy”. It took a five-year battle and a landmark European Court of Justice ruling to prove that these privately run monopolies operated as public authorities. The courts noted that the water companies wielded unique statutory powers ordinary private firms do not possess, including the right to enter private land, declare hosepipe bans and pass bylaws to protect drinking water.

By legally subjecting the companies to the Environmental Information Regulations, the ruling gave the public — and researchers like Hammond — the right to demand raw data from sewage monitors. The anglers had breached the wall of secrecy that had shielded the water companies from public outcry since privatisation.

The dirty rivers story was gaining serious momentum. The Times followed it with a dedicated campaign for cleaner waters soon after, while Feargal Sharkey — the former frontman of The Undertones turned passionate fly-fisherman — began a relentless social media crusade against the water utilities. Sharkey and I became regulars at his Soho club, trading water industry gossip over wine. The mounting public noise was a boon for environmental campaigners, but it infuriated Water UK, the industry’s powerful trade body and lobby group. Days after I wrote the piece revealing that nearly all the rivers were polluted, it wrote to the editor of the FT, threatening to bring in its lawyers.

Water UK claimed it was entirely untrue that much of the river pollution had been caused by sewage outflows; that nearly all the worst offending sewage overflow pipes had been dealt with over the past two decades and that agriculture was the true culprit. None of this required a correction to our story, yet six months later a senior delegation from Water UK arrived at the FT’s London headquarters, aggressively disputing nearly all of my findings.

The experience was dispiriting but did nothing to dissuade me from pursuing the story over the months and years to come. In 2023, Water UK, under new leadership, issued a sweeping public apology for failing to act quickly enough on sewage spills, effectively conceding the very ground they had spent years trying to defend.

Before the sewage crisis came the debt. Today, Thames Water, which provides water and sewage services to around a quarter of the population in England, is on the brink of bankruptcy and dependent for its survival on an expensive loan from its lenders, which include the hedge funds Silver Point Capital and Elliott Investment Management. The monopoly supplier risks running out of cash in October and its assets are in a precarious state, posing a “risk to public safety, water supply and the environment”, according to the company’s own documents in 2024.

More recently, internal documents have shown that 13 of the company’s critical infrastructure sites, including the largest water treatment plant in Walthamstow, north-east London, are at risk of “single point of failure”, meaning that any one incident at those sites could disrupt supplies to the capital, with the army needing to be brought in to help. In what has become fairly routine among water companies, last November Thames Water threatened legal action when the FT was preparing the story detailing the threat of such a failure, arguing that the revelations would aid terrorists.

I’d started writing about Thames Water’s debt years earlier, when only a handful of academics were warning about the danger. It was 2014 and a brand-new sewer, the Tideway, was to be built under the River Thames in London. Although the water companies had been privatised debt-free, they had borrowed aggressively and, by the time the new tunnel was needed, Thames Water already had too much debt on its balance sheet to pay for the work.

Instead its then majority owner, the Australian asset manager Macquarie, together with the law firm Linklaters, proposed an entirely new method of financing infrastructure. A new water company was set up, which would keep the project off Thames’ balance sheet and provide returns to a new set of investors even while the tunnel was being built. All the costs would be added to customer bills as a surcharge — currently £33 a year — and the company would have a licence to run the tunnel for 125 years.

I spoke to Martin Blaiklock, a gentlemanly former banker at the European Bank for Reconstruction and Development, who liked to walk his dog, Pluto, along the river in Teddington. He had been warning for some time about the risk posed to the industry by the water companies’ spiralling debt. But the Tideway project struck him as particularly egregious. It was, he said, like Londoners being “forced to pay for a meal at a restaurant before the restaurant has even been built, let alone served any food”. The tunnel, which opened last year, already has £5bn of debt.

In its home country, Australia, Macquarie was dubbed the “vampire kangaroo” for its allegedly ruthless focus on profits and tax. In the UK, it lived up to that reputation. Within six years of buying Thames Water in 2006, the consortium of investors managed by Macquarie had recovered most of the money they had spent on the acquisition by borrowing against its assets and taking out dividends.

Just eight days after Macquarie sold its final stake in Thames Water in March 2017 — leaving behind a debt pile that had grown to £10.8bn — Thames Water received a then-record £20.3mn fine for allowing 1.4bn litres of raw sewage to flow into the River Thames. The untreated effluent had entered the river at six different sites in Oxfordshire and Buckinghamshire, suffocating bream and trout, killing herons and waterfowl, and putting boating companies out of business. Handing down the fine, Judge Francis Sheridan described the company’s actions as “borderline deliberate”. In truth, the word “borderline” seemed unnecessary.

In the months following the case, I spoke to numerous people, from former regulators and investment bank heads, to Doug Kennedy, the Aylesbury local who’d spotted the dead chub fish with their gaping mouths in the river in 2012 and persuaded the EA to take it seriously. The evidence was stark — Thames Water had been dumping sewage to save money on maintenance during a period when investors received big dividends and its executives huge salaries. No one was held to account. The company’s chief executive, Martin Baggs, had left six months earlier and before the court case started with a £2mn pay package. Baggs went on to join the board of Thames 21 — a non-profit that protects the river.

As Thames Water’s problems mounted, the wider industry sought to frame the company as a lone bad apple in an otherwise compliant sector. Yet Thames was hardly unique in funnelling massive dividends to investors while starving infrastructure of capital. Three decades of a “fix-on-fail” approach to maintenance were finally taking their toll. Pipes that should have been replaced years ago were bursting with increasing frequency, and treatment plants that should have been upgraded to cope with the expanding population were straining at the seams. I routinely heard from citizens whose lives and health had been upended by the water companies’ failures.

I first met Tommy Stadlen after his home in an affluent pocket of west London was inundated with raw sewage. During heavy rainfall, the local combined sewer overflows — designed to carry a mix of stormwater and waste — had become overwhelmed, forcing effluent backwards into his property and those of his neighbours. The debris washing into a basement flat next door included dead rats. In October 2021, I joined Stadlen and other local residents weaving past the multimillion-pound stucco houses and upmarket restaurants in Kensington to gather at the local town hall for a packed meeting with Thames Water and councillors. The need for water is a great leveller, something Stadlen, a tech entrepreneur, appeared to reference when he told the meeting to loud applause from angry residents. “This is the richest borough, in one of the world’s wealthiest countries, and yet it lacks a functioning sewage system.”

A subsequent report by Thames Water confessed that the local infrastructure “remains vastly unchanged” from two centuries ago. At the utility’s current rate of investment, the company admitted it would take 357 years to renew the network — even though the operational lifespan of the pipes is just 50 years.

Earlier this year, Stadlen emailed me again to say that the same streets — though not his home — were again under water. “Can you BELIEVE it?” he wrote. This is the “most morally bankrupt large corporation in the country”, he said. Thames Water said it had launched the biggest upgrade of its network in 150 years. “We have more to achieve and have been clear it will take at least a decade to turn the company around,” it added.

Stadlen also bemoaned the “deeply inept” regulator, Ofwat. Every five years, Ofwat demands thousands of pages of infrastructure improvement plans from water companies. It is a labyrinthine and bureaucratic system that even the utilities themselves struggle to understand. “I’d say there’s one person in every water company who has a fairly good grasp of how Ofwat calculates its economic models and prices,” one former water utility chief executive told me.

Under fire over sewage pollution, water companies have attempted to cast themselves as honest participants in a broken system. Yet according to one former Ofwat chief, even when the companies were granted substantial bill increases, they frequently underspent the revenues collected from customers. In one striking instance recalled by a former head of the regulator, Ofwat executives actually proposed an even larger bill hike for Thames Water to repair its crumbling assets, only for the company to reject the offer because it was unsure how to spend the capital. “That is why it annoys me when people say Ofwat didn’t give them enough money,” he said. “If I offered you more cash to renovate your house, you’d know exactly what to do with it.”

The bigger issue was that no one was actually checking whether the companies had delivered. “The prevailing philosophy was that this was nothing to do with us,” said one former head at Ofwat. “The regulator wanted what the investor wants — and no one was really interested in anything else.”

If the regulators weren’t tracking the water companies’ failures, the campaigners were.

In late 2021, Hammond rang to tell me he had proof that Thames Water was breaching its licence conditions by illegally spilling sewage into the river even during dry periods. By applying machine learning to historical data provided by Thames Water itself, Hammond uncovered nearly 1,000 unreported instances over an 11-year period where raw effluent had been illegally discharged from two sewage works on the Thames — with some spills lasting for weeks. “The Environment Agency had the exact same data as I did,” Hammond told me. “They just weren’t looking at it.”

When I put these findings to Thames Water — then led by a new chief executive, Sarah Bentley — I was astounded when the company accepted them without dispute. To its credit, Thames subsequently became the first utility to map live sewage outflows. Since then, Hammond has found that dry-weather dumping is an industry-wide practice; the EA has ruled that the number of dry-day spills is “totally unacceptable”.

It took a further two years, and a flurry of Freedom of Information requests from another band of Oxfordshire campaigners, before I was able to confirm that most of Thames’s treatment plants lacked the basic capacity to process the volume of waste they received. It took longer still to prove that most water companies did not even possess maps of their own infrastructure. At Southern Water, just 40 per cent of the network was mapped because, said the company, the cost of “physically mapping the network was considered prohibitive”.

MPs were starting to take notice. In November 2021, Ofwat and the EA announced parallel investigations into potential breaches of environmental permits by every water and sewerage company in England and Wales. It marked the largest criminal investigation in the EA’s history and the most expansive regulatory inquiry ever launched by Ofwat. Both are massive, slow-moving operations, which continue to grind on. By 2022, parliament’s Environmental Audit Committee was actively investigating, busing nine of its members to Oxfordshire for talks over sandwiches in Hammond’s garden, beside the windmill on the River Windrush.

Two years after its employees were found to have obstructed environmental inspectors, Southern Water was tried at Canterbury Crown Court. This time the company was fined an unprecedented £90mn for thousands of illegal sewage discharges — including those into the Whitstable oyster beds. The judge, Mr Justice Jeremy Johnson, said the case showed a “shocking and wholesale disregard for the environment” and for human health.

Despite the excoriating verdict, once again none of the company’s controllers were singled out. Southern’s chief executive during the period when the offences took place, Matthew Wright, had already left the company by the time of the court case, after being paid more than £5mn during his tenure. “If you and I went down to the local river and chucked in a bucket of sewage, we would be hauled off to the magistrates’ court,” says Emily Shirley, an environmental lawyer who became involved in the campaign against Southern Water.

Senior executives in the industry have not previously been charged over alleged wrongdoing. Last month, however, Wright became the first former water chief executive to be hit with criminal charges, accused alongside three other former senior executives of conspiring to defraud the EA and Ofwat. The prosecution alleged a deliberate plot to manipulate sample testing to mask pollution, including the tankering of sewage away from sites to evade inspectors, enabling the company to avoid millions of pounds in penalties. Through his solicitor, Wright has denied all wrongdoing and stated he has co-operated fully with the investigation.

This year, after the longest, hottest and driest summer on record, Britain’s water companies have again been under the spotlight. Tens of thousands of people in the south-east of England have suffered the debilitating effect of not being able to wash, cook or clean because their taps have run dry and there is the ominous threat of water shortages. Southern Water has even considered shipping in water from the Norwegian fjords, despite the UK getting more rain every year than most of Europe. Meanwhile, most of us are banned from using our hoses, and my tomato plants are dying.

The infrastructure failure is clear: there is not enough storage or treatment, and the pipes leak away more than one-fifth of the treated water they carry, a figure that has been largely unimproved since privatisation. Recently, I wrote that water companies have breached official guidance on discharging sewage at 65 popular swimming sites in England since May, risking public health at the busiest time of year.

The reckoning is fast approaching. Between 1991 and March 2025, the 16 privatised water monopolies raised a staggering £82bn in debt while simultaneously paying out £85bn in dividends to their shareholders, according to research by the FT. The government may soon be forced to renationalise Thames Water or allow creditors to restructure it — a plan that would ultimately add new debt and force customers, already faced with sharp increases to water bills, to pay for it.

Running through it all, the international pension funds, sovereign wealth funds and private equity firms that own the utilities have remained largely detached from the fallout. Meanwhile, that unusual July morning in Kent in 2016 is a reminder that a broken system can only operate in the dark for so long before the campaigners send inspectors knocking on the door.