It’s one of those times of year when leaks spring up in the street. The summer heat causes a surge in demand for water and the added volume opens cracks in the pipes.
The Victorian system is too old to hack it, and London’s expanding population and climate change are only making matters worse.
Yet just as we need upgrades and improvements, Ofwat orders Thames Water to spend £1.6 billion less than its already-shrunken £10.9 billion investment plan. Madness.
But what can chairman and acting CEO Ian Marchant do about it? If , as appears likely, Ofwat has still refused to bend by January, he can take the ruling to the Competition and Markets Authority, but the risks are high.
Over the years, five or six power or water networks have tried it, in some cases winning, in others losing and getting an even worse result.
These days, the CMA is run by Andrew Tyrie, who has the former politician’s eye for vote-grabbingly zealous anti-business decisions – witness the killing of the Sainsbury’s-Asda deal, its proposals to hogtie corporate audits in red tape and the bizarre investigation into Amazon’s minority stake in Deliveroo.
Given that relentlessly pro-headline grabbing bias, one has to assume that if Thames appealed against Ofwat to the new-look CMA, it would be ejected quicker than floodwater through an open sluice.
Marchant will have to suck up what the regulator throws at him. For consumers, that might not be such a good thing. London needs to get its network fixed, and that will cost money.
Cut-price, sticking plaster measures of the type Ofwat is budgeting for won’t do the job.
