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The Sustainable Cost Accounting Question that won’t be asked

I only very slightly apologise for the language in my headline. I can’t do more, because I am beginning some accounting research on the liabilities of the water companies that are pumping raw effluent into rivers and the sea.

The urgency is high, so I was looking for some help. I am seeking estimates of the cost of, firstly, putting right damage already caused by these companies, and secondly, the cost to them of installing equipment that will prevent it happening again.

An interesting question.

We can see where this is going to go of course. Under Sustainable Cost Accounting rules all the water companies will be bust and so can be nationalised at zero cost.

Which isn’t, in fact, the interesting question. Rather, once we know the cost we also need to know the benefit of that spending?

It’s not going to cost £5 to rebuild the entire country with both sewers and also storm runoffs, which is the thing that will be required. Could be £50 billion, could be £500 billion, what the hell do I know? There will be some benefit to separating to two flows of water. But how much benefit?

Will that benefit be greater than the cost of the separation? That’s the important question. Who owns the system is trivia compared to that.

Think it through – if it’s all nationalised then the population as taxpayer, or the population as consumer (for if there are no capitalists involved those are the only shoulders the costs can rest upon) must carry the costs as also they gain the benefits. So, are those benefits greater than those costs?

And, yes, we need to see the sums. We need the cost benefit analysis that is.

Which is, of course, the thing we’re not going to get, isn’t it? No doubt on the grounds that CBAs use discounting which is the work of the neoliberal devils or some such tuberosity.

15 thoughts on “The Sustainable Cost Accounting Question that won’t be asked”

  1. One is tempted to write to him asking if he wants an estimate of the cost of providing the estimates. For one suspects the “help” he requires is someone to do his “research” for free so he can hawk the result around the usual prospects.

  2. Does the thing that Tuber objects to really get pumped into rivers.
    I would have thought that in storms you just release a gate and let gravity move the untreated water into the river. Surely Water Companies don’t really fire up pumps to do this.

  3. @Bongo
    In the Somerset Levels and the Fens, for example, yes they do have to fire up the pumps even for day-to-day drainage.

  4. Sounds like SCA is doing as well as the ‘Class’ think tank and the Fair Tax Mark.

    But lest we forget:

    ‘I have no desire for power for myself. I have no reason as a consequence to appease those who might give it to me. I am, instead, only interested in effecting change. And since the only way in which it seems I can achieve this is by writing, and by sometimes being unreasonable, then that is precisely what I will be.

    You do wonder how close his mental faculties are to collapse…

  5. ‘I have no desire for power for myself.
    Why do those words so remind me of the withdrawal method of contraception?

  6. The water companies don’t own the infrastructure anyway. They own the operating concession, and generally get paid on a Regulated Asset Base model (although the water industry uses a different jargon)- more net assets under management means more money due to them.

    So if the regulated return on RAB is higher than their financing costs – and it usually is – then they always want to invest *more* (up to their financial capacity), not less.

    So generally they propose more capex, not less. But this has to be paid for by our bills, so OFWAT – the government basically – are the gatekeepers for the capex programs; they tell the water companies what has to be included, and what has to be cut to make sure bills don’t escalate too fast.

    So it’s not really the water companies who aren’t fixing the sewage problem. They would happily fix it, if we agreed to monstrously jack up our water bills to make it financially worthwhile (remind you of renewables?!). It’s the government who has decided the cost/benefit analysis does not support it, and to be fair they are probably right and protecting our pockets.

    But the water companies are a convenient PR shield for OFWAT and the government. And the water companies just accept it so the regulator treats them well. So no-one really dispels this notion and we get this whole bizarre debate that bears little relationship to how the industry actually operates.

    Fixing the sewage problem provides lots of capex opportunities.

  7. Storm runoff in large cities generally ends up having to be treated anyway – after it’s flowed over enough roads it’s got a lot of oil etc.

    We had a large fuss where I live a while back about this – much rebuilding of pipes.

    So you separate the flows, then have to put them back together again at a different point.

  8. Dennis, Pointing Out The Obvious

    Why do those words so remind me of the withdrawal method of contraception?

    Well, they came from a penis. There’s a start.

  9. @ BIS

    “‘I have no desire for power for myself’.
    Why do those words so remind me of the withdrawal method of contraception?”

    More like “we have no more territorial demands once you give us the Sudetenland”.

  10. Perhaps it’s an admission that he knows he won’t get anything from a Labour government. His threats to leave the EU post Brexit have not materialised so all he has left is his blogging and his grants from fake charities.

  11. Sounds like SCA is doing as well as the ‘Class’ think tank and the Fair Tax Mark.

    I’m very surprised he hasn’t launched a Sustainable Cost Accounting Mark for anyone who wants to give him £500.

  12. Surely the question should be ‘what is the right amount of shit to pump into the rivers and the sea?”

    Spud will try and argue that it’s zero, because he’s a bellend. But the right answer is more than zero, so it’s all a question of the degree to which water companies can pump shit into the rivers without causing too much damage to things along the way.

  13. Indeed. And the answer to “right” is what is the cost of less, what is the benefit of less? Or more, of course.

  14. “what is the right amount of shit to pump into the rivers and the sea?”

    There’s never a satisfactory answer to that one. Too. Many. Factors.
    Including the simple fact that the organisms in the river adapt in time ( usually a very short time..) to a “moderate” level of enrichment.

    And remember.. one organism’s deadly pollution is generally another one’s preferred food..
    Currently the Titanic is literally being eaten..

  15. All of these stories about sewage in rivers portray the situation as one of commercial companies making huge profits while investing nothing in solving the problem. But that is untrue. Thames Water is investing about £1bn a year. For example, the Thames Tideway Tunnel (see is specifically designed to increase the capacity so that there will be no (or far fewer) overflows of sewage. This project got approval in 2014, started tunnelling in 2016, and is expected to be finished next year (see – a period which includes at least three general elections. The need was identified as far back as 2001, when Labour was in government, showing that it is the commercial companies and the regulator that have the long-term vision to actually fix things, and not governments which come and go quickly.

    What more do people want? A magic wand that can instantly achieve what mere mortals need a decade of work for? Or is the real motivation just criticism, regardless of what is being done?

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