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Business Comment

Anthony Hilton: Let's stop kicking up a stink over Thames Water and just build this tunnel

Complaining about Thames’s financial structure should not delay the whole project

Wednesday at breakfast with Thames Water, my host looked out at the grey morning. It's been raining at least three hours, he said. That means raw sewage going into the Thames at Hammersmith. Any time now.

Don't believe those stories that it happens only once or twice a year, he added. It takes just two millimetres of rain to overload the system and force a discharge. It is more like once a week. Nor does that sewage then flow swiftly down river out of sight and out of mind. It might go some miles downstream but because the Thames is tidal it will then flow all the way back up again. Indeed this week's most astonishing factoid is that a tennis ball dropped off Hammersmith Bridge will take three months to make it to the sea.

Or so Thames says, and that is why it wants to build its Thames Tideway tunnel, a huge bore which will run under the river from Hammersmith to Beckton and into which will be diverted the overflow from 30 or more sewage outlets which currently dump untreated waste into the river every time it rains heavily. And the volumes are daunting — enough over the year to fill the Royal Albert Hall not once, not even every day, but 450 times. That's why the tunnel needs to be huge too.

But the grand plan is in trouble, partly because inevitably some local residents don't want the disturbance which construction cannot avoid, but more because of the financing. It will cost £4bn, which Thames will pay but it wants a government guarantee as long-stop insurance against being bankrupted by the kind of disaster which can happen in construction projects, for example if its tunnel-boring machine turned left instead of right and flooded the entire Tube network.

Unfortunately the water companies are hugely unpopular because they have become state of the art in financial engineering as well as civil engineering. They have adopted the usual formula of massive debt and minimal tax bills coupled with large cash extractions to the owners and steadily rising bills to the consumers. And they have been caught by the rising backlash against such cleverness. Thames is a regulated business which does invest heavily. But in the country's mood of zero tolerance for tax avoidance, that is no longer enough.

But moral indignation will not get us from Hammersmith to Beckton. London's sewers were built 150 years ago by the great-great-grandfather of the man who invented the Big Brother reality TV show. The population then was two million but they were built to accommodate growth to four million. Today the population is eight million, hence the overflow.

Complaining about Thames's financial structure can be satisfying but it is a second-order issue which should not be allowed to delay the whole project. The tunnel needs to be built, and work needs to start soon. It is the civil engineering which should matter , not the financial engineering.