Review: Murky Water. Challenging an Unsustainable System, by Luca Calafati, Julie Froud, Colin Haslam, Sukhdev Johal and Karel Williams

‘Murky’ is a kind word to use about Britain's water system. It is much, much worse than that. Pipes flow into rivers and across bathing beaches, spewing excrement, used toilet rolls, condoms, sanitary towels and other hazardous filth. As the recent Channel 4 docudrama Dirty Business hideously reveals, this is neither exceptional nor unavoidable, but commonplace and characteristic of the way a vital service is delivered in the UK today. Here is the ‘murky water’ of the title: not the vile leakages, but the muddy, systemic dysfunctions that produce them.

There are (at least) two reasons for paying attention to this book. It offers a forensic examination of what's gone wrong. And it illustrates a perspective on political economy that is increasingly influential, known as ‘foundational economics’ (FE). This is now a major strand of the ‘new economics’ agenda that challenges neoclassical orthodoxy. Launched more than a decade ago by a Manchester-based team that included most of this book's authors, it has since been taken up by a wide range of academics and activists across Europe.

In a nutshell, FE posits that governments’ economic policies must give priority to ‘the provision of everyday essentials such as food, housing, health services, utilities and transport, within planetary limits.’ It calls for sustained public investment in material and social infrastructure (hardware and human services) so that everyone—in all income groups and localities—can have access to the basic requirements of life. There is plenty of evidence that getting this right could do much to support health and well-being, protect the natural world, build social solidarity and create a multitude of jobs across the country. The FE perspective has been routinely marginalised by mainstream policy makers caught in an over-excited embrace of high-tech innovation, unfettered markets, resource extraction, profits and growth. However, it becomes increasingly salient if Prime Minister Burnham means what he says about strengthening public control of utilities and making life's basic necessities genuinely affordable for everyone. Geographically and ideologically, Burnham's ‘Manchesterism’ and FE have much in common.

So, could this book help to realise Burnham's ambitions? The authors argue that, as an essential provider, the water and sewerage system should ideally be technically capable, socially and spatially inclusive, financially accessible, environmentally responsible and democratic. It fails spectacularly on all counts. After decades of privatised ownership, financial engineering, inept regulation and negligent government, it is unmistakeably in deepest shit.

The roots of the problem are exceedingly complicated, we are told. They lie in the specifics of water and sewerage provision. For a start, there is an apparently inescapable gap between costs and income. The industry is asset heavy. Building, operating and maintaining all those reservoirs, aquafers, drains, pipes, sewers and sanitation plants across the country is hugely expensive under any circumstances. Finding the funds to repair, extend, modernise and prepare for the onslaught of floods, droughts and hurricanes that climate science predicts is a gargantuan undertaking—greatly intensified by years of feckless commodification.

At the same time, an adequate supply of clean water is something people regard as a basic necessity that should be universally affordable. Ofwat, the regulator, has long kept a lid on charges, not least to avoid political revolt. Bills are now due to go up, but not enough to fund the scale of change required. Lower income groups will be hardest hit—and harder still with each subsequent rise. Under the current charging regime, it is hard to imagine how it could be financially or electorally viable to bridge the gap without heavy government subsidies.

As the industry is reduced to churning out raw sewage, its proprietors have famously managed to keep churning out hefty dividends to shareholders. Unable to raise sufficient funds from consumers, they have avoided upgrading or future-proofing the material infrastructure, favouring patch-and-mend where absolutely necessary. They have borrowed eye-watering sums, ratcheting up debt to levels that render them ‘zombified’, with inflated interest payments, wrecked balance sheets and vanishing opportunities for further borrowing. At this point, their only resort is ever more baroque financial engineering, for which households are supposed to pay through further charges on their water bills. Politically and fiscally, it doesn't add up.

The industry was debt free when privatised in the 1980s. By 2023, the water companies had collectively borrowed £68 billion. No new reservoirs have been built in thirty years. There are huge variations in rainfall between different parts of the country; climate change has brought wetter winters and drier summers, with greatly increased threats of floods and droughts—yet there has been no coordinated planning to secure universal access in the long term. The regulators, Ofwat and the Environmental Agency, are geared to overseeing a commercial sector where citizens are mere consumers and providers are left to report their own wrongdoings.

Of course, water is profoundly ill-suited to private ownership. It is a natural monopoly, widely recognised as part of the ‘commons’ and a proven market failure. It is crying out for a return to public ownership or at least to much stronger public control. The authors agree, with caveats. Even if public ownership can be achieved at minimal cost, as the respected think tank Common Wealth has argued (How to Clean Up Our Water: Why Public Ownership in Law Costs Zero), they warn that this will fail to restore the industry unless it is accompanied by root-and-branch reform.

Stronger public control could eliminate profit extraction. But if water companies carry on trying to fix the infrastructure by contracting out to private financial consortia (a tactic often favoured by government), they will pile up unbearable levels of debt for the future. This was a costly lesson from New Labour's private finance initiative (see Nick Timmins, ‘An unhealthy end looms for the private finance initiative’, The King's Fund).

What, then, do these leaders in FE suggest should be done? The final chapter points towards ‘a more foundational water management system in the age of climate change’. It calls for four technical reforms: a progressive charging system based on household income; public ownership as ‘a necessary defensive move to protect against financial engineering and short-termism’; coordination of ‘multiple social actors’ to involve ‘the local expertise of civil society in… democratic water management’; and ‘reinvention of national planning’ to safeguard the public interest.

These suggestions are meticulously expounded and qualified. The authors point out that ‘power relations’ are critically important and recommend ‘adaptive reuse’ of existing structures and processes. What emerges, however, is an excruciating tension between the far-reaching implications of the foundational goal and a closely focussed preoccupation with the complexities of the status quo. Woods and trees come to mind.

What is more likely to get the job done, surely, is a detailed plan for swift government legislation and institutional reform. Indeed, a group of MPs and mayors presented just such a plan to Burnham shortly after his arrival in Downing Street, specifying how to achieve much stiffer regulation and a rapid pathway to mutualise the water companies (‘A watertight solution for public control’, Good Growth Foundation, August 2026).

To be fair to the authors of Murky Water, they could not have anticipated Burnham's march on Westminster and the sudden shift in political weather. But that's not all that hinders their capacity to influence change. Self-declared ‘liberal collectivists’, they follow Amartya Sen in championing ‘the individual freedom of citizens to live lives they have reason to value’. They deeply distrust Westminster and Whitehall and share communitarian ideals with the soft centre of politics known as ‘blue Labour’. This leaves a tricky course to steer between an anti-statist philosophy that favours individual choice and proposals for public ownership and national planning. They hope to ease navigation by conjuring up a ‘social movement’ for water that will ‘change the existing framework of policy and practice’. Will it, though?

On climate change, they recognise the implications for the water industry, but display little urgency about the existential threat it poses to life on Earth. The idea of a ‘sufficiency economy’ that involves constraining unnecessary consumption—of water and other staples as well as luxury goods—is increasingly supported by climate scientists and experts in sustainability. But it doesn't get a look in, here. Tellingly, they want to tie water bills to household income, rather than introduce an affordable ‘block tariff’ tied to household needs. The latter aims to ensure that everyone has enough water and discourages excessive use by charging extra for it—but it jars with the notion of individual freedom.

The book helpfully lays bare some inner contradictions of the water and sewerage industry. It also shows FE as a work in progress. Cleaving to the liberal collectivist roots of the originating FE group, the authors abstain from directly challenging today's rapacious late-stage capitalism, even though it bears so much responsibility for the problems they painstakingly analyse. It is heartening, then, to find that the Manchester team has inspired cohorts of intellectuals and campaigners (based in Austria, Belgium, Italy and other EU countries as well as the UK) who are now working to put more flesh on the bones of FE so that it can support a more radical eco-social transformation.

Murky Water: Challenging an Unsustainable System, by Luca Calafati, Julie Froud, Colin Haslam, Sukhdev Johal and Karel Williams. Manchester University Press. 352 pp. £14.99.