Drought, flash floods and extreme weather. Heavy downpours hit parts of the UK last week resulting in flash floods in the South East, and the closure of train platforms and theatres in London. The flooding came after experts warned that rain would “offer little relief” after the driest spell in almost 50 years. Several parts of the country have announced hosepipe bans including Thames Water, Yorkshire Water and Southern Water. Recent flash floods have also caused serious problems in other parts of Europe as well as western China where at least 16 people have died due to the recent extreme weather.

Water companies. The UK’s current water crisis has been dramatically compounded by a myriad of failings by water companies. The Environment Agency has described the environmental performance of England’s nine water companies as “the worst we have seen for years”. 

Has privatisation been a failure? As the water and sewage crises worsen, many (including Jonathan Portes who worked on the privatisation of water companies in 1989) argue that the private ownership of these companies is to blame. It’s time to admit that water privatisation has been a failure”, argues former David Cameron advisor Camilla Cavendish, saying that “as customers, we are captives with nowhere else to go”. Similarly, musician and campaigner Feargal Sharkey recently argued that the current crisis is the result of “30 years of underinvestment, 30 years of regulatory failure, 30 years of mismanagement and all of it topped off with 30 years of a political vacuum, devoid of oversight and scrutiny”.

Calls for renationalisation. The Green Party has called for the renationalisation of water companies to “end the scandal of wasted water”, as has the Guardian, which argued in an editorial that services such as water “can clearly be managed by the state in a way that makes sense”. We Own It has long campaigned for the public ownership of water, with director Cat Hobbs arguing that as the UK anticipates an increase in extreme weather, “we need to bring water into public hands so it can be run for people, not profit”. The renationalisation of water is overwhelmingly popular with the public, with 91% of Express readers saying that they would back bringing private water companies back into public control.

Weekly Updates

Energy and inflation

Conservative support for energy bill intervention. Former Conservative Treasury Minister David Gauke has argued that relying on tax cuts to relieve the cost of living crisis, as Liz Truss has indicated, will lead to a “long, miserable winter - for both the public and the Conservatives.” He argues that Truss might want to freeze the energy price cap as “there was (and continues to be) an overwhelming and pragmatic case for vigorous government action in the current extraordinary circumstances.” Rupert Harrison, George Osborne’s former chief of staff, also argued that the “Government will have to act on a very large scale to support households, especially those on lower incomes - and also probably small businesses…It's a once in a generation threat to the solvency of many households and businesses that could scar the economy for years to come.” (Carbon Brief’s Simon Evans calculates that the overall cost of higher energy bills for the economy as a whole could reach ~16% of GDP.)

People won’t be able to afford higher energy bills. The Resolution Foundation’s Karl Handscomb and Jonathan Marshall explain why “This winter, low-income households will have to reduce their spending by three times as much as high-income households in order to afford their energy bills” with almost half of the poorest fifth of households living in homes with uninsulated walls. In addition, the Head of the NHS Confederation Matthew Taylor wrote to Ministers warning that fuel poverty could lead to over 10,000 excess deaths.

Stabilise prices or increase interest rates? Commenting on the Emergency Price Stabilization Act and Inflation Reduction Act in the US (see Carbon Brief’s analysis of the latter here), economists Isabella Weber and Mark Paul argue that targeted price stabilisation for essentials and strategic investment in productive capacity is a better response to inflation than deliberately deepening recession through interest rate hikes.

“Looming global food crisis.” McKinsey & Company have explored how the war in Ukraine, monetary and fiscal responses to the Covid-19 pandemic and heat waves across the world are interacting to limit global food supplies and inflate prices further, the consequences of which “may be more pronounced than during the 2007-8 global food crisis and the 2010-11 food price hikes that contributed to the Arab Spring”.

Climate change

Fossil fuels must stay in the ground to achieve net zero. A peer reviewed paper in Nature Communications has assessed 6 decarbonisation scenarios given by BP, Shell, Equinor and the International Energy Agency (IEA) and found that only the IEA’s Net Zero 2050 scenario met the criteria for meeting the Paris Agreement. (The IEA called for an immediate end to new fossil fuel developments in its landmark report last year.)

Decarbonising the downturn. In a peer reviewed paper, political economist Jack Copley explores how decarbonisation might be affected by a stagnating global economy. He concludes: “Decarbonization projects based on sparking a green investment boom will struggle to overcome capitalist stagnation. This makes it all the more urgent to build democratic economic planning mechanisms that seek not to bolster/redirect private market activity, but to replace it”. 

Work and regulation

Unionising the renewable energy sector. The trade union Prospect has secured a recognition agreement with offshore wind company Orsted (in which the Danish government has a 50.1% majority stake). Unionising the renewables sector is vital to securing a just transition away from fossil fuels.

“Synchronised” strikes as dock workers began industrial action. RMT union leader Mick Lynch suggested trade unions are on the brink of “synchronised” strikes as wages remain below the level of inflation. Dock workers at Felixstow, the UK’s largest port, began an 8-day strike on Sunday. The strike is likely to exacerbate disruption to UK supply chains. Politico reports that ports in Liverpool and elsewhere are planning solidarity strike actions.

Freeports and deregulation zones. The Guardian’s George Monbiot explains how the eight freeports planned for the UK, to be run by “highly controversial private companies”, “will deprive central government of income” through localised tax cuts, as well as relaxing planning permission for businesses. He also speculates that these deregulation zones may extend to much larger areas than expected due to the “Freeport Outer Boundary” rule in the policy.

Algorithmic management. What if your boss is an algorithm? The TUC has published guidance for trade union representatives on how to negotiate a collective agreement on AI at work that is just, transparent and fair to workers. The report argues that “through consultation and collective bargaining, unions can make sure workers have a say in the development, procurement and application of technology at work”.

Finance and housing

Financial regulator shakeup? The FT’s Seb Payne, Daniel Thomas and Laura Noonan report that Liz Truss may merge three financial regulators (the Financial Conduct Authority, the Prudential Regulation Authority and the Payments Systems Regulator) as part of “a wider war on technocrats” if she wins the premiership. These regulators used to be combined before the 2008 financial crisis.

Housing market dip in 2023. Analysis from the Centre for Economics and Business Research predicts that house prices will fall by 4% over the next year as mortgage rates and living costs rise. The Telegraph reports that the areas where affordability is already most stretched, and are most dependent on mortgage lending, will see the biggest falls - namely in London and the South East.