Face the Faceless

A tale of modern capitalism

For much of 2023 the press has been awash with the financial antics of the nation’s water supply and sewage companies, now 70% owned by private equity and sovereign wealth funds. The companies are loaded with debt while service standards have plummeted, rivers poisoned and the nation’s water security neglected. In many ways it is a story that encapsulates everything that has gone wrong with this country and modern capitalism.

In 1973 Conservative prime minister Ted Heath coined the phrase ‘the unacceptable face of capitalism’ when criticising the behaviour of Lonhro bank. If you Google that phrase one of the results is an article from Conservative Home, a website owned by Lord Ashcroft and described as the middle ground of Conservatism.

A story of our time

That website has an article penned in 2016 titled The return of the unacceptable face of capitalism about the collapse of Sir Philip Green’s BHS empire. Green’s sale of his high street business (for the princely sum of £1) was intended to offload a massive pension fund deficit to a buyer that Green knew was gullible and manifestly unsuitable.  Bear with us, there is a connection with the topic of water!

The subsequent collapse of BHS took with it 11,000 jobs and risked the pensions of 20,000 people. A parliamentary investigation exposed how Green had systematically extracted hundreds of millions of pounds from BHS, paying very little tax and fantastically enriching himself and his family. 

The article in Conservative Home argues that a code of behaviour with the threat of public shaming is of more value in deterring this kind of behaviour than detailed regulation, because the latter potentially stifles legitimate enterprise. Therein lies a grain of truth. And complex regulation can be gamed and hugely expensive to enforce.

Faceless capitalism

However today, the unacceptable face of capitalism is faceless. Private equity and sovereign wealth funds are buying-up vital infrastructures, loading them with debt and siphoning off profits. They are not owned by billionaires or public figures who can be named and shamed. Rather they are faceless money-making machines trawling the world for opportunities focussed solely on extracting profit and seemingly answerable to no one. They are the ultimate manifestation of unacceptable capitalism. 

When the water companies in England were privatised 35 years ago it was hailed as a way of securing future investment in water supply and sewage disposal. With the benefit of hindsight that was bull****.  Very little has been gained beyond fulfilling an ideologically-driven crusade for privatisation. Worse, it has allowed a vital national resource to be hijacked and exploited, leaving a trail of debt and the nation perilously exposed to water shortages and pollution. 

And by the way, Green retained his knighthood. So much for applying a code of behaviour.

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