England has become an asset management society with predictably calamitous results
Does it matter that the entire infrastructure of wastewater collection and treatment in Kent, including tens of thousands of kilometres of sewers, is controlled by the Australian asset manager Macquarie? It should do, as these pipes are those of Southern Water, regularly criticised for noxious discharges into the sea. It was under Macquarie’s control that Thames Water was first attacked for underinvesting and for poisoning rivers with untreated sewage as it extracted billions in dividends while the company’s debt soared. In 2018, Ofwat, the UK industry regulator, lost patience and fined it a record £120m. But Macquarie had exited the company the previous year – leaving others to carry the can.
Macquarie is a face of what the academic Brett Christophers calls an “asset-manager society”, one where these firms increasingly own and control our most essential physical systems. They are paid fees to hold global housing and infrastructure assets worth $4tn – a sum that has grown 100-fold in 40 years. Financial wealth has zoomed and so has the proportion invested via asset managers. The business model squeezes profits out of the infrastructure they own by cutting costs to the bone and maximising the income the holdings generate.
