The Commons: Why Is Britain’s Water Privatized And Should It Be Nationalized?
andres siimons
Most of Britain’s water was privatized in 1989 under PM Margaret Thatcher, who made it one of her key manifesto promises. She believed it would increase investment, uplift standards, and reduce consumer prices. However, since then, Scotland’s water system has remained publicly owned, Wales has turned theirs into a non-profit organization and no other major economy followed in Thatcher’s footsteps by privatizing their water. However, England’s water and sewage systems are still privately owned, split into 10 different for-profit companies who manage the water delivery and sewage collection in their area. With a new left-of-center Government in power that have plans to nationalize trains and appear open to publicly owned energy, it is fair to assume that there may be a chance that the UK is heading towards a nationalized water industry as well.
Did privatization benefit the water industry? It is difficult to tell. Since the 1980s, investment in UK water services has certainly increased. However, after an initial spike in 1991 investment has been wildly inconsistent, and that level of funding was not again seen until this year. This lack of consistent and reliable funding may have contributed to short-term thinking by water CEOs, with a grand total of one extra reservoir being planned and built since 1989. In comparison, the previous 35 years from 1954-89 saw 93 reservoirs completed, showing a dramatic collapse in the construction of water infrastructure over the last few decades.
Water Industry investment by year
There are major problems with the current UK water industry. Recently Ofwat, the UK’s water regulatory body, approved a consumer bills price hike for all 10 water provider companies, with the biggest increase going to customers of Southern Water who will be paying an extra 53% on their water bills by 2030. At the same time, thousands of people served by Southern Water and SES water experienced water outages in December 2024 forcing them to queue for hours to pick up bottled water. This has outraged many members of the public, who feel resentful about paying higher bills for inadequate service. The sewage treatment side is not much better, with the illegal dumping of sewage into Britain’s rivers and seas becoming commonplace. Surfers against sewage have estimated that there have been nearly 600,000 discharges of raw sewage into UK waterways in 2023. As a result, 75% of UK rivers pose a serious risk to human health and many pose significant ecological dangers to habitats and the local environments.
To the dismay of some, the Government do not currently have plans to nationalize the water industry. Unlike in previous election campaigns, the Labour manifesto of 2024 did not include any proposals to nationalize the water sector as it was considered too expensive by the party. Even more recently, the Environment Secretary, Steve Reed, said that nationalizing water firms would cost up to £100 billion and “not resolve the problems” faced by customers. Instead, he announced an independent review into the industry which has been called the largest review into the sector since privatization. Despite continued calls from other left-wing parties to pursue nationalization, Reed responded with “I’m more interested in the purity of our water than the purity of our ideology. I will do what works best as quickly as possible, the commission will give us guidance on how to change the system to make sure it works for everybody.”
While the Government wait for this commission to collect their findings, they have introduced an interim piece of legislation, the Water (Special Measures) Bill, with the intent to better hold water companies to account for their actions, including the illegal sewage dumping. The Bill does four key things to achieve this objective. First, blocking bonuses for executives who pollute our waterways. Second, bringing criminal charges against persistent law breakers. Third, enabling automatic and severe fines for wrongdoing. And fourth, ensuring monitoring of every sewage outlet. They make it clear in the Bill that this is not the full extent of the Government’s plans, with more comprehensive and transformative changes to be delivered in due course.
Reece Tann-Salmon, an electrical engineer apprentice who works at Thames Water (the biggest single water provider in the UK), critiqued the Government’s approach for not addressing the financial issues within the water company. “Thames Water, before being purchased in 2017, was in a financially bad place.” He argues that “preventing major shareholders from withdrawing their dividends from the company” would have enabled more money to be reinvested into the business. Shareholders are, of course, a major element of being privately owned, and so not many other countries suffer from the issue of having to pay out dividends. This is one of the core arguments for renationalizing the industry, as any profits could be reinvested into infrastructure and maintenance work. However, he disputes the scale of some the issues in Thames Water specifically, “I think the media have overinflated the severity of some of the claims. Thames Water do get targeted, and it’s not a shock since we are the biggest water and sewage utility company in the country, in some sectors we aren’t as bad as the media may make us seem compared to some other companies in the same business.” He went on to say, “There is absolutely more that can be done, but the presented options won’t save the companies money, they will cost money, money we can’t afford to just throw away.”
