There are occasions when it is important to recall just why privatisation was supposed to have taken place in things like the UK water industry.
The claim was that private capital would deliver additional funds and market efficiencies that would improve the performance of these sectors way beyond the levels that could be achieved by the state.
In this context, an article in the Financial Times is of interest this morning. They note:
Thames Water's creditors, who are providing a £5bn backup rescue of the utility, are demanding waivers that would exempt the UK's largest water company from key environmental laws. The lenders are calling on the government and regulator Ofwat to grant licence changes and even emergency legislation to shield Thames Water from laws and regulations, according to documents seen by the Financial Times.
The FT has added:
They also want fines removed, including those already imposed.
And they also suggest:
The creditors are also asking for changes to Thames Water's licence, which would provide added protection against Ofwat fines and penalties and would also allow them to raise prices at any time before 2030.
The claim being made is that unless these changes are made, then Thames Water is not "investable".
The obvious conclusion, which should be apparent to everyone, except perhaps OfWat and our government, is that what this makes clear is that Thames Water is not "investable".
In fact, it is anything about that. What is apparent is that to make Thames Water investable, it must, apparently, be both above the law and able to charge prices that are completely unaffordable by those to whom it is supposed to supply competitive services.
I cannot avoid asking the question, yet again, about why these discussions are continuing. The evidence that there is no future for a private water industry in the UK is now overwhelming. Surely it is time to get on with nationalisation and deal with the real problems that we face, including a lack of investment in water infrastructure, imminent and long-term water shortages, sewage in our rivers and on our beaches, and the risk that we face that this essential supply might not exist unless action on these issues happens.
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We need a public-private partnership to deal with our Great British Water.
No, no, let me speak!…
The private sector hand back all the cash they stole from water companies, in director bonuses, and shareholder dividends and interest paid on unnecessary borrowed capital, & the costs of all those sewage leaks, & contaminated water supplies, and the public sector will relieve the aqua-kleptocrats of the unbearable burden of owning all the water in the country.
Simples!
It cannot hand back money it no longer has – that is not possible. So this is a non-starter.
Sorry, forgot to add the “sarcasm” emoji.
I realise that my suggestionss are utterly just and utterly impossible. What a mess we are in.
It defies any sort of logic to continue to delay the decision to nationalise Thames Water…and then the rest.
The failure to provide adequate services is all around us in terms of environmental pollution, failure to have adequate resilience in terms of water supply, etc. It demonstrates beyond doubt that the concept of ‘privatising’ to improve services, gain efficiencies, etc., is a complete and utter failure. They are run to maximise the return to the investors and senior management is incentivised to do this…and, essentially, only this.
The government should not delay further. It should step-in and nationalise Thames Water and in doing so it might actually create some growth (that Rachel Reeves talks about constantly but seems to do nothing about) by investing in the necessary infrastructure upgrades, creating economic activity, enhancing water security and resilience and protecting the environment.
Personally, I think they should privatise all…but that would take courage and foresight. Maybe, giving the Thames Water investors a haircut will stimulate a bit more of a circumspect approach from investors in other Water companies when they realise that they will be fined heavily, dividends will be monitored / capped / stopped, etc., if they don’t deliver the services they are expected to provide. Always with the axe hanging over them that if they do continue to perform poorly, they to will be nationalised.
I have nothing but disdain for the executive teams in the water companies. They have made a pact with the devil and are looking after only their own self-interests…and in a sector which is supposed to be a public service.
A simple question:- what is the best realistic estimate of the cost of renationalising water?
Noithing. As my work has shown, all the companies are environmentally bankrupt.
The real costs of renationalising water will come downstream: the capital expenditure needed to catch up with all the neglected infrastructure investment. That is likely enormous, but it’s unavoidable if we are to restore our rivers and beaches. As the Government is discovering, private investors are only interested if they can be allowed to avoid such responsibilities. That cannot be allowed to happen. This is the poison pill that the Tories have left. Unfortunately there is no option but to swallow it, and the longer the Government delays the worse the problem will grow.
Watch Starmer and Blue Labour make all the concessions requested and more.
They equate any form of nationalisation as socialism and would reduce their standing with the right wing billionaires they want to cultivate for when they leave power.
The costs both in terms of economic and environmental damage will be huge, but Starmer and co will expect ordinary people to pay it
Deeply unfair to Starmer & co.
I understand that one of the conditions they have set is that each floating turd will have a Union Jack affixed to it – one can thus look forward to gaily coloured flotillas of patriotic turds floating in UK rivers. & in fairness to those putting the money up – they have expensive lives to fund, large familes, multiple mistresses not to mention the yacht(s?), gambling, golf etc. They deserve our sympathy and understanding – they are – after all only trying to earn an honest buck or million on the backs of UK serfs.
An entity called ‘Takeback water’ posted “Almost 100 new reservoirs were built in the 35 years before privatisation. In the 35 years since, private water firms haven’t built any – and sold off 25.”
If this is accurate, it prompts the thought of renationalisation without any payment for shares etc?
I think little compensation will be due.
If Thames Water is ‘uninvestable,’ then it is worthless, and its owners will be offloading a liability—value at a pound. Job done.
Agreed
The reference to reservoirs in those stats relates to what might be thought of as underground storage and sumps. It’s not the common or garden open reservoir we see in pictures of mid-Wales like Vyrnwy.
Were not the privatised water companies originally given “green dowry” on privatisation in 1989 and also all the old water authority debts were cancelled with the tax payer taking on that responsibility? This privatisation has been nothing less than daylight robbery. There’s an interesting piece on this in Adam Curtis’s “Shifty” series (episode 5).
Yes
Just in case anyone isn’t aware, in Scotland the public water supply is operated by Scottish Water, a statutory body answerable to the Scottish Government. Brought into being, to their credit, by the Lab/LibDem coalition in 2005. And in a recent survey they were credited with having the second best water quality worldwide, only beaten by N.Y.C.
But it only covers household supply and there remain problems with it.
Better than England, but not ideal.
And one nationalised water company exists already as a model. It’s called Scottish Water. Its not perfect, but its better than anything in England.
Yes, but it is very partial – because it does not cover private business.
Scottish Water is actually the only supplier of water and sewerage in Scotland. It is just that business users have to go by a Third Party ‘supplier’. All they do is cream off a bit in the middle as they are really only a sales agent for Scottish Water. My company uses such a ‘supplier’ but the pipes etc belong to Scottish Water, as does the meter, and any repairs.
Treating water as an asset for exploitation for private profit was a mistake in the first place.
As one of the essentials of life, water should be managed for the good of all, not the benefit of the already rich.
The mere fact that the investors are making such demands should be enough to end discussions. Even if it’s just a negotiating position, it shows that the financiers priority is not delivering a good service, it’s entirely about what they can get away with to maximise profits. How long is the Government going to allow this pantomime to continue!
There is no clearer example of the ideolgical fixation of this govt than that their ‘inquiries’ and ‘reviews’ rule nothing out – exept public ownership – they say it will cost too much without asking the independent experts to examine how much it will really cost.
https://weownit.org.uk/news/steve-reed-thames-crisis/
Steve Reed went to football matches with water company CEOs. When bought a ticket by someone from weownit and asked to meet her there, he didn’t even deign to respond. Steve Reed is not the only MP who has taken bribes from water companies.
Water should never have been privatised. There is no competition. You have no choice who you pay for your water.
Northumbrian Water is partly owned by the same company that was going to buy out Thames Water. The rest is owned by a Hong Kong company.
https://www.theyworkforyou.com/wrans/?id=2025-06-05.HL8190.h
Interesting question yesterday by Prem Sikka.
Almost 1 million is the answer
So you know, but the government doesn’t because it’s voluntary to give that information. It shouldn’t be, should it?
It will be in the future.
The law has now changed.
Privatisation of water has demonstrated that it has failed, utterly.
The only people to benefit are shareholders and management… at the expense of the public and the environment. But the business is uninvestable, so it even fails shareholders.
Nationalising water is the only viable option, supported by a majority two-thirds of the public.
This is social democracy (not socialism) where the majority benefit from an essential service.
Half of Scotland’s water is still in public hands thanks to the 1994 Public Water Referendum organised by Strathclyde Regional Council when it became clear that Westminster was planning to privatise Scotland’s water. 97% of voters (75.1% of the electorate turned out) to reject the UK’s proposal to privatise Scotland’s water. But it turns out it’s just domestic water supplies that remain public in Scotland.
Before Labour was kicked out of Holyrood in 2007, they half-privatised Scotland’s water, creating Business Stream Ltd, which sells to the non-domestic market all over the UK.
However, the privatised part of Scotland’s water free rides of the investment the public part, Scottish Water, makes in infrastructure. In 2024 Scottish Water invested £1.02 billion to upgrade and replace water and waste water assets across Scotland. It spends £72 more per household or 35% more than private English water companies. If English companies invested at this same rate, they would have spent an additional £28 billion on infrastructure to fix leaks and reduce sewage dumps. Instead, since 1990, English water companies have paid £52 billion in dividends to shareholders.
There are people within Scottish Water who are worried that Starmer is coming to finish the job by selling off the rest of Scotland’s water to hedge funds. After all, it has been such a glorious success down in England, hasn’t it? Of that happens, it might just be the thing that enrages Scots enough to finally end this union.
https://dearscotland.substack.com/p/how-public-is-scotlands-water?utm_source=publication-search
https://x.com/we_ownit/status/1935662342479421897?s=48
Cat’s speech on weownit.
They’re avvin a larf ent they?
The core problem is that previous owner(s) of Thames Water indulged in financial engineering to extract money from the pockets of captive consumers. The government stood by and allowed it. Until financial engineering at public expense is blocked, the problem will recur. There are current examples in privatised car parks, privatised social housing, and privatised student accommodation.
The TW problem was exposed by the BBC see https://www.bbc.com/news/business-41152516
The only way to end this once and for all is to give the people power to investigate new forms of financial engineering quickly when they arise, and block them.
As for TW, my personal view is that the owners bought a lemon and should lose everything. If that passes some losses to pension funds, tough. Only genuine third-party debt should be compensated.
Agreed
We have exposed a lot of this in work at Sheffield
No one seems very bothered.
Interesting article on the impact of AI, on the UK’s water industry.
AI boom means the regulator cannot predict future water shortages in England.
At present, datacentre operators are not required to disclose how much water they consume, leaving regulators effectively blind to one of the most critical trends shaping England’s future water demand.
https://bmmagazine.co.uk/in-business/ai-boom-means-regulator-cannot-predict-future-water-shortages-in-england/
Prime Minister sets out blueprint to turbocharge AI
https://www.gov.uk/government/news/prime-minister-sets-out-blueprint-to-turbocharge-ai
He needs to get Rachel in accounts to put two and two together.
Water needs to be in public ownership.
Could we bring the whole of English Water into common (community) ownership, do you suppose? Just cut the government out of it altogether? They don’t seem particularly useful any more…
No, in a word.
Where would it get the capital it needs?
A nice dream, but basically isn’t that what governments are for?
I wrote to a Labour MP stating that some people who know about money, naming Richard, say nationalising Thames Water should not cost much as the company is bust. This was his reply.
“Nationalising the water industry could cost taxpayers £90 billion according to the Social Market Foundation, equal to the entire education budget or twice the annual NHS wage bill. The figure would be more than a tenth of all annual Government spending.
The foundation considered options for nationalisation where the Government forced through a sale for lower prices. While this would reduce up-front costs to taxpayers, it would cost the UK economy money in the longer term as investors in other sectors either deserted Britain or demanded a risk premium to invest here.
Unfortunately, given the state of public finances inherited by this Government, we are not in a position to nationalise Thames Water due to its prohibitive costs.”
That Social Market Foundation was pure neoliberal guff assuming every creditor must be paid even though most were loan financiers who had known the risk they were taking.
What about the argument about a loss of investor confidence in the UK?
What argument?
Are you pretending we must bail out people however badly they manage things?
Just to clarify, the public company Scottish Water owns all the distribution network, and supplies all the water wholesale to the commercial providers, who in turn supply commercial customers.
In that case, the commercial providers are an unnecessary intermediary. Ditto electricity, gas, transport, telecommunications, and so on. WRT Thames, customers have no responsibility to bail out any private company. Imagine if Tesco demanded funds from everyone living nearby, just because.
In asking what you thought about a Labour MP saying that nationalising Thames Water by ‘forcing through a sale at lower prices’ would lose money in the long run through loss of investor confidence I was asking how you would respond to that argument Richard, not arguing that it is correct.
Let me be clear: I don’t think the question is in any way relevant
Anyone who understands finance knows these companies are a basket case and prove nothing.
The claim confidence will be dented is right wing political spin to be ignored.
That is my point.