Northern Rail passengers protest over poor service in Manchester in 2019 Photograph: Christopher Thomond/The Guardian
Analysis reveals ‘privatisation premium’ of £250 per household per year paid to owners of water, rail, bus, energy and mail services since 2010
The public has paid almost £200bn to the shareholders who own key British industries since they were privatised, research reveals.
The transfer of tens of billions of pounds to the owners of the privatised water, rail, bus, energy and mail services comes as families face soaring bills, polluted rivers and seas, and expensive and unreliable trains and buses.
As a result, citizens have been paying a “privatisation premium” of £250 per household per year since 2010 alone, the analysis found.
Recent focus has been on the privatised water industry, which has run up long-term debts of £73bn and paid out dividends of £88.4bn in the past 34 years at the same time as overseeing record sewage spills, according to the latest figures.
But for the first time the thinktank Common Wealth has drawn together the haemorrhaging of billions of pounds to shareholders across four key sectors, most of which were privatised from the 1980s and 1990s by Margaret Thatcher’s Conservative government – energy, transport, water and mail.
England’s privatised water industry may one day be considered a textbook case study of failed corporate responsibility, regulation and governance. The Cunliffe review, the recent report into England’s privatised water industry, concluded that the financial regulator, OfWat, needs to be disbanded and a new water regulator will be introduced.
For that to work effectively, better pollution monitoring and more clearly defined pollution incident criteria are essential. While politicians and water companies have claimed to be reducing pollution incidences, they might not strictly be tackling sources of pollution, so communications must be carefully scrutinised for disinformation.
The UK’s environment minister Steve Reed MP has described the water industry as “broken”. The public have rising water bills. Water companies owe over £60 billion in debts and have left the country with uncertain water security in the face of climate change.
The Environment Agency (EA) in England recently announced that serious pollution incidents in 2024 rose by 60% to 75 from 47 in the previous year. The EA classifies pollution incidents using a four-point scale called the common incident classification scheme. Trained EA officers consider the evidence reported via their incident hotline to assess its credibility and severity.
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Category 1 is for major incidents, 2 for significant, 3 for minor incidents and 4 for no impact. Category 1 and 2 typically involve visible signs of dead fish floating. For salmon, if more than 10 adult or 100 young fish are dead, this is category 1. With fewer than ten adult and 100 young fish dead, it’s category 2.
No dead fish, no serious problem? The EA can also record damage on protected habitats as “pollution incidents” but these are harder to substantiate without investigative research that takes time and money.
Last year, more than 450,000 sewage discharges were recorded by event duration monitors. These are devices fitted to the end of overflow pipes that indicate when and for how long they have been discharging.
These discharges represent 3.6 million hours of untreated sewage going into our rivers and coasts. These contain chemical contaminants including pharmaceuticals, detergents and human pathogens. Only 75 incidents were recorded as serious or significant in 2024. Another 2,726 were classed as minor.
So lots of sewage discharges are not being classified as pollution incidents, despite containing pollutants. The EA advises its investigating officers to “record substantiated incidents that result in no environmental impact, or where the impact cannot be confirmed, as a category 4”.
The EA has been criticised for turning up late to 74% of category 1 and 2 pollution incidents and for being pressured to ignore low-level pollution – all claims that they have denied. However, they admit they are constrained by finances. Any new regulator must be adequately resourced and independent.
Pollution isn’t always classified as an official pollution incident. YueStock/Shutterstock
In their recent report into pollution incidences, the EA states that they respond to all category 1 and 2 (serious and significant) water industry incidents and will be increasing their attendance at category 3 (minor) incidents. They highlight that more inspections will identify more issues. This shows some acceptance that the more incidents they attend, the more would be substantiated or recorded appropriately.
Most sewage discharges would not have been reported to, or recorded by, the EA as pollution incidents because they were permitted discharges from combined stormwater overflows. Water companies are allowed to discharge untreated wastewater under exceptional rainfall or snowfall conditions to prevent sewage backing up through the pipes.
Extra water flow in rivers from rainfall is meant to dilute chemical contaminants in wastewater. However, some discharges can last days or weeks. The EA is currently investigating whether water companies have been breaching their permits and discharging untreated wastewater when there is low or even no rainfall.
What counts as pollution?
The UN classifies pollution as “presence of substances and energy (for example, light and heat) in environmental media (air, water, land) whose nature, location, or quantity produces undesirable environmental effects”. This definition differs markedly from the EA’s working definition of pollution incidents.
Many sewage discharges containing low concentrations of pollutants won’t kill fish but might still be harmful to fish larvae or small insects, for example.
However, the broad picture from EA data is that invertebrate communities at least are in a better state than they were three decades ago before wastewater treatment plants were upgraded following the EU’s Urban Wastewater Directive.
Some pollutants bioaccumulate through the food chain, so they become concentrated in top predators such as orcas. Some chemicals mimic reproductive hormones even in low concentrations and can feminise fish, for example. High levels of nutrients from agriculture and sewage in rivers can cause fungal diseases in seagrass meadows.
Other families of chemicals build up in wildlife and people, such as persistent “forever chemicals”, much of which comes from wastewater discharges. Continued discharges of antibiotics into waterways might not be classified as pollution incidents but still pose a substantial risk to human and ecosystem health through bacteria developing antibiotic resistance.
The government has just committed to cut sewage pollution by 50% by December 2029 based on 2024 data. But it’s not yet clear whether these involve cutting the frequency of discharges, the duration or both.
This data could also be manipulated so that a large number of small discharges can be consolidated into one official discharge event. Currently, the volume of discharges from stormwater overflows isn’t known. Without this vital data we can’t ascertain the risk posed by their contaminants.
Surfers Against Sewage paddle-outs involve local communities coming together to protest against water companies dumping sewage in the oceans and rivers they use for watersports and swimming. (Photo by Jack Taylor/Getty Images)
Ofwat is opening enforcement cases into four more water companies, meaning it is now investigating every single water and wastewater firm in England and Wales for the mismanagement of their networks and treatment.
The notices follow a what Ofwat described as a “detailed” analysis of information on firms’ environmental performance and data about the regularity of their spills from storm overflows.
The regulator believes the four firms may not be fulfilling their obligation to protect the environment and minimise pollution, meaning that it is now investigating all 11 water companies in England and Wales.
Investigations into Anglian Water, Northumbrian Water, South West Water and Thames Water, which last week was effectively placed into special measures by Ofwat, are ongoing from 2022, while Southern Water is still subject to monitoring following a case that dates back to 2019.
David Black, Ofwat’s chief executive, said: ““The fact that Ofwat now has enforcement cases with all 11 of the wastewater companies in England and Wales demonstrates how concerned we are about the sector’s environmental performance.
Green Party MP for Brighton Pavilion Siân Berry. Image by Kelly Hill, Wikimedia CC BY-SA 4.0.
Responding to the publication of OFWAT’s a draft verdict on water companies’ five-year spending plans and bill increases to 2030, Green Party MP, Siân Berry said:
“We’re today calling on Prime Minister Keir Starmer to put all water companies into public hands.
“The provision of such a basic human right should not be based on profit.
“The idea that water companies will hike bills while so many people are struggling to get to the end of the month is horrific. Meanwhile, some companies, like Thames Water, are still paying shareholder dividends, which is deplorable.
“Public ownership is a matter of both social and environmental principle. But, as today’s verdict from OFWAT shows, it is also a pragmatic necessity.
“Why not take decisive action and show real leadership by saying that all water companies should be in public hands?
Prime Minister Sir Keir Starmer (centre front) next to Deputy Prime Minister Angela Rayner (front row, third from left) and Chancellor Rachel Reeves (front row, fourth from right) stand with Labour Party MPs, some of whom won seats in the 2024 General Election, at Church House in Westminster, central London, July 8, 2024
CHANCELLOR Rachel Reeves is right to say that steep increases in our water bills are a “bitter pill to swallow” — especially since her government could stop them if it wanted to.
Maybe its reluctance to take the obvious step — nationalisation — is linked to the lucrative rewards waiting for former ministers who play ball. After all, Water UK, the trade association lobbying for still steeper rises, is headed by former Labour minister Ruth Kelly.
Water UK slams Ofwat’s refusal to endorse its own proposed increases as “the biggest-ever cut in investment.”
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No other country has surrendered its water to private companies in this way and it is unlikely that any will, given that the outcome here has been poisoned waterways, sewage-strewn beaches and soaring bills. Earlier this year, over half the people polled said the sewage scandal would affect their vote. It may well have driven the Tory collapse across swathes of southern and coastal England. An even higher proportion, 69 per cent, want water back in public hands.
Labour says the cost of renationalisation is prohibitive and lands the public with private-sector debt.
