Adrian Ramsay MP, Green Party Co-leader. Wikipedia CC.
Reacting to news that government and regulators have broken the law by being too lenient on water companies that spill sewage, and on the day Thames Water seeks a £3bn bailout, Green Party co-leader Adrian Ramsay MP said:
“For too long billions have been leaking out to shareholders instead of going into fixing our broken water system. But it will be water customers who are expected to bail out this failed model of privatisation through steep hikes to water bills.
“The way to end this fiasco and ensure government and regulators keep within the law is to put failing water companies into special administration and ultimately to bring water back into public ownership.”
Demands for renationalization of water services in England grows as private London water supplier requests bailout
Social justice organizations in Britain are urging judges to reject a bailout request from Thames Water, one of the country’s largest water providers, serving some 16 million people in the greater London area. Campaigners argue that approving the bailout of the private utility provider would allow Thames Water to continue its mismanagement while forcing consumers to shoulder the burden—raising annual water bills by £250 (USD 317) per user.
“This is daylight robbery. There are two people who can stop it, the judge in court today and Steve Reed, the environment secretary. He can protect billpayers from this by withdrawing Thames Water’s license, on the basis of financial insolvency, illegal sewage dumping, or both,” Cat Hobbs, Director of We Own It, told Peoples Dispatch. “Tony Blair’s government defended the public interest when Railtrack went bust, why won’t this government do the same for Thames Water?”
The company warned that without the bailout, it would run out of funds by March next year. However, Thames Water customers predict that they will be unfairly burdened with the costs of the bailout, including the high interest rates that will follow, while company management will face little accountability. The We Own It campaign noted that “it is obvious that the consumer as the sole source of revenue will indirectly fund this amount by way of increases in their water bills.”
While claiming financial difficulties, Thames Water has managed to secure substantial profit margins for its investors—many of whom are based outside Britain and remain unaffected by the declining quality of local water services—while awarding generous bonuses to its management. This pattern is not unique to Thames Water: all water and sewage companies across England have followed a similar path since privatization under Margaret Thatcher’s administration. During this time, these companies have paid out £72 billion (91 billion USD) to shareholders while accumulating £60 billion (76 billion USD) in debt. The result has been a chronic lack of investment in infrastructure, leading to leaks of both water and money.
“The argument for privatization was that there would be more investment, the water would be cheaper, and the service would be more efficient,” independent MP Jeremy Corbyn remarked during a discussion on water services earlier this year. “It’s really worked out well on that, hasn’t it?”
A risk to ecosystem and human health
In addition to financial losses, privatization has led to a significant decline in water safety and quality. Private operators have regularly discharged untreated sewage into rivers and the sea, causing harm to ecosystems and posing a direct threat to human health. Regulators, meanwhile, are unable to enforce compliance with safety standards due to conflicts of interest, low fine thresholds and the fact that the infrastructure itself remains under the companies’ ownership.
Unlike other European countries that experimented with water privatization by outsourcing service provision but mostly retaining ownership of infrastructure, England sold everything. As a result, rather than waiting for contracts to expire and reclaiming control, the government would need to buy back the entire water system from companies like Thames Water. According to We Own It, the initial cost for this process could start around £15 billion (19 billion USD)—an amount the campaign estimates could be repaid within just six years.
Re-nationalizing water services has led to significant successes in other countries, according to Matthew Topham, Lead Campaigner at We Own It. “Paris took back control of its drinking water in 2010 from an outsourced private contract. Bills were immediately lowered, customer satisfaction levels are high, and last year, they were able to reinvest 89 million euros in improving the network,” he explains. He adds that public ownership has also sparked community participation, with cities like Lima, Terrassa, and Paris establishing observatories to give communities, workers, and activists a voice in managing water services.
Campaigners against the Thames Water bailout are calling precisely for a return to public ownership. They argue that this approach would not only lower costs for users but also create space for more investment in infrastructure, improving water quality. This demand resonates with over 80% of the British public, who support the idea of water services being brought back into public hands.
The Labour government, however, does not share this vision. Under Jeremy Corbyn’s leadership, the party’s program included an ambitious plan to renationalize water services. By 2024, Labour’s election program had moved away from this idea, keeping only the possibility of granting “new powers” to regulators to block bonuses for companies proven to pollute watercourses. As many on the left predicted ahead of the July 2024 election, Keir Starmer’s administration has shown a clear inclination toward privatization, not only in water services but also in healthcare and other sectors.
The final decision on Thames Water’s bailout request is expected in early 2025, with campaigners urging the court to consider users’ concerns and reject the proposal, paving the way for better water services.
Thames Water is seeking to raise the funds it needs to avoid short-term nationalisation. Photograph: Maureen McLean/Rex/Shutterstock
‘Economically illiterate’ Defra letter sent to anti-sewage groups cites 2018 report commissioned by water companies
Labour used “economically illiterate” analysis paid for by water companies in order to argue against the nationalisation of the sector, the Guardian can reveal.
In an official letter recently sent to anti-sewage groups, civil servants cited a paper by the Social Market Foundation as a reason to avoid nationalisation as part of its review of the sector. The report from 2018 was commissioned by United Utilities, Anglian Water, Severn Trent and South West Water.
The letter, sent by the Department for Environment, Food and Rural Affairs (Defra) to the Rivers Trust, Surfers Against Sewage, River Action UK and Greenpeace states: “The Social Market Foundation calculated the likely cost of renationalisation to be £90bn, drawing on publicly available data from Ofwat, the London Stock Exchange and the annual accounts of the water companies. Renationalisation would impose a huge burden on the public purse at a time when public finances are already stretched.”
Sir Dieter Helm, a leading economist, called the analysis “economically illiterate”.
Moody’s rating agency has disputed this figure and estimated that nationalisation could actually cost £14.5bn – a fraction of the analysis amount.
Earlier this month, Steve Reed, the environment secretary, announced a review into the water companies and the regulators, but said nationalisation was firmly off the table. He said it would cost “billions of pounds” and would not solve the sewage crisis.
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.
‘There is a growing perception that the water industry cares more about profit than the service it provides.’
Public trust in water companies has hit a new low.Less than one in four people believe water companies will help protect the environment.
Just 23 percent of water consumers in England and Wales say they trust their water companies to “do what’s right for the environment,” marking a 9 percent drop from 31 percent two years ago.
These were the findings of a consumer survey commissioned by Ofwat and the consumer watchdog Consumer Council for Water (CCW). The Savanta study was conducted between December 4 and 18, 2023. It surveyed 2,399 UK adults in England and Wales.
The research found that satisfaction with the quality of water services has fallen to 58 percent from 65 percent in 2021. Similarly, consumer satisfaction with wastewater and drainage services has dropped to 49 percent from 56 percent.
The water regulator Ofwat says the findings underscore the importance of the need for a transformative change in the water sector, so that it “delivers better outcomes for customers and the environment.”
