Opinion: Water under pressure – the case for renationalisation

On the day that water regulator Ofwat announced hikes of an average of 36% over five years for consumers, England’s largest water company is on the verge of collapse, burdened with massive debt and embroiled in court battles. Elsewhere in England, over 50,000 homes, schools, hospitals and businesses are without water due to failing infrastructure.

Public good should come before private profit. It’s time to renationalise water companies.

A way forward

On 9 December, UNISON launched its water report in Parliament (see photo above, by Gary Schwartz), joined by senior UNISON activists from the water industry and Environment Agency, Labour MP Clive Lewis, parliamentarians and prominent academics, with speakers emphasising the need for a water sector that prioritises public health, environmental protection, and accountability.

Outlining a comprehensive roadmap for renationalisation, it highlights systemic issues in England’s privatised water sector.

When water services were privatised in England and Wales in 1989, it was sold to the public as a way to improve efficiency and attract investment. Since then, private water companies have raked in £72 billion in dividends for shareholders, while failing to invest adequately in infrastructure.

That is what Ofwat says today’s announcement of rises to bills is looking to address.

Household bills have risen by 40% in real terms and the regulator’s recent announcement to ringfence infrastructure – this only compounds the burden.

England’s rivers and beaches are in crisis, with companies spilling 3 million hours of raw sewage into waterways in 2022 alone. Only 14% of rivers meet good ecological standards.

Meanwhile, companies have built up a staggering £60 billion in debt since privatisation, with much of it used to pay shareholders.

A case study in the problems

Thames Water epitomises the issues plaguing the sector.

Despite managing the UK’s busiest water network, it loses 630 million litres of water daily – equivalent to 250 Olympic swimming pools.

Since 2017, the company has paid £32.4 million in fines for pollution, including dumping raw sewage into rivers.

It is saddled with £14 billion in debt, largely accrued to pay shareholders. In June 2023 it nearly collapsed, requiring a £750 million bailout from investors.

This is not an isolated case. Financial mismanagement, excessive shareholder payouts and environmental harm are endemic.

Failures of senior management in individual companies do not reflect the high standards of their employees, many of whom are UNISON members.

In addition, Ofwat was established to hold private companies accountable for fair pricing and environmental protection. It has failed, allowing companies to get away with poor performance, focusing on short-term price controls instead of long-term investment.

After a 20% price hike in July 2023, today’s announcement averages a 36% increase – closer to the demands of water companies, many of which are owned by foreign investors or private equity firms, and many of which prioritise profit over public service.

Renationalisation would eliminate the need to pay shareholders, allowing money to be reinvested into infrastructure and passed on to consumers as savings.

Public ownership can prioritise ecological restoration, ending the sewage scandal and ensuring clean, safe water for everyone. Removing the profit motive would allow water services to focus on long-term planning and sustainable investment, not short-term gain.

Public ownership isn’t just possible—it’s popular. A 2023 poll found that 66% of Britons support renationalising water, cutting across political and social divides.

UNISON will continue to pressure the government to make water security and renationalisation a key priority. It’s time to end the 30-year experiment of privatisation and put water back where it belongs – in the hands of the public.