Back in Public Hands? Is there a Case for Renationalising England’s Water?

In the early days of the new Labour government, bold moves have already begun to reshape key sectors of Britain’s infrastructure. From allowing rail operator licences to expire, paving the way for a publicly run rail network, to re-establishing state ownership of British Steel and launching the publicly owned Great British Energy company, there’s a clear shift in direction. These efforts reflect growing public dissatisfaction with privatised essential services and have reignited debates over who should own and manage the UK's critical infrastructure.

One of the most hotly debated sectors is water. Since its privatisation in 1989 under Margaret Thatcher, England’s water industry—alone in the UK in being fully privatised—has come under increasing scrutiny. Leaks, pollution, skyrocketing executive pay, underinvestment, and rising bills have led many to question whether the current model is fit for purpose. So, should England follow Wales and Scotland’s example and bring its water companies back into public ownership?

The Case for Renationalisation

1. Environmental performance and pollution scandals

The most pressing concern is the state of the environment. In 2023, England’s water companies discharged raw sewage into rivers and seas over 440,000 times, sparking national outrage. While the companies argue this is a result of outdated infrastructure and heavy rainfall, critics say underinvestment and prioritisation of shareholder dividends are the real culprits.

A publicly owned water system, advocates argue, would focus on long-term infrastructure improvement and environmental stewardship rather than quarterly profit margins. Scotland, where water is publicly owned and managed by Scottish Water, has consistently outperformed England on both leakage rates and customer satisfaction—offering a working alternative.

2. Financial inefficiency

Despite being natural monopolies with guaranteed customer bases, England’s water firms have collectively amassed billions in debt—much of it used not for investment, but to pay dividends and service interest. According to a 2023 report by the University of Greenwich, since privatisation, companies have paid out over £70 billion to shareholders, while household water bills have risen by 40% in real terms.

A nationalised water industry could redirect these profits into system upgrades, pollution control, and climate adaptation projects. With growing pressure on water resources due to climate change and population growth, reinvestment is critical.

3. Public support

Polling consistently shows that a majority of the British public supports the idea of water being publicly owned. In a 2023 YouGov poll, 63% of respondents said water should be run in the public sector, with only 10% supporting continued private ownership.

The Case Against Renationalisation

1. Cost of renationalisation

One of the most significant hurdles is the upfront cost of buying back the water companies. Estimates vary, but the total value of England’s water firms could be as high as £90 billion, including debts. Critics argue that this money could be better spent on direct investment in the network rather than acquiring ownership.

However, proponents suggest alternatives such as allowing licences to expire or using public interest tests to reclaim control at a reduced cost. The model used for bringing rail services under public management—allowing private contracts to lapse—may offer a path forward.

2. Government efficiency and accountability

Opponents also raise concerns about the efficiency of state-run enterprises, pointing to past issues in nationalised industries with bureaucracy and lack of innovation. They caution that poor governance or political interference could undermine service quality and environmental progress.

Yet it is also true that the current regulatory regime under Ofwat and the Environment Agency has struggled to hold private firms to account. Some argue that true accountability can only come with democratic control and transparency through public ownership.

Learning from Existing Models

Renationalisation need not mean a return to the monolithic state-run utilities of the 1970s. Innovative models are emerging across Europe. In Paris and Berlin, water has been successfully remunicipalised, leading to increased investment and lower costs. Closer to home, Welsh Water operates as a not-for-profit, reinvesting surplus into the network and reducing customer bills.

Labour’s approach to public ownership has emphasised pragmatic, not ideological, solutions—whether it's Great British Energy or bringing rail under a publicly controlled operator. A similar approach could work for water: a phased transition, driven by need and evidence.

Time for a Strategic Shift?

The renationalisation trend now taking root under Labour is not simply about nostalgia for public ownership—it’s a reaction to decades of private sector underperformance in essential services. The failures of England’s water firms in managing pollution, investment, and public trust make the sector a prime candidate for reform.

Renationalisation offers a path toward a water system that prioritises long-term sustainability, public accountability, and resilience to climate change. While the transition would be complex and costly, the alternative—continued deterioration under private ownership—may ultimately cost us far more.