The Competition Illusion
By Ewan Burrows | WaterMatters.life
When five English water companies appealed to the Competition and Markets Authority (CMA) this week, it sounded like another regulatory scuffle. Ofwat said their proposed bill rises were too steep; the companies argued that without higher prices, they could not meet environmental and infrastructure targets.
But look closer, and it borders on farce. An industry with no competition is appealing to a competition authority for permission to charge customers more.
Anglian, Northumbrian, Southern, Wessex, and South East Water all claim Ofwat’s limits are too strict to fund the scale of investment needed. They want consumers to foot the gap. The CMA now looks set to grant at least some of those increases.
On paper, this is about “economic regulation.” In practice, it exposes a structural absurdity. You cannot regulate competition where none exists. There is no switching, no choice, no rival provider waiting in the wings. Each company controls its patch of England like a medieval estate, complete with guaranteed customers and rivers downstream of responsibility.
It is like a plumber who insists he cannot fix your leak unless you also pay for his next car. When you refuse, he takes the complaint to a business tribunal and accuses you of damaging the market.
That is not oversight. It is theatre.
The Dividend Paradox
The greatest irony is financial. These companies plead poverty yet keep finding cash for dividends. Since privatisation, the industry has paid out more than £70 billion to shareholders. The parliamentary Environment Committee has called those returns “excessive.” Dividend yields have often been higher than 10 percent, an extraordinary figure for a regulated monopoly meant to deliver public service, not private enrichment.
Meanwhile, the debts grow deeper. Thames Water alone owes around £15 billion and is now clinging to solvency. Yet even in its weakest years, money has continued to flow to investors. The logic is clear: reward shareholders first, repair the pipes later.
Some companies have tried to change course. Southern Water, for example, has avoided dividends in recent years and attracted new equity to stabilise its finances. But that does not redeem a wider model built on financial extraction. The contradiction remains: the system somehow always has money for investors but rarely enough for infrastructure.
If the sector were truly cash-strapped, dividends and bonuses would stop. They do not. Which suggests this is not mismanagement, it is design.
When “Competition” Becomes a Punchline
In most industries, competition law protects consumers from monopolies. In the water sector, monopolies use it to protect themselves from regulators.
The CMA’s appeal process allows companies to relitigate Ofwat’s determinations from scratch. Instead of a narrow review of specific errors, it offers a complete re-examination, effectively inviting monopolies to argue for higher profits in a market where consumers have no choice at all.
The irony is thick enough to block a drain. Regulators call it “promoting investor confidence.” Everyone else might call it a conflict of logic. The CMA’s involvement legitimises a fiction: that water companies compete, and that profit signals drive better service.
If Ofwat’s framework is truly unsustainable, fix it. Do not invite monopolies to plead hardship to a markets tribunal. It is like asking a chef to appeal to a restaurant critic because his customers cannot dine elsewhere.
Why Privatised? Why Foreign-Owned?
This takes us to the deeper question: if water is such vital national infrastructure, why is it in private hands at all, and why are so many of those hands foreign?
Thames Water’s ownership includes Canadian and Chinese state funds. Other regional firms are tied to investors in Australia, the Middle East, and Europe. In most G20 nations, water remains publicly owned or municipally controlled. The UK’s model, outsourcing an essential public utility to overseas investors, is unique.
Politicians call it “attracting private capital.” In truth, it is a dependency: strategic infrastructure managed at arm’s length, with profits flowing offshore. When decisions about London’s reservoirs or Kent’s treatment plants are made in Toronto or Sydney, accountability dissolves faster than phosphate in a river.
Even the United States, that global champion of free markets and corporate excess, has understood that water is too strategic to be left to private interests. Most American water utilities are city or county-owned, publicly financed, and politically accountable. If even the home of Wall Street thinks water should stay in public hands, what does it say about Britain’s blind faith in privatisation?
The Cost Myth
Why “Too Expensive to Nationalise” Doesn’t Wash
Every time public ownership of water is raised, the same argument trickles out: “It would cost too much to take it back.” But the maths, and the morals, do not hold water.
1. We are already paying for failure.
Consumers have funded decades of dividends, debt interest, and now bailouts. Thames Water alone has soaked up billions in emergency support and could still fall into temporary state control. If we are already footing the bill, why not own the asset outright?
2. Market value is not moral value.
Claims that renationalisation would cost “tens of billions” assume full market compensation for shareholders. Yet much of that value reflects financial engineering, not genuine investment. Government could legislate for limited compensation where firms have breached environmental or service duties, as it has done in past nationalisations.
3. The cost is temporary, but ownership is permanent.
Even a one-off buyout of £50 billion would end decades of dividend leakage, offshore profits, and inflated borrowing. Over time, the public would save more than it spends. The National Audit Office has already concluded that customers have paid more under privatisation than they would have under public control.
4. Continuing to rent our own infrastructure is not cheaper.
It is a hidden tax, debt disguised as efficiency.
The Case for Public Stewardship
If the water sector is so fragile that it needs to appeal to the CMA to survive, it is time to question the entire experiment. Water should be publicly owned, transparently financed, and run for long-term resilience, not short-term yield.
A not-for-profit public authority could still borrow, invest, and innovate, but without paying dividends or servicing vast private debt. Every pound collected from customers would return to the system itself. That is how most developed nations handle water. France’s river basin agencies, Germany’s municipal utilities, and much of the US network all operate this way: service first, profit second, or not at all.
Here, endless “reforms” promise accountability but never touch the model itself. New ombudsmen, new oversight panels, new slogans, none of them fix the contradiction at the heart of it all: that a monopoly selling an essential public good still expects to behave like a private business.
A Drip of Truth
The CMA appeal is not just a bureaucratic dispute. It is a mirror held up to the whole failed system. The promise of competition has evaporated, leaving behind only the residue of privatisation: debt, dividends, and sewage.
For three decades, the public was told private ownership would bring innovation and efficiency. Instead, it brought creative accounting and environmental decay. The same companies now insist that only higher bills can save the rivers they helped pollute.
That is not market logic, it is moral inversion.
Perhaps it is time to stop pretending water is a business at all. It is not a product, not a brand, not a tradable asset. It is the most basic human necessity, and it belongs in public hands.
Because if an industry that does not compete must still appeal to a competition authority to survive, then the competition is not the problem. The system is.
