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Should We Nationalise Water Companies In The United Kingdom?
It is not exactly news to say that the water industry in the UK has been going through some significant difficulties in recent years. Depending on where your company is located, the problems range from frustrations to outright crises.
The recent release of the docudrama Dirty Business has highlighted the pollution crisis surrounding Britain’s waterways, the 2024 General Election featured water reform as a major campaign point, and the continuing crisis at Thames Water highlights how unsustainable the status quo is.
Recently, A New Vision For Water has presented the UK government’s proposals for reforming the water sector, but it consciously, deliberately and explicitly leaves out one of the biggest options for reform as part of its efforts to focus on “market-based solutions”.
This is a mistake, because not only is there a serious public demand for nationalisation of vital utilities such as water, but the case for businesses to have a nationalised water supply option is larger than the white paper gives it credit for.
To explain why, we need to explore what nationalisation actually is, the many options for putting it in place, why it is so possible, and why it would save businesses money on their water bills in the long run.
What Is Water Nationalisation?
The term nationalisation is often particularly loaded, but it simply defines the transformation of privately owned assets, industries and utilities into public assets owned by the government on behalf of the people.
It is often used in market sectors in crisis, or where it has become clear that the benefits of private ownership for customers have not been realised, and it makes more economic sense to bring assets into public ownership and run them as public services.
What Does Water Nationalisation Look Like?
Whilst often used to describe state ownership of assets, there are various ways in which nationalisation can work. The group Surfers Against Sewage described various ways in which nationalisation could work:
- Publicly owned cooperatives or mutual companies, which customers and workers own and have a stake in.
- Not-for-profit companies, such as a public benefit or community interest company. Welsh Water has run under this system since 2000.
- Municipal water companies, which are operated by local authorities. This was commonly the case before the Water Act 1948 consolidated and nationalised the water sector.
- Nationalised companies that are run as independent commercial businesses, such as Scottish Water.
- Nationalised water authorities which are directly operated by the government, as seen with Northern Ireland Water, an Agency within the devolved Department of Infrastructure.
- A Special Administration Regime, which takes struggling and failing utilities and essential industries and takes them under temporary public ownership for the purposes of restructuring. Usually, this is to reprivatise them later, but it could be the basis for nationalisation.
Why Nationalise Water?
Aside from the very clear and obvious moral case for ensuring that British people have access to clean water, hygienic water services and waterways that are not overrun with raw sewage, nationalising water makes a lot of business sense as well.
The organisation Left Foot Forward points out that the government’s case for eschewing nationalisation as an option is based on faulty economic reasoning.
Not only have researchers such as Professor Dieter Helm at Oxford University noted that the purported £90bn cost to bring water companies back into public ownership has “virtually no intellectual substance”, but it also misses the benefits for customers, both residential and business.
The net savings, even with the £90bn cost, would equal £3bn a year, even notwithstanding the benefits you cannot put a price on, such as having the ability to hold water companies more to account and the removal of the profit motive for price increases and poor service.
Water is a very poor industry to try and run purely for profit; as a natural monopoly, customers are forced by geographic location into their ultimate choice of water provider, and there is little incentive for water companies to improve when revenue is guaranteed.
In fact, this is the exact reason why Thames Water is in the existential crisis it is; as the BBC helpfully recaps, Macquarie bought Thames Water and loaded it with debt by taking on loans leveraged against the company, whilst also paying bonuses to executives and dividends to shareholders.
No other country in the world currently runs water purely for profit in this way; either water industries are run as government departments, fully publicly owned not-for-profit companies or as public-private partnerships which help fund needed infrastructure improvements.
Is Water Nationalisation Inevitable?
The government took control of British Steel in 2025 in order to avoid an essential industry from being irreversibly closed down when its existing owners signalled their intention to downsize the business.
This highlights that if there is an existential and potentially irreversible crisis, the government will ultimately step in even if they claim otherwise.
Thames Water has been running hand to mouth, with various proposals to take control of the business reliant on unacceptable terms regarding pollution targets, whilst calls for nationalisation have only become more popular.
If Thames Water does end up failing in its statutory duties or as a going concern, it will be nationalised under the Special Administration Regime. If this happens, it could become the first domino towards nationalisation.