Briefing for Secretary Of State to inform water reform white paper
the findings of the People’s Commission on the Water Sector.
December 2025
More than Regulatory Failure
The current water system is failing and will continue to do so - the model is broken. Any modern water system must provide safe drinking water, dispose of wastewater safely, remain resilient and adaptable to emerging pressures, and operate in a way that is both fair and affordable. The current system in England and Wales is failing on all of these counts with catastrophic pollution, water shortages, loss of public trust, ever increasing water bills, and lack of preparedness for the future.
Untreated and undertreated sewage has been discharged for millions of hours into our waterways, because water companies have failed to invest and concealed their data from the regulator. The sector is in a precarious financial state because companies loaded up debt (serviced by over a ¼ of bill payers fees), while paying out dividends. Companies abused their position of trust. Regulation could have been better, but financial extraction happened in plain sight and was completely legal.
This is not simply a regulatory failure. It is a systemic failure rooted in the commercialised model itself. The private sector does not consistently behave in predictable or publicly-oriented ways, and regulation is, by its nature, perpetually reactive. This is evidenced by the fact that regulators are now investigating every single water company.
After 35 years of monopoly privatisation, the model of running an essential public service on commercial lines has demonstrably failed the public and the environment. It has proven high-cost, structurally difficult to regulate, and unable to deliver the outcomes society expects. A radical reform of the way that water companies are owned is the only way to bring about the lasting change in ethos that is required to provide a transparent, equitable and sustainable water system. A new model for water is now required.
Water Systems That Work are in Public Ownership
Across the world, governments are confronting the same pressures: climate change, emerging pollutants such as microplastics and PFAS, and increasing demands on ageing infrastructure. Those achieving better-quality, cheaper, and fairer water systems have a clear strategy in common: they conserve and protect water through democratised governance and active public participation.
Globally, 90% of water services remain in public ownership, and this is where the highest-performing utilities are found. Public ownership of water assets is fundamental to water security, future-proofing against scarcity, and driving down pollution. It is also more cost-effective. Publicly owned systems provide stability that attracts longer-term, lower-risk investment (including pension funds), avoid incentives to inflate capital projects, and benefit from substantially cheaper borrowing. Where these systems work well, infrastructure is properly maintained and innovation in water conservation—whether through building standards, leakage reduction or non-concrete alternatives—is actively pursued. In many countries, water bills cover only a minority of service costs; by contrast, in England and Wales they now cover the majority. Regulation is also more effective and far cheaper under open-book public ownership, where transparency and public value are built in rather than imposed.
Operational delivery in democratised public systems is open to competition and innovation. International experience shows a spectrum of proven models—from full municipal ownership, to cooperatives, to hybrid public-private arrangements, to publicly owned utilities run akin to commercial enterprises. No single structure fits every geography, but the UK can draw on a rich repertoire of tested approaches and adapt them to the conditions of England and Wales.
Key Findings
The Water System must transition away from the failed monopoly commercial model to public ownership, alongside the rest of the world. It will not cost £100bn (this is based on a flawed ands discredited valuation model) [1] . It is possible to do this without disrupting service delivery, it does not cost the taxpayer anything, and it attracts reliable long term investors. A feasibility study of the range of options for delivery under public ownership should be commissioned.
The water system lacks coordinated strategic oversight. The government should establish the SAGE (Special Advisory Group of Experts) for Water to support a cross-sector national crisis committee to determine a long-term strategy for water conservation, protection and water efficiency, and to radically reduce pollution. Addressing the scope of requirements can only be achieved through collaboration between the public, business, water sector, planners and policy makers; nationally, regionally and locally. Long term planning by public democratic bodies will ensure that investment is well structured while costs are kept down.
Learning from Europe, the government should pursue a polluter pays model, rather than landing all the costs of industrial, agricultural and building sector pollution at the bill-payers door. More is needed, not just to hold polluters to account but also to devise imaginative ways of reducing the pollution entering the system. Innovation could be promoted in pollution so that prevention, rather than treatment is the priority.
One regulator can only be effective under public ownership where there is no asymmetry of information, and all performance and costs are transparently available. The focus of regulation is water quality, security and public value.
Transition
Transition to public ownership should be planned rather than managed in crisis. Drawing on other countries' experience means that known risks can be planned for and mitigated, innovative mechanisms adopted, and a new public system designed for context. Strong political will, good preparation and public buy-in are key. In addition to a vision for a new kind of public service, there is a need to develop the power and capacity of public authorities to control, monitor, and evaluate service delivery. Transparent data and the ability to manage it are vital. Shadow Water Authorities could be established as a preparatory step.
Transfer does not affect the day to day running of the water organisation and the majority of staff and operations are kept intact. SAR provides a process for the continuation of the water company under a government appointed special administrator. Special Administration has been used before such as in 2001-2002 by the Blair government to take over the failing network company Railtrack, and transfer it to a new company, Network Rail; and for rescuing failed banks after the financial crisis.
Campaigns to build the political momentum and to consult the public, and to undertake feasibility studies often precede transfer from private to public. But once the decision has been made, the process need not be long – in Paris the transfer from private to public ownership was effected in 1.5 years (Le Strat 2025). Water companies may exert strong lobbying pressure to delay or disrupt public ownership as was the case in both Berlin and Paris. In the UK the re-nationalisation of British Steel was enacted in a day.
About the People’s Commission on the Water Sector
Public outrage about sewage pollution of rivers, lakes and seas made the water system an election issue. It remains a significant and emotive issue for the public. Hundreds of campaign groups have formed [2], shocked by local pollution.
The People’s Commission on the Water Sector was conducted by academics with expertise in economics, water governance, innovation and the law, who have provided a full pragmatic and evidence-based report. The People’s Commission conducted its inquiry in public across the country using a methodology of witness interviews, evidence submissions and public discussion. The report took a wider remit than the Cunliffe Inquiry which, whilst identified as the most comprehensive review since privatisation, was actually limited in scope. Our approach enabled us to look at both the causes of pollution and the best approach to strategy and operational management of the water sector. As you would expect from a report informed by academic experts and peer reviewed research, the recommendations are therefore not based on ideology but on evidence.
The People’s Commission Report and all the evidence heard is available here . With thanks to all the members of the public who took part in evidence-sessions, expert witnesses, and the organisations that hosted our events.
Prof Becky Malby, Prof Frances Cleaver, Dr Kate Bayliss.
Footnotes
Email: peoplescommissionwater@gmail.com | Tel: 07974777309
1.The People’s Commission (2025) Defra and the £100bn. September. Available here. Dieter Helm (2025) The next episode in the Thames Water saga: Defra’s misleading £100 billion cost of nationalisation and flawed board vetting proposals. 22nd September. Available here
2. See the 52 members and supporters of the Sewage Campaign Network