The myths about Public ownership
There are multiple assertions on the costs and logistics of public ownership of water. Most are just not true. Many are misleading.
The current water crisis is putting our country at risk, affecting businesses and public services (water shortages, and pollution incidents), the environment, and the bill payer with bills and water poverty set to increase.
The government is spoilt for choice in terms of alternative models. 90% of water internationally is in public ownership. How to transition to and run water in public ownership is tried and tested. There is lots to learn from the successes and the mistakes. Nothing can be as bad as what we have. There is nothing to lose, and all to gain from working with other countries willing to help, to design a bespoke modern public ownership model for the UK.
The government makes a number of assertions to refute the public’s call for public ownership. Some of these were published on the petition site for the petition to hold a referendum to bring the Water Industry into Public Ownership [debate in Westminster 14th September]
This is the rebuttal to those assertions.
1. Public ownership is too difficult and will distract effort from cleaning up rivers lakes and seas. It will take too long. This is not true.
“The government has already chosen to nationalise industries in meltdown. in 2008, the multi-billion £ Northern Rock was nationalised in 5 days. In April 2025 the government took control of British Steel in a day and recently decided on full nationalisation which is reported to be ‘due to be completed within weeks’.” Ash Smith, WASP.
It is privatisation that is diverting government effort from cleaning up rivers, lakes and seas, with regulators mired in rescue packages for water companies in financial distress, the government having to monitor water company CEO bonuses, and the select committees having to hold failing water company Chair’s to account. In public ownership the water industry would not be distracted by the overwhelming effort to service shareholder’s finances.
Careful planning of the model and buy-in from stakeholders, pragmatic measures, and transfer of expertise secures an efficient transfer. There are well -documented European cases of the process of transition to public ownership (e.g. in France and Germany). 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.
Transition should be supported by a feasibility study to inform the choice of public ownership models, and active engagement with the public that secures trust and effective implementation.
2.Taking water into public ownership will cost £104bn and put education and NHS budgets at risk. This is not true.
The People’s Commission has calculated that it costs closer to £0 to take any failed water company into pubic ownership where repair costs exceed debt. The test is ‘appropriate compensation’ - for a solvent company it would be a discount on market cap. Prof Ewan McGaughey calculated £12bn for the English water industry, based on zero compensation for 5 failed companies, and half market cap for the rest. In 2019 Moodys[1] estimated it would cost £14.5bn, a fraction of the Defra assertions.
The People’s Commission challenges Defra’s calculations[2] (2025) which is behind the government’s repeated claims it will cost £100bn[3] to bring the water industry back into public ownership.
DEFRAs calculations are based on the companies’ Regulatory Capital Value (RCV) which was first calculated in 1989, based on market value and adjusted each year by capital spending and depreciation. RCV is a pricing mechanism and has no relation to the actual market value of water companies.
We disagree with DEFRA’s valuation in three main respects:
● First, using RCV as a proxy for market value is flawed. DEFRA uses RCV as a proxy for the water companies’ debt and equity, which is supposed to indicate what has been spent on investment. This approach does not reflect the £83bn that firms have taken out of the water companies in dividends. Defra does not need to use a proxy for debt and equity, as spending as net debt is readily known (£85bn detailed in Ofwat’s Financial Resilience Report[4]) and equity spending has been next to nothing. Shareholders have actually invested very little (People’s Commission Report p104[5]).
● Second it is meaningless to value a company in terms of how much is spent on infrastructure without including the current condition of that infrastructure.
● Third, we disagree that this figure reflects the value of the companies. Three of the water companies are publicly traded and currently the stock market valuation is considerably lower than RCV. DEFRA refers to the average market value over the last 30 years. Current market values would be a more relevant comparator. Using DEFRA’s methodology, Thames Water has a RCV of £21bn (which is the figure for Thames built into the Defra £100bn costs) but in 2025 could not even attract £4bn investment.
Both RCV and Enterprise Value are artificially high and should not be used to assess the costs of re-nationalisation.
With nationalisation, compensation (the cost of nationalisation) would be a matter for courts and valuation would be on the basis of an independent fair value assessment. When the dividends are withdrawn and the costs required to rectify years of underinvestment are taken into account, the fair value for failing water companies could likely be closer to zero than £100bn (People’s Commission p 13). Moreover, the figure fails to address the fact that at the point of any transfer to public ownership the value of the assets transfers which more than offsets any costs. The gains from public ownership (assets, reduced costs of regulation, reduced borrowing costs) needs to come into any government valuation of transfer costs need to be included in any figures on cost.
We conclude that the motivation for this £104bn valuation is to protect the status quo and eliminate discussion of policy alternatives, especially public ownership which is normal in the rest of the world. The idea that NHS and Education budgets would be affected is clearly scaremongering and false as governments choose how to determine department budgets.
3. Public ownership is too expensive. The government has no evidence.
1. The government does not know the cost of public ownership so it cannot say this.
An FOI request asking for Defra’s figures on the ongoing costs of public v private ownership over 30 years secured this response: “the government has no intention to nationalise and therefore has not assessed the ongoing costs of continuing with the current privatised model versus public ownership of the water industry”. People’s Commission January 2026[6]
2. The People’s Commission report found that private ownership is more expensive than public ownership.
The People’s Commission report found that water prices tend to be lower in public ownership, and all of the revenue can be reinvested in infrastructure and system development. Borrowing in the private sector is much more expensive than in the public sector. Project costs are transparent not inflated. There are no work around payouts (no dividends). Free from the profit imperative, public sector water utilities can focus primarily on the public good.
Currently customer bills cover the total costs of water company business plans (Root 2025)[7]. The legacy debt however swallows between 21% and 53% of current bills on interest payments.
Case Study Paris: The experience of Paris demonstrates that it is possible to create new and renewed public water services that are fair, sustainable and resilient. On taking water back from private operators into public management there was an immediate lowering of the water bills of 8%. Fifteen years after re-municipalisation Paris is securing high quality of water at a fair price; users are at the heart of the service; there is equal access to drinking water for everyone; there is transparent management of the resource and Paris now has a long-term vision of the service (Le Strat 2025)[8]. The total reduction in costs could provide more funding to address the failings of the water companies to maintain the assets they inherited.
In contrast we have found that private ownership is more expensive than public ownership. Private sector finance is expensive. Hall and Gray (2025)[9] calculate that on average 35% of company revenue from bills in 2023/24 went in financing costs, a figure supported by Root (2025). This means that over a third of income from bills does not go to frontline services but to the financial sector. Debt can be expensive. A £3bn emergency loan that Thames Water took out from a group of hedge fund creditors in January 2025 was charged at an interest rate of 9.75% p.a., compared to the 4.25% base rate.
4. Pension funds will be at risk if water is taken back into public ownership, and it will put off patient investors. This is not true.
Pension funds are expected to invest to create value, in line with their fiduciary duties to members. The responsibility for where they invest lies with the pension funds. This should not be a ‘ransom’ issue used by water companies to inflate the risk of their collapse. The UK-based Universities Superannuation Scheme has all but written off its 20% investment in Thames Water which in 2022 was valued as £956m but in March 2024 they said the value of their investment was ‘minimal’ according to accounts filed.[1]
Global investors including pension funds have highly diversified portfolios. The value of investment held by UK pension funds in the water industry is minimal, when set against the value of the funds overall. USS has total investment assets of £84bn (USS 2024). According to their 2024 Annual Report, USS has a diversified investment strategy which means that “no single investment is of sufficient magnitude as to jeopardise the scheme’s ability to pay its liabilities as they fall due.” Pension Fund risk is not a reason for propping up a failed privatised system
Public ownership provides the stable environment that is more likely to attract patient investors such as pension funds.
It is worth noting that the Environment Agency Pension Fund had investments in 9 water companies to the value of £35.7M [2]
5.Workers’ pensions are at risk if water companies go into public ownership. This is not true.
It is possible to protect workers pay, conditions and pensions on transition to public ownership (see a positive example of this in the Montpellier case in our People’s Commission report).
Note the Pension Protection Fund guarantees pensions in event of insolvency - but the whole pension should simply transfer to the new organisation.
The Transfer of Undertakings Protection of Employment Regulations 2006 mean that if/when assets are transferred to a new company then there can be no change in employment terms without a very good economic, technical or organisational justification
If secured creditors and debt is wiped clean as it should be then there is money for better terms and conditions for workers - the government should refuse to bail out Wall Street banks who share responsibility for running up £23 billion in repairs
Unions can demand that workers/unions get the right to elect directors on the board of all water companies, and the Secretary of State can order this, using section 1 of the new Water Special Measures Act 2025.
6. Special Administration is too costly. This is not true.
The assertion that special administration will take too long, with costs borne by the government, creating knock on effects for borrowing and debt (Good Growth Foundation)[3] are not credible. SAR in fact costs the government zero (Root & Malby)[4]. Creditors have also claimed that costs will be over £3.5 Billion (assertions by creditors) figures were rejected twice: first by Mr Justice Leech in the High Court in February 2025[5], and again by the Court of Appeal in April 2025.[6]
Meanwhile with no ‘bottom line’ sanction the water companies can behave increasingly badly from bonus work arounds to ceasing to provide running water as a minimum standard, to increasing pollution incidents. Without SAR regulation cannot work.
SAR provides the gateway to understanding the real state of the water companies’ assets and their real worth. Without SAR all of this is contestable. SAR for Thames creates the foundation for determining the best ownership model for the water sector based on a real transparent understanding of the state of the assets and finances.
SAR also provides a moratorium on interest payments – bringing real money straight into running the company, for Thames this is 37% of bill income, and freezing debt interest for 3 years would create an additional £2.25bn cashflow. SAR brings additional money into solving the water crisis.
7. Lack of regulation is the problem not water industry profiteering. This is not true.
Regulatory burden did not cause the problem.
● Water companies choose not to comply with their statutory duties or the law, and they should pay the price.
● It is the offenders who are the problem. This bill lets them off the hook
Regulation can’t work.
It is not possible to regulate a monopoly private water industry (People’s Commission 2025). We have seen that no sanction is enough, information is hidden and water companies put profit first. Regulators are always on the back foot faced with an industry owned by the profiteering wealthy.
“Privatisation has brought the sector to its knees. In responding to the scandals of underinvestment and financial mismanagement, the state has closed ranks around the shareholders. Those that wrought havoc in the system will stay in place, profitability will be restored, and consumers and the environment will continue to bear the costs.” Water Alternatives Forum 2026[7]
Blaming the regulators who had one hand tied behind their back is an excuse not to address the scandal of pollution for profit.
8. The Government is taking tough action through the white paper. This is not true.
The White Paper lets water companies and oversees owners off the hook. Any struggling water company will be able to ‘postpone’ fines and regulators are required to understand the water company’s problems. Whilst the government talks ‘tough’ on regulation and the water companies in reality it rewards poor performance. All the focus of the government’s white paper, apart from some pre-pipe solutions, is on regulation. No amount of regulatory change will secure water companies who care about the environment. Their motive is profit. Their behaviour has been the same for many years and no amount of regulation will stop it. Even recently when the government tried to ban bonuses, water companies changed the way they paid chief executives (the ones overseeing criminal activity) through alternative payments, payments from holding companies, one-off payments and increased salaries. No water company CEO was worse off as a result of the ban.
You can read comprehensive blogs that set out the problems here:
The People’s Commission on the Water Sector response - Radical reform needs to address the web of interests, structures and narratives that sustains the current system, and stands in the way of genuine change
Ilkley Clean River Group - Government White Paper - Greenwashing its failure to address the elephant in the room
Windrush Against Sewage Pollution - New Vision for Water a mirage or worse?
9. The Government has banned bonuses. This is misleading.
Water Company CEOs continue to secure salary increases using work arounds (salary increases and ‘additional payments’) to the banned bonuses (Guardian 2026). Louise Beardmore of United Utilities received an increase of £1.1M this year (yes million).
David Hinton CEO SE Water, responsible for 30,000 properties two hospitals, a kidney treatment centre, 15 schools, 19 care homes and 29 nurseries in Tunbridge Wells left without water for two weeks and countless businesses affected. He received a £115K bonus this year, and was in line for a 30% increase in salary from April 2025, and If he stays in his job until 2030 will receive an extra £400m just for still being there. He has just had a cash allowance of £50,000 for extra hours put in to deal with the water companies appeal that customer bills are set too low. (Jack, BBC, 2026)
Nicola Shaw Yorkshire Water CEO who has overseen Yorkshire Water’s performance being downgraded by the EA from three stars to two, whilst Ofwat says it is lagging behind; whose serious incidents nearly tripled in 2024, whose sewage dumping of 430,262 hours is primarily due to lack of capacity in their sewage network, and who has under delivered; by 31% on improvement projects, whilst reporting profits year on year – took a £1.5m payment over 2 years in addition to her salary, from the company that sits above Yorkshire Water – Kelda Holdings. This was repeated this year with an additional £500K on top of her salary increase to £730K despite record severe pollution incidents, Ofwat grading the company as ‘lagging behind’ and the trailed likelihood of EA downgrading Yorkshire Water to 1 star in the autumn.
“Overall reported pay packets rose by 1.5% to £25.3m for chief executives and chief financial officers in the year, thanks to salary rises and the use of pay loopholes, according to analysis of the 14 companies that serve most of England and Wales.” (The Guardian 24th July 2026)
10. Changing the ownership model won’t work, after all just look at Welsh Water it’s a not-for-profit and it is in a mess. This argument doesn’t make sense.
The Government argues that it is not the ownership model that’s the problem – citing the same issues in Welsh Water (not-for-profit) as privatised water in England, and therefore it must be the regulator that needs changing.
This is not the case. Both Welsh Water and Water Companies in England are companies organised using commercial principles. Welsh Water is still a monopoly provider of a commodity, has laden itself with debt, pays executives extortionate bonuses, and has no public voice on its Board. “The problem is not just privatisation, but commercialization – diminishing water as a public good.” (The Peoples Commission page 64)
“It is simply not possible to conclude that the theory of privatisation working with regulation is credible. It was an evidence-free theory to begin with, and English and Welsh water was used as a failed experiment to test it. That experiment should now be considered over.” (People’s Commission page 92)
The government has not been curious about why 90% of water internationally is in public ownership, and what works in that model.
“The possibilities for transforming people-water relations [that in turn improves the opportunities to preserve and protect water and generate a sustainable solution] are increased when public ownership includes a shift towards treating water as a public good, not a commodity; and towards democratisation, citizen input and oversight (Beveridge 2025)”. (The Peoples Commission page 64).
We are not calling for ownership that keeps the model of consumerism and water as a commodity intact, or copying anything that’s already broken, rather we are calling for a model of public ownership that sees water as a public good requiring strategy, collaborative planning at a regional level, ownership of the assets, active citizenship in a water conscious society, public and employee participation in governance, and a range of delivery organisations competitively contracted.
The fact that the government assumes that because Welsh water is also failing that the ownership model is not the problem shows a lack of rigour in understanding how best to secure cleaner, cheaper and fairer water as a public good.
For example, France operates a mixed model of delivery where ownership can be public, but delivery can be private/mutual/or public. The municipalities retain ownership of the infrastructure but provide 3 to 5-year contracts to delivery organisations which can be public, or private.
And don’t forget public ownership can be cheaper than any corporate model (no dividends, surpluses reinvested, borrowing if needed is much cheaper -dropping form 8-12% interest to 4.5%, project costs are transparent and are not inflated, regulation is cheaper as its inevitably lighter as all information is in the public domain.) See Point 5 below.
We are spoilt for choice. The fact that other countries have transferred water into public ownership already, means there is a lot to learn from. That gives England and Wales the opportunity to design a modern bespoke publicly owned water system.
The Water Bill must be stopped until there has been a transparent and independent review of all options learning from what works internationally. Use this to design a bespoke modern public ownership system with public consultation. Water is cleaner, cheaper and fairer in public ownership.
11. The government has secured £104bn investment. This is misleading.
Ofwat has said this money comes from customer bills.
Here are the two links setting out the evidence for your information:
1. 'Ofwat says the allowed bill increases will be used to fund a £104 billion investment in the system' [8] [Channel4 Fact Check ]
2. Previously Ofwat told the City that "PR24 set prices for 2025 to 2030 based on an allowed expenditure of £104bn of which £90.9bn is allowed revenue (i.e. from the increase in consumer bills) and the balance is intended to come from shareholder equity".[9] [PR24 final determinations City briefing 19 December 2024]
12. The water white paper will save £125m.
The government promises to deliver savings of ‘over £125 million on water and energy bills over the next 10 years’ (less than £1 per household per year) through smart meters and labelling dishwashers. But this is nothing in the face of money lost by suspending fines for struggling companies as outlined in the white paper. For example, in 2025 Thames was fined £123m for pollution and illegal dividends with Ofwat saying “Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations.” Suspending that single fine would write off the total savings in the government’s plan.
References
[1]https://www.ft.com/content/e2e459ab-8eb7-4390-8584-eed07e936ee1
[2]https://www.eapf.org.uk/investment/companies-we-invest-in
[3] https://www.goodgrowthfoundation.co.uk/a-watertight-solution-for-public-control
[4] Root and Malby (2026) Briefing on Special Administration for MPs and Peers.
[5]Re Thames Water Utilities Holdings Ltd [2025] EWHC 338 (Ch), Mr Justice Leech, 18 February 2025, paragraph 293. The judge rejected the Plan Company’s evidence that a SAR would cost between £3.35 billion and £4.01 billion: judiciary.uk
[6]Kington S.À.R.L. v Thames Water Utilities Holdings Ltd [2025] EWCA Civ 475, Sir Julian Flaux Chancellor, Lord Justice Zacaroli, Sir Nicholas Patten, 15 April 2025. The Court of Appeal confirmed the High Court’s rejection of the £3.35–£4.01 billion SAR cost claim and noted that the true direct government cost of equivalent bridging finance was quantified in evidence at £65.93 million.
[7] https://www.water-alternatives.org/index.php/blog/ukw
[8]https://channel4.com/news/factcheck/factcheck-water-bills-in-england-and-wales-to-hit-record-high.
[9]https://www.ofwat.gov.uk/wp-content/uploads/2024/12/PR24-final-determinations-City-briefing.pdf
[1]https://www.theguardian.com/business/2024/sep/29/labour-water-industry-analysis-argue-against-nationalisation
[2]https://www.gov.uk/government/publications/nationalising-the-water-sector-how-we-assessed-the-cost/nationalising-the-water-sector-how-we-assessed-the-cost
[3]https://www.thepeoplescommissiononthewatersector.co.uk/blog/blog-post-title-one-8ma2e
[4]https://www.ofwat.gov.uk/wp-content/uploads/2024/11/Monitoring-Financial-Resilience-Report-2023-24.pdf
[5]https://static1.squarespace.com/static/679fa8e9b924866c2537ebe4/t/687ff57ddafc3734f9cc4752/1753216605244/Report+of+The+People%27s+Commission+on+the+Water+Sector.pdf
[6] Peoples Commission (2026) The Government does not know the costs of public ownership. Blog.
https://www.thepeoplescommissiononthewatersector.co.uk/blog/blog-post-title-one-8ma2e-sdats-c4epz
[7] Root, S (2025) Evidence for the Independent Water Commission on Thames Water and Yorkshire Water. Reports available at https://www.thepeoplescommissiononthewatersector.co.uk/general-2-3
[8] Le Strat, A (2025) Presentation to the People’s Commission on the Water Sector. Available at https://www.thepeoplescommissiononthewatersector.co.uk/general-2-1
[9] Hall, D. and C. Gray (2025) Leaking money: the finance costs of privatised water and regulation in
England and Wales: Scottish public ownership shows potential savings.
https://gala.gre.ac.uk/id/eprint/50096/7/50096%20HALL_Leaking_Money_The_Finance_Costs_Of
_Privatised_Water_And_Regulation_In_England_And_Wales_%28WORKING%20PAPER%29_2025.