England's privatised water system is undermining climate resilience and delivering poor value for consumers, according to a new assessment. The analysis argues that the government’s refusal to renationalise water shows it operates in the interests of private capital rather than the country. It highlights that despite promises of higher investment following privatisation, a detailed study by the public service union Unison found no net investment between 1990 and 2023.
Investors spent £3.6bn buying shares in 1989 and 1990, but by March 2023 total shareholder equity across the water sector amounted to just £3.4bn. In real terms, that represents a 60% reduction in shareholder capital. Over the same period, shareholders extracted £77.6bn in dividends, adding to a total of £82.4bn withdrawn from public assets. Much of this was funded by borrowing, with water companies loading themselves with debt to pay dividends rather than invest in infrastructure.
As a result, customers have borne the cost. Water bills rose by 360% between 1990 and 2023, more than double the general rate of inflation. Research by the University of Greenwich suggests households pay £2.3bn more annually than they would if suppliers were publicly owned. The analysis also points to high leakage rates, with 19% of piped water lost through leaks, compared with 4% in the publicly owned Dutch system. No major reservoir has been completed in England since 1992.
Demand management has been equally poor, with forecasts indicating water demand will exceed supply by 2034. The analysis claims water companies have a financial incentive not to reduce consumption, as profits from metered customers depend on usage. Instead, as drought conditions persist, they are seeking permission to extract even more from rivers and aquifers, risking further harm to wildlife and water quality.
The assessment concludes that the current system represents a political crisis as much as a climate one, with companies effectively dumping liabilities on the public. It notes that while foreign states are permitted to own England’s water supply, the UK government is not, leaving the country as a 'dustbin' for corporate debt and environmental damage.
