As public outrage at water companies disregard for the law, abuse of our money, neglect of our water systems, pollution of our waterways, continues to mount it is an extraordinary act of arrogance to see the water companies increase rewards for CEOs and Finance Directors rising to £25M this year (Guardian 2026).
Whilst the government has fallen into the trap of believing the problem of water pollution is complex, and the fault of regulation, the People’s Commission on the Water Sector undertook a truly independent review and found that the cause was commodification of water and the lack of national strategy. The shorthand is that privatisation has led to pollution for profit, but that same shorthand is leading to proposals for ideologically driven short-term fix solutions, for instance replacing water companies with mutuals, that do not address the root causes of the water crisis.
One solution being proposed is the move the water companies into Mutuals, companies owned by members (which could be the public) rather than shareholders. They vary enormously from charitable trusts to non-profit company, consumer co-operative, multistakeholder mutuals (all of which are being used to describe alternatives to for-profit, shareholder-owned private water companies). Whilst this looks an attractive solution with the possibility of the public owning the problem, on its own it is problematic as water remains a commodity rather than a public good, financing costs can be high, and the water system as a whole remains fragmented.
Rather than jump into another unproven and unprecedented approach (at the scale of the UKs water sector) of mutuals, we called for an evidence-based solution that embodying careful stewardship of water as a vital eco-system for life, our economy and our future. The ownership model that will secure us a sustainable and resilient water system should be designed based on lessons learnt from the 90% of the world that has already transitioned to public ownership, so that we don’t make the same mistakes as Thatcher in pursuing a wholesale ideologically driven transfer, but instead design an evidence-based modern bespoke public ownership model fit for the future drawing on the vast expertise available to us. What is clear is that international approaches that are more effective have a fundamentally different ethos of clear strategy and long terms planning, democratisation of decision-making, transparency, and lower costs. Those countries took time to prepare the public and carefully design a system that works for the public good.
Knee jerk adoption of another fragmented set of owners (be it mutuals instead of corporates) does not address the fundamental strategic problems that run alongside private ownership – for instance our lack of preparedness for climate change that affects regions of our nation differentially and requires national and collaborative responses to tackle water scarcity; the planned building boom and data centre expansion that does not address our lack of capacity to manage and store water, or use grey water effectively, to name but two.
Neither does the grasp for a quick fix solution meet the test of the international experience which is that we have to secure public ownership of the problem not just public control of the delivery mechanism, so that everyone pulls together to conserve and protect water. The mutuals solution as proposed adopts the mentality that water is a commodity that needs managing, rather than water as an asset that is vital for all aspects of our and our country’s survival and ability to thrive.
Replacing water companies with mutuals does not bring the valuable assets of water companies back into public ownership against which to borrow using low cost access to government bonds. Moreover with the range of ‘membership’ options available they do not safeguard against a re-takeover by private equity much like the privatised water companies have already experienced. Tit for Tat is not a strategy.
This is not to write off mutuals as part of the solution. Internationally mutuals do play a part in a hybrid model of delivery within a public ownership model. This is why after 37 years of failed privatisation the public deserves a feasibility study looking at all the options in order to design a modern bespoke public ownership system that works now and for the future. We are spoilt for choice – if only we took the time to open the box and see what’s possible.
Prof Becky Malby BEM
The People’s Commission on the Water Sector
‘The Independent View‘ is a slot on Lib Dem Voice which allows those from beyond the party to contribute to debates we believe are of interest to LDV’s readers. Please email [email protected] if you are interested in contributing.
* The People’s Commission on the water sector reflects the public outrage at the state of our rivers, lakes and seas, and seeks to undertake a full root and branch review of the water system, examining what we can learn from the very best approaches internationally, and from innovations emerging in the water industry and scientific community. The People’s Commission has been established by members of The Sewage Campaign Network
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7 Comments
‘Knee jerk adoption.. (be it mutuals instead of corporates) does not address the fundamental strategic problems’. Indeed.
Dŵr Cymru Welsh Water is not-for-profit, but as an idea of the tasks faced/sums needed (Nov 2025), it: ‘ is on track to invest c.£665m in 2025/26 as part of its largest-ever capital investment programme of over £4bn for the 5 years up to March 2030.’ (£2.4bn of that on the environmental side).
That’s on top of everyday running costs and finance costs, and with just 1.5million households, most it has to come from investors.
The broken part is not the provision of water (a commodity and natural monopoly supplied to households) but the disposal of sewage and rain water run-off (a service supplied to communities). If you treat them as one industry and structure it to provide the commodity, the real problem will not get fixed.
@ Peter,
” If you treat (supply of water and sewage disposal) as one industry and structure it to provide the commodity, the real problem will not get fixed.”
Is this just an assertion or do have any justification which you perhaps think is so obvious that it isn’t worth mentioning?
The use of the River Thames for both functions could be an example to provide evidence for the contrary. Residents of London will be drinking water that has been passed though the bodies of residents of towns upstream like Oxford and Reading. So the two are inextricably linked.
It’s probably relatively safe providing the water is adequately treated but at the same time Londoners probably avoid thinking about it too much!
There’s no easy way to avoid it so the best solution has to be having one organisation which is responsible for both operations. If someone or some organisation has to dump sewage into the rivers we should expect them to consider others who have to later drink the river water rather than thinking it is someone else’s problem.
@Peter water companies are generally geographically split according to the centres of population supplied not the areas from which it is extracted. They dispose of the sewage produced by the same population. In your example, when sewage leaks occur in London, they affect the bathers and wildlife of Kent and Essex but are downstream of any input to any water supply. It is the leaks in the Home Counties which would potentially affect London water supply. They don’t because as I said, the water companies are generally quite successful at supplying clean water.
Peter Davies 7th Aug ’26 – 7:48pm:
The broken part is not the provision of water (a commodity and natural monopoly supplied to households) but the disposal of sewage and rain water run-off…
Indeed, but it’s broken by design….
How did belief in miasma theory result in CSO discharges?
https://gemini.google.com
.
There are strong parallels with the way miasma — “bad air” — was vilified in Victorian times and the way carbon dioxide — an essential gas of life — is vilified today.
Are mutuals the answer to the water crisis?
Betteridge’s Law applies.
As public outrage at water companies disregard for the law, abuse of our money, neglect of our water systems, pollution of our waterways, continues to mount…
Water companies aren’t ‘neglecting our water systems’ – real investment is over five times higher than it was under public ownership: 40% of all water investment in Europe.
…it is an extraordinary act of arrogance to see the water companies increase rewards for CEOs and Finance Directors rising to £25M this year.
While possibly excessive for managing a monopoly with a captive market, it’s just 0.12% of £20.8bn annual investment spending. So financially irrelevant.
The ownership model that will secure us a sustainable and resilient water system should be designed based on lessons learnt from the 90% of the world that has already transitioned to public ownership,…
Under public ownership the UK system was starved of investment for decades. Today, we see the same chronic underinvestment in publicly owned systems the world over, such as in the home of EU water regulation…
‘Brussels holds its nose on sewage water pollution problem’:
https://archive.is/11XhS
…so that we don’t make the same mistakes as Thatcher in pursuing a wholesale ideologically driven transfer.
Privatisation was driven largely by the need for huge investment in order to meet new EU Directives for water quality. Privatisation has been and continues to be successful in accomplishing that without adding to public borrowing. Currently, 40% of all water investment in Europe is happening in the UK.
Replacing water companies with mutuals does not bring the valuable assets of water companies back into public ownership against which to borrow using low cost access to government bonds.
It’s a common fallacy that because government bonds (UK gilts) trade at lower yields than corporate bonds, the government can borrow money more cheaply. Not so. UK public debt is already exceptionally high. Watch how gilt yields rise on just a hint of more government spending. Any additional debt would push up the interest rate on all new government borrowing indefinitely. Currently annual borrowing is £300bn including rolled-over debt. Borrowing a further £100bn to nationalise water companies and £20bn a year for investment would be disproportionately expensive.
This is why after 37 years of failed privatisation the public deserves a feasibility study looking at all the options in order to design a modern bespoke public ownership system that works now and for the future.
If the objective is to improve water quality while holding down bills to reasonably affordable levels then privatisation has been a success. Public ownership results in underinvestment and inefficiency.