Thirty-two years after water privatisation, rivers in England and Wales are not improving, leakage levels are unacceptable, and massive financial engineering has not added to the resilience of the system or the ability to finance the large-scale investment we now need. It cannot and should not be allowed to go on like this.
It is easy to blame the water companies for all this. And they do indeed deserve a lot of the blame, but they are not alone in polluting our rivers. Regulators are to blame too. Ofwat could have ensured water company revenues were used to fund more investment. The way the industry watchdog set the cost of capital provided opened the door for businesses to borrow against their assets – for the benefit of owners, rather than customers. Share buybacks, special dividends and multiple takeovers were never part of the gameplan at privatisation, and nor were the excessive executive salaries. None of this should have been allowed to happen.
