Nils Pratley’s article on the water industry in England and Wales provided a succinct summary of the sector’s history, and how it was brought down by investor greed and weak regulation (Cheap sales, debt and foreign takeovers: how privatisation changed the water industry, 10 July).
The privatisation story, however, has two halves. The first was one of increased investment (after years of inadequate public funding), with improved operational and capital efficiency. Purposeful design headed off asset-stripping, while excessively entrepreneurial activities were constrained. The second half saw regulatory relaxation, weakened environmental enforcement, and infrastructure funds seeking better returns. Investors know that high returns can’t be sustainably delivered by low-risk businesses, but it didn’t stop new owners and lenders stepping in, leading to overborrowing.
