The Court of Appeal’s decision to wave through a £3bn bailout for Thames Water is the final, wretched confirmation that the experiment of water privatisation in Britain has failed. Thirty-five years of asset-stripping, financial engineering, environmental destruction, and state complicity have culminated in this: a nation paying billions to rescue a company whose entire model was designed to extract wealth, not provide water.
The justification for privatisation, back in 1989, was a familiar one. Market discipline, efficiency, competition, each buzzword backed up by the vague promise of a better-run service, free from the grubby inefficiencies of state bureaucracy. The problem, of course, is that water is a natural monopoly. No competition emerged, just a patchwork of regional fiefdoms, each one free to charge what it liked, take what it wanted, and dump what it pleased. Thames Water, the biggest of these private entities, has been run like a cash machine for its various owners. Instead of investing in infrastructure, the company loaded itself up with debt, an astonishing £19bn at last count, using the borrowed money to enrich shareholders and executives. Leaks went unfixed. Sewage flooded rivers and seas. Bills climbed. All the while, Ofwat, the regulator supposedly keeping this all in check, acted as little more than an enabler, allowing Thames and others to raise prices while failing to ensure any meaningful reinvestment in the network.
Now the scam has collapsed in on itself. The bailout means that, once again, the public is forced to step in where private capital has failed. But the terms of the loan, extracted from Thames Water’s senior creditors, including Pimco, Elliott Management, and Silver Point, are extraordinary even by the standards of corporate ruin. A 9.75% interest rate, with additional fees pushing the total cost above £800m over just 2.5 years. This is not a rescue; it is a ransom. The financial vultures who have profited from Thames Water’s reckless debt-loading are now being rewarded with eye-watering returns, paid for by the very customers who have endured years of soaring bills and deteriorating services.
The government insists this is not nationalisation, merely an emergency measure to stabilise the company, though crucially, no public money has yet been used. The £3bn bailout comes entirely from private creditors, who are demanding extortionate returns for their so-called rescue. But the reality is clear: the state is now propping up a failed model, paying to sustain the very system that created this crisis in the first place. Worse still, if the company collapses entirely, the government will be forced to step in and take control, absorbing its debts and liabilities into the public purse. The burden will, once again, fall on taxpayers, while the financiers who orchestrated this debacle walk away with their profits intact.
The backlash has been swift. A growing chorus of voices is calling for renationalisation, not just of Thames, but of the entire water industry. The argument is straightforward: water is a public good, not a vehicle for private profit. Instead of endless bailouts, spiralling bills, and regulatory capture, why not run water as a public service, accountable to the people who rely on it?
The political class, of course, is reluctant. Starmer’s Labour has cautiously floated the idea of tighter regulation but steers clear of the renationalisation demand, wary of being seen as too radical, too interventionist. The Tories, ever defenders of privatised excess, still cling to the illusion that the market can fix itself. Meanwhile, Thames Water’s debts continue to mount, its infrastructure continues to decay, and its executives continue to draw their salaries, insulated from the consequences of their own mismanagement. This is where water privatisation in Britain has led: a crumbling system, environmental catastrophe, and a public forced to foot the bill for private greed. The bailout of Thames Water is not just a rescue package, it is an indictment, the final proof that the entire model is broken beyond repair. The question is no longer whether water privatisation has failed. The question is how much longer we’re going to put up with it.
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