Let’s flush away the idea of a return to state-owned water

Water, water everywhere in the media this week, as the Thames Water utility – crippled by debt and shamed by Niagaras of raw sewage – reached the brink of collapse. Anticipating government intervention if Thames’s owners cannot inject sufficient new equity, pundits decried the 1989 privatisation of English and Welsh water – which passed from conventional shareholders to private equity and foreign sovereign wealth that combined to extract £72 billion of dividends while loading the industry with £60 billion of debt and allegedly denying it new reservoirs and leak-free pipes.

Put like that, the fate of water – a resource so natural that some say it should be immune from all financial alchemy – is indefensible. Yet we know that had it remained in public ownership, capital investment would have been minimal, because no cabinet would prioritise water over hospital and schools. We know also that this is a regulated sector in which smart financiers such as Macquarie of Australia merely gamed tax and debt rules to advantage.