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Thames Water’s Collapse is a Warning to us all

Business and Economy Private Equity Privatisation

February 17, 2025

Here is a list of all the countries in the world that fully privatised their water and sewerage systems:

• England & Wales

Now, here is a list of the countries with massive bill hikes, water companies teetering on the edge of collapse, and sewage dumping crises:

• England & Wales

Nobody else did this!¹ It’s worth remembering our unique experiment in giving a natural monopoly like water supply over to private equity companies this week as Thames Water returns to court arguing that it should be allowed to take on £3bn worth of debt (with a crippling interest rate of 9.75%) in order to avoid total collapse. This debt, alongside the £300m or so of interest payments that would accrue over two and a half years, would of course be paid for by the customers in Thames Water’s monopoly.

This is an issue that far exceeds the 16 million of us trapped in Thames Water’s coverage area. As well as the bill hikes proposed by other water companies to pay for similar, if less advanced, debt-and-dividends crises,² the evidence suggests our whole system is rotten.

Water companies have been claiming that new debt and bill hikes are needed to fix their enormous sewage dumping problem and, certainly, there’s clearly a huge problem to be fixed there. According to the most recent data we have from the Environment Agency, there were 464,056 sewage discharges lasting 3.6 million hours in total in 2023. In return for this service, water companies have paid their shareholders £78bn in dividends between privatisation in 1991 and 2023; £2.5bn of that was since the sewage dumping crisis worsened in 2021.

But the way water companies are depicting the war on their own sewage dumping may be far from honest. An analysis from environmental scientists in January 2025 found evidence of disinformation on a massive scale from the nine major water and sewerage companies in England. This includes a “deliberate attempt” to mislead regulators in order to avoid fines and attempts to greenwash, mislead, and manufacture doubt about their activities in order to keep profits high. This approach seems to have borne fruit. The Environment Agency identified 464 illegal sewage spills between 2020 and December 2024, according to a Freedom of Information request, but gave out not one fine for them.

Clearly, England & Wales’ uniquely privatised water system is a failed one, regulators are incapable of checking privatised water companies, and the only sensible way to proceed is to nationalise Thames Water and the other failing water companies, as protestors outside courts have demanded the government do.

However, the root problem is one that engulfs the whole of the UK: our entire economy is structured around shareholder demands. Thames Water’s £16bn of debt was taken on by private equity companies to pay shareholders and CEO bonus payments in much the same way that the wider water system took on £64bn of debt in order to pay £78bn of shareholder payments since privatisation; in much the same way that other bits of key infrastructure, from energy companies and banks to supermarkets or social care, have been swallowed up by private equity and the shareholder demands for payouts that come with it. This has been a dramatic cultural change within business over the last hundred years, and one that’s deepened inequality.

This problem ballooned after Covid, peaking at £152bn in deals in 2021, and is once again growing in what regulators fear will cause a systemic risk to the UK’s economy. These same regulators, however, have been ordered to prioritise growth, and perhaps this is the real face of a “growth at all costs” mantra: debt, payouts, disinformation, and systemic risk.

Shareholders should not hold so much financial, and by extension political, power. Thames Water’s collapse shows how much of the promise of growth under the shareholder-first model is built on sewage.

1.  Attempts to privatise Scottish Water were fought off and, lo and behold, they invested 35% more per household than the privatised companies did between 2002 and 2018. ↩︎
2. Southern Water proposed a 66% increase in bills and while Severn Trent suggested a 37% hike last year ↩︎