The Environment Secretary has said all options, including nationalisation and public control, must be on the table to tackle the failures of the water companies, as ministers move to remove Margaret Thatcher’s restrictions on public ownership.
Dame Angela Eagle told activists on the final day of Labour’s conference in Liverpool that, for the first time in almost four decades, the public rather than shareholders would decide where “billions of pounds of water investment should go”.
“The essentials of life must be controlled in the public interest. And that means fundamental reform of our water system,” she said.
“So when the public turn on their taps, they get clean, safe water. When they go to their local beach or lake they don’t have to worry about swimming in untreated sewage. And when they pay their bills, the money stays in the system and gets invested in the infrastructure we need. It is not siphoned off by wealthy interests.
“So now, for the first time in almost four decades, it will be the priorities of people in our communities, not shareholders of water companies, who decide where billions of pounds of water investment should go.”
Her speech came a day after the Prime Minister announced that she will bring forward a “strengthened Water Bill” to Parliament. Its centrepiece, Andy Burnham said, would be “the repeal of Margaret Thatcher’s ideological ban on public ownership of water companies”.
Mr Burnham described the existing restrictions as a ban. In law, the Water Act 1989 caps government shareholdings in the major water and sewerage companies, with limits that vary between one and three per cent depending on the company, and restricts the Government from acquiring shares in them. The strengthened Bill would remove those limits in England. That would clear one legal obstacle to greater public ownership, though taking an existing company fully into state ownership would raise further legal, financial and compensation questions.
The Bill, as Mr Burnham set it out, would start “a 10-year journey to a very different water system”: new powers for mayors to hold companies to account, “tougher consequences for those which repeatedly fail” and the closing of loopholes used to pay “excessive bonuses”. “Where private companies serve the public interest, we will support them,” he said. But the consequences would be clear for those that do not, “including taking back control or public ownership”.
He had been blunter still. Water is “a symbol of what has gone wrong with Britain”, he said, “a service where the shareholders never lose and the public never win”, from which some have “syphoned out easy money while the public picked up the bill for the sewage in our seas”. Then: “It stinks.”
The argument reaches back four decades. Water and sewerage services in England and Wales were reorganised into publicly owned regional water authorities in 1974. Margaret Thatcher privatised them in 1989, after the government wrote off their outstanding debts, estimated at around £5bn, and provided the newly privatised companies with a “green dowry” of public funding. Labour’s proposals do not recreate that 1970s model. They do reopen questions about public ownership of the sector on a scale not seen since the pre-privatisation era.
Ministers point to the industry’s record. Researchers at the University of Greenwich calculated that investors withdrew £85.2bn from the ten largest water and sewerage firms in England and Wales between privatisation and 2023, mostly through dividends. Ofwat strongly refuted the figures, putting dividend payouts since privatisation at £52bn and pointing to more than £200bn of investment.
Sewage has become the emblem of that record. In 2024 companies in England discharged raw sewage for a record 3.6 million hours. Last year the figure fell to 1.9 million hours and spill events dropped by 35 per cent, though the Environment Agency said much of the improvement reflected unusually dry weather, and campaigners dismissed it as “not evidence of real change”.
The taps still run. The pollution problem remains.
Claire Bullivant, chief executive of the Great British PAC, said:
“Britain’s water industry clearly needs fixing, but the answer to failed corporate management is not to hand the whole thing back to politicians and expect Whitehall to run it better.
Margaret Thatcher understood that government does not create wealth simply by owning things. The role of the state should be to set the rules, enforce them ruthlessly and make sure companies that fail their customers face real consequences, not to build another vast state monopoly where taxpayers ultimately carry the risk.
If water companies pollute our rivers, neglect infrastructure or reward failure in the boardroom, hold them to account. Fine them, change the regulation, remove failing management and make the market work properly. But nationalisation risks replacing unaccountable corporate bureaucracy with unaccountable state bureaucracy — and presenting taxpayers with the bill.
Labour’s instinct whenever something is broken seems to be that government should own more of it. Conservatives should have the confidence to say the opposite: good government is not measured by how much of the economy the state controls, but by whether it creates the conditions for enterprise, investment, competition and accountability to work.”
The immediate test is Thames Water. Britain’s biggest supplier is in debt of around £20bn, was fined £122.7m in May 2025 over wastewater failures and improper dividend payments, the largest penalty the industry regulator has issued, and has warned its funding could run out by the end of the year. Its lenders have put forward a £10bn rescue takeover, which a cross-party committee of MPs urged the Government to reject this month, and creditors are readying a revised plan involving deeper debt write-offs and fresh equity. The Government has refused to say whether it will approve such a deal or place the company into a special administration regime, the legal mechanism under which a failing water company can be taken temporarily into government control while essential water services continue. Reports in August suggested the option had been shelved over cost and legal risks. The Department for Environment, Food and Rural Affairs says all options remain under consideration.
Cat Hobbs, director of the campaign group We Own It, said: “Thames Water should have been in special administration yesterday. It is in £20 billion of debt and teetering on the brink of financial collapse.”
The industry pushed back. Water UK said the best way of improving service and protecting the environment is to “urgently implement the reforms recommended by Sir Jon Cunliffe in his independent report last year”, adding that “there is no evidence that nationalisation would improve water company performance”.
Kemi Badenoch, whose Conservatives gather in Birmingham on Sunday, said in June she was “concerned” about the prospect of Thames Water being nationalised.
Water nationalisation was not part of the manifesto Labour won the 2024 election on, which promised instead to put failing water companies under special measures and block executive bonuses. The announcement is one of several significant policy changes unveiled at this conference, alongside Mr Burnham’s proposal to keep the pensions triple lock unchanged for the rest of this Parliament and adjust it from April 2030, after the next general election, and his decision to reopen debate over Britain’s longer-term relationship with the European Union, with options running from the status quo through a customs union or single market arrangement to “going all the way” and rejoining.
Mike Rouse, Chief Technology Officer of the Great British PAC said:
„Nationalisation is not a new idea. It is an old one, and it failed. Before 1989 the water industry depended on the Treasury for every penny of investment, and when money was short, the pipes went without. Privatisation was meant to end that by making the industry answerable to its customers and its owners. Thames Water’s difficulties arose because that discipline was allowed to lapse. Its owners took on debts they could not support, and the regulator permitted it. The remedy is to restore that discipline, not to abandon it. The Government has no money of its own. If Labour takes Thames Water, it is the taxpayer who will pay for it and the taxpayer who will carry its £20bn of debts.“
The Government is expected to publish more detail on its ten-year reform plan later this year. The Bill will follow. Margaret Thatcher handed the water companies over with their debts written off in 1989. Taking them back will not be so simple.
Sun news article – Burnham claims he is a man of the people but in reversing brexit wants to overturn the biggest vote by the people
We need to come down like a ton of bricks on the plan to rejoin the EU – that deal was rejected by the British people!