Pro-nationalisation research claims public ownership could save customers £5bn a year

Public ownership pressure group We Own It has commissioned Greenwich University to assess the financial costs of private sector ownership of water. By analysing the percentage of debt and equity capital that forms bills, the pressure group claimed that if the Government took water back into public ownership, it could save customers between £3bn and £5bn a year on financing charges, and reduce the average annual water bill by £100-£160 per annum.

It pointed out that the financial costs of the privatised water and sewerage companies of England and Wales averaged 35% of company revenue from customer bills in 2023-24. It claimed that one-third of customer bills "pass straight through the companies without being used for water and sewerage services”. There was no recognition that the finance charges are a direct result of funding past and future capital investment in infrastructure, whether to deliver environmental improvement or asset rehabilitation. 

The research then compared this figure to the low finance charges for publicly-owned Scottish Water — only 8% of revenue in 2023-24. However, Scottish Water does not provide a best-in-class comparison to private companies in England and Wales. Given that one of the public’s chief concerns is about poor river quality, Scottish Water can provide no reassurance about its environmental performance. It monitors only 4% of combined sewer outflows, compared to near comprehensive coverage in England and Wales. By focusing simply on current finance costs, the report lacks a meaningful comparison between the asset health or environmental performance of the water companies in England, Scotland and Wales. 

We Own It disputed the Government’s assessment that renationalisation would cost £100bn. However, whatever the opinions of We Own It, the Government has repeatedly made it clear that it is not in favour of renationalising water in England and Wales. If there had been any evidence of a change of policy by Government, it might have emerged during the court hearings opposing the emergency finance package for Thames. The lack of engagement in the challenge process showed clearly that Government looks to the capital markets for funding water as it did at privatisation, given its many other pressing economic priorities.