‘Keir Starmer’s Timid Refusal to Nationalise Failing Water Companies is a Symptom of a Government Cast Adrift’

The collapse of KKR’s planned rescue of Thames Water has exposed something even murkier than the sewage flowing into our rivers: the ideological bankruptcy at the heart of Britain’s privatised water model.

Thames Water, burdened by £20 billion of debt and escalating pollution fines, now teeters on the edge of a special administration regime. Done the wrong way, that could morph into a taxpayer-funded bailout.

This fiasco isn’t just corporate mismanagement; it reveals profound flaws in the Labour Government’s timid approach to water reform. One vividly underscored by the narrow technocratic remit of the recent Cunliffe Review, which recently published its interim findings.

When Sir Jon Cunliffe, former Deputy Governor of the Bank of England, was tasked last year with leading “the largest review of the water sector since privatisation,” cautious optimism emerged.

Perhaps, after decades of catastrophic underinvestment, ecological ruin, and public outrage, Labour ministers had finally grasped the nettle. Instead, they ensured the Cunliffe Review explicitly restricted itself to “reforms within the privatised regulated model,” excluding any meaningful exploration of public ownership – despite overwhelming public support.

This deliberate limitation was both predictable and tragic, highlighting Labour’s broader political timidity – one born, in part, of No10 and 11’s unimaginative, technocratic approach to governance.

The interim Cunliffe report repeatedly admits that decisions around water governance are inherently political. Paragraph 85 explicitly states, “only Government can set overarching strategic goals,” acknowledging the profound, systemic issues facing the industry extend beyond technocratic solutions.

Cunliffe effectively told Environment Secretary Steve Reed: ‘This is a huge sh*t sandwich, filled with strategic-level decisions, and it’s you—with societal backing – that must take a big bite.’

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Time to Show You Really Keir

Keir Starmer‘s Government now faces a stark choice: confront this challenge decisively or continue stumbling from crisis to crisis.

This attempted technocratic evasion is likely to leave profound questions unanswered about ownership, accountability, and the very nature of public services in an era of political and ecological crises.

The approach is symptomatic of a deeper malaise. From paralysis over Gaza to a vacillating stance on welfare, the Starmer Government seems adrift—defined less by vision than by caution.

It offers little more than empty gestures toward “growth,” while quietly discarding long-held principles and inching closer to the authoritarian right on social policy. What we’re left with is not leadership, but management—Government by spreadsheet and soundbite, devoid of moral compass or political courage.

Unsurprisingly, defining oneself merely as “not Jeremy Corbyn or the Tories” has proved inadequate as a governing philosophy.

Yet, with its strong mandate for transformative change, this was avoidable. The public are hungry for change. On water, opinion has been clear: consistently over 80% of the English public support returning water to public ownership.

Organisations like Compass, Up Sewage Creek, Ilkley Clean River, and Henley Mermaids submitted compelling evidence to the Commission, passionately advocating for democratic ownership.

A consultation by 38 Degrees saw 88% of 28,000 respondents back public ownership. Yet, these voices have been systematically marginalised by a Government determined to operate within narrowly enforced ideological boundaries.

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Consequences of Privatisation

Despite its deliberate limitations, the Cunliffe Review still manages isolated admissions of privatisation’s failure, noting how “high levels of debt relative to equity have impaired resilience” – a polite understatement for decades of corporate looting disguised as financial innovation.

It explicitly acknowledges that the regulatory system has “largely lost public trust,” with Ofwat, the sector’s watchdog, conceding a fundamental “reset” is necessary. Yet, these admissions mean little if the fundamental flaw – the profit motive distorting a vital public resource – remains unaddressed.

Privatisation’s consequences are starkly clear. Thames Water, privatised in 1989 and repeatedly plundered by private equity, exemplifies systemic failure.

Its current crisis was entirely predictable, rooted in decades of financial engineering that enriched shareholders while infrastructure deteriorated. With KKR withdrawing amid regulatory and political uncertainty, the Government finds itself scrambling to reassure markets while avoiding essential reforms.

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The Benefits of Public Ownership

The path forward is evident. Firstly, ministers must urgently expand Cunliffe’s remit to include genuine analysis of public ownership models – municipal, regional, mutual, co-operative, or not-for-profit – as viable alternatives.

Public ownership isn’t merely ideological; it’s practical, proven across Europe, and essential to aligning water infrastructure with public and environmental interests. It enables long-term, sustainable investment free from shareholder pressure, ensuring accountability and transparency absent under private equity.

Secondly, the immediate crisis at Thames Water demands transparency and public accountability. If special administration is needed, it must be conducted openly, overseen by consumer representatives, environmental campaigners, and local authorities – not corporate restructuring consultants. Public oversight could offer a blueprint for lasting structural change rather than another temporary bailout.

Thirdly, regulatory reform must be radical, transcending incremental adjustments. Binding national targets for environmental performance, climate resilience, leakage reduction, and pollution control must be established, with swift interventions for failures. The regulatory framework should become a guardian of the public interest, not merely a passive observer of failure – market or otherwise.

Ten months into this Labour Government, the public is no longer passively waiting for Westminster to summon the vision required to tackle this crisis.

Initiatives like The People’s Commission on the Water Sector demonstrate rising public frustration with official inertia. This grassroots-led commission represents communities, campaigners, and ordinary citizens stepping into the vacuum left by Governmental timidity.

Through public hearings, citizen-led research, and inclusive dialogue, the People’s Commission embodies precisely the boldness and strategic thinking lacking in official reviews. It’s proof that communities across Britain refuse to wait, instead building genuine democratic accountability and transformative solutions from the ground up.

For millions of Britons already anticipating droughts and water shortages, water has become a defining political issue – testing democratic accountability, environmental responsibility, and survival itself.

Yet, water symbolises something greater – a broken political economy and a deepening recognition of its dysfunction. More than policy failure, it represents the catastrophic outcomes of a fifty-year experiment begun by Margaret Thatcher, which promised efficiency but delivered environmental damage, financial opacity, and democratic erosion.

This project hasn’t merely failed; it has left a toxic legacy: the inability of post-Third Way social democratic parties like Labour, the US Democrats, and their European counterparts to dream boldly, to imagine a radically better future.

As David Graeber argued, the hidden truth of our world is that it is something we make—and could remake differently. If we fail to fill this vacuum with democratic answers, the authoritarian right – through Reform, or worse – will seize the opportunity.

The Thames Water debacle vividly shows the privatised model has already failed. Labour’s timid response demonstrates a profound misunderstanding of both the crisis’s urgency and the public’s appetite for genuine reform.

If Thatcher lacked a blueprint when privatising water, neither should we wait indefinitely for technocratic detail to restore democratic control. Vision, determination, and bold political choices can reclaim water as a public good, not a corporate asset.

The public demands and deserves nothing less. The next step is clear, urgent, and long overdue: bring water home and dare to dream again.