I think water belongs in public or non-profit hands. The reason is fairly straightforward: most households can't choose another supplier, and they can't choose to stop using water. That makes it a poor fit for the kind of market discipline privatisation was supposed to provide.
There was a serious case for selling the companies in 1989. The network needed investment. Public ownership hadn't protected maintenance budgets from Treasury pressure, and private investment offered a way to improve infrastructure without funding everything through current taxation. A regulator was supposed to protect the customer while shareholders pushed companies to operate efficiently.
Those aims weren't foolish. The difficulty was how to make the arrangement work when the customer had so little power.
A customer who can't leave
Competition isn't the only way to regulate a business. A well-designed regulator can impose investment requirements, restrict prices and penalise failure. Privatisation depended heavily on that substitute because a household couldn't discipline its water company by taking its custom elsewhere.
The state also couldn't simply allow an essential service to collapse. Whatever happened to the company, someone would have to keep the water running. That creates a risk that owners receive the benefits when things go well while the public remains responsible for continuity when they don't.
It also makes a company's financial structure a public concern. Debt, dividends and maintenance aren't merely choices between a business and its shareholders when millions of people depend on the assets. They affect how much room remains to invest and how vulnerable the service becomes if financing goes wrong.
Individual companies should be judged by their accounts and performance. We don't need to assume every owner behaved identically to question whether this is a sensible arrangement for water.
Public ownership has failures too
Nationalisation wouldn't make investment free or management competent. Ministers can hold bills down for electoral reasons, postpone maintenance and interfere with decisions they don't understand. Public bodies can serve their own workforce or bureaucracy badly at the expense of the public too.
The choice is between imperfect arrangements. My preference is for ownership whose purpose is the service, with finances and investment open to public scrutiny. Public or non-profit ownership still needs independent regulation, competent management and a way to hold decision-makers responsible.
That is an argument about the particular service water provides. It isn't a general objection to private enterprise. Where customers have meaningful choices, competition can do work that a regulator would struggle to reproduce. Household water supply doesn't give most people that choice. We should stop assuming that calling it a market supplies the missing discipline.