Amid a Water Crisis, England Asks: Who Should Be in Charge?

On its journey to the North Sea, the River Thames runs through Henley, a picturesque middle-class town about 35 miles west of London. The river is central to the town’s identity, which is known for its annual royal regatta and for being the location of the first boat race between Oxford and Cambridge Universities.

Long a source of pride, the river is now a source of alarm.

“In the last two years, it’s just got worse and worse and worse,” said Laura Reineke, 51, a Henley resident who started a local swimming group, the Henley Mermaids.

The water is “murkier, and if you do see vegetation on the bottom, it’s covered in sewage fungus,” she said. While swimming in the Thames, she added, the group has also seen sanitary products caught in the plants, colostomy bags and what appear to be excrement marks on swans.

Nearby, wastewater treatment plants for Thames Water, England’s largest water company, sometimes dispose sewage into the river and local streams, drawing complaints from Henley residents.

Thames Water is not alone. The 10 water utilities in England and Wales, which were privatized in 1989 during a wave of deregulation and free-market liberalization, have become a target of public ire over polluted waterways and rising household bills.

The number of people getting sick from the water is growing, according to data collected by campaign groups and hospital admissions. Surfers Against Sewage, a nonprofit group that tracks water quality around Britain, said more than 1,900 people reported getting ill after entering the water last year, nearly triple the number from previous year. But this was likely just “a glimpse into the true scale” of the problem because it included only reports submitted to the group, it said.

As anger grows, Henley has become one of the loudest cries in nationwide calls to bring the country’s water companies back into public ownership. “Privatization has been a calamity, and in particular in the water industry,” said Jo Robb, 47, a district councilor and a member of the Henley Mermaids.

Across England and Wales, insufficient investment in the sewage infrastructure and the water supply has led to a crisis that has been brewing for years. Now, more people are putting the blame on the ownership of the water utilities, which are regional monopolies, predominantly owned by multinational conglomerates and asset managers, including sovereign wealth funds and pension funds. Critics argue that shareholders in the water companies have received billions of pounds in dividends since privatization but failed to put enough money back into the water system while piling up debt.

In June, the Henley Town Council called for the nationalization of Thames Water, which serves about 16 million people, saying the company’s track record has been “beyond concerning.”

To activists, Thames Water is an ideal starting point to nationalize water utilities because the company is in the most financial distress.

Thames Water, which has debt of about £15 billion, or $20 billion, said it would run out of cash by May if it was unable to raise more equity. Its shareholders, who own the company through Kemble Water Holdings, include a Canadian pension fund, Abu Dhabi’s sovereign wealth fund and a British pension plan for university staff, and they have been reluctant to inject fresh cash amid clashes with regulators over how much to raise customers’ bills.

Thames Water faces regulatory fines that will add to its burden. Last month, the country’s Water Services Regulation Authority, known as Ofwat, said it intended to fine the company £104 million, a record amount, for spilling untreated wastewater and causing environmental harm, in part because it had not upgraded sewage plants.

The issue intensified in recent years, as more Britons flocked to the waterways after being isolated for pandemic lockdowns. They began to track the extent to which water companies had released sewage near beaches and rivers. In Henley, Dave Wallace, 54, is among a growing class of citizen scientists tracking pollution.

Water is collected from the Thames for analysis. Dave Wallace, a local resident, checked the sample with a phosphate and nitrate testing kit.

“I know too much to swim here,” Mr. Wallace said, standing on a bank of the Thames near Henley in late August, before he dipped a metal canister into the river. He collected a water sample to run tests for phosphates, nitrates and E. coli, something he has been doing at least weekly for the past two years.

Thames Water has said it is planning to upgrade the Henley sewage center by the end of 2026. More broadly, a company spokeswoman said, it had submitted “an ambitious business plan” to Ofwat that would “help us address an aging asset base, climate change and population growth.”

Thames Water might be the starkest example of the crisis, but anger is felt around the country, from Windermere in the Lake District to Brighton’s beaches on the south coast. Regulators are investigating all of the water and wastewater companies in England and Wales over concerns about their releasing sewage outside of exceptional circumstances, such as storms, and for not accurately reporting the pollution. The regulator has warned several of them about the state of their finances.

The average utility bill in England and Wales is £441 a year, higher than some of their European neighbors, like France, but lower than others, such as Norway. Ofwat has proposed increasing consumers’ bills by more than a fifth on average over the next five years.

“People instinctively understand — they can see when they’re being ripped off,” said Clive Lewis, a member of Parliament who has called for public ownership of the water companies. “They can see when things aren’t working.”

When the British government, under Margaret Thatcher, privatized water utilities, it went further than many other countries had. The water and sewage assets were transferred to companies with limited liability and cleared of debt. Shares were floated on the stock exchange, but most of the companies are now privately held, a relatively rare ownership model, though some countries or cities have contracts with private companies for the management of the water systems.

Since privatization, companies have invested £130 billion into the water and sewage system, according to Ofwat, improving leaks and supply disruptions. But they have accumulated about £64 billion in debt, the regulator said, and paid out £53 billion in dividends, according to its latest data from 2023.

The water companies rebut the accusation that shareholder payouts are to blame for insufficient investment. Rather, it is because water bills are too low and have been “artificially suppressed” by Ofwat, said Stuart Colville, the deputy chief executive of Water UK, an industry group.

Charging customers even more would allow water companies to double their investment, to £105 billion, in the next five years, the group said, enabling them to reduce pollution and protect future water supplies, such as building new reservoirs.

“It is not the case that shifting to a publicly owned model in England would improve results,” Mr. Colville said. It would cause disruption and competition for capital, he said, adding that England’s history with public ownership and comparisons with international ownership models suggest nationalization would not improve the situation.

But there is a renewed interest in public ownership. The new government led by the Labour Party has said it will put rail services back into public hands and is setting up a publicly owned energy company.

More than 80 percent of Britons said water companies should be run in the public sector, according to a poll in July. In Scotland and Northern Ireland, the water companies are owned by their governments. In 2001, one of Wales’s water companies became a nonprofit organization.

However, the British government has said it is not in favor of nationalizing England’s water companies.

“Nationalization, which some have advocated, would cost billions of pounds and take years to unpick the current ownership model, leaving sewage pollution in the meantime to get worse and halt the much needed investment,” Steve Reed, the secretary of state for the Department of Environment, Food and Rural Affairs, said in a recent speech.

There is disagreement about how much nationalization would cost, but one estimate, using Ofwat’s capital value for the water industry, pegs the public bill to compensate shareholders and debt holders at £99 billion. Given that Britain’s public finances are already stretched and the government has warned of a “painful” budget next month, this move seems unlikely.

That has not deterred the calls for nationalization. As Mr. Reed was meeting with the investors in water companies last month, more than 80 lawmakers met in the Houses of Parliament with campaigners, including the Henley Mermaids.

“We need to adapt our water supplies, and that means investment,” said Mr. Lewis, the lawmaker who helped organize the event. It can’t be “siphoned off into private shareholding.”