Water troubles

Nationalising the water industry is not the answer for all

Water companies are in the news once more. Following Thames Water’s recent challenges there was much speculation, prior to news that shareholders would invest £750 million, that the company would even need to be bailed out by the Government. This led many to question the ownership structure of water companies and utilities in general, asking if dividends and profits had actually come at the expense of customers.

Lauren Oddy Senior Executive 13/07/2023

The headline figures are clear, almost two-thirds think that the water industry should be state owned and operated (65%). This is higher than any other industry we asked about, including energy and railways.

Underneath these headline figures there is a slightly more surprising picture, and in particular, one that shows the public troubles of Thames Water is perhaps not impacting the views of their customers as one may expect.

When asked what should happen to the ownership of Thames Water if the Government did need to bail the company out, those who live in London were less likely than all respondents to support the Government taking the company over.

Thames Water: why are customers more skeptical of public ownership

If you look across the regions, respondents in London (the area served predominantly by Thames Water) are among the least likely to favour state ownership.

Whilst it may be tempting to suggest this means Thames Water are doing a good job for its customers, the main driver of this comes more down to the demographics and the way in which London is different to other regions in the UK.

London is on average much younger than the general population. According to data from the 2021 Census, the Median age of someone living in London is 36, compared to 43 for the rest of the country. Whilst nearly four in five of adults living in London are under 55 (78%), and almost half (48%) under 35, outside of London only two-thirds of the adult population are under 55.

Support for nationalisation is lower in London because young people hold a much greater level of faith in businesses in general.

How do young people feel about public ownership?

Though young people are often perceived to be more left-leaning, these results point to them being far more likely to trust businesses and business leaders than those from older generations.

Almost half of people aged 18-24 trust water companies to appoint senior leaders who will put customers’ needs first. Less than one in six people aged 55+ would say the same. And this is reflected in attitudes to other issues as well. Nearly half (45%) of people aged 18-34 think that there is enough competition in the water sector, compared to only a fifth (22%) of those aged 55 and over.

There are a number of possible explanations for this generational difference.

On the one hand those aged 18-34 may be more likely to be living with parents, or renting in a flat where utilities are included. As such they may not be paying bills as regularly.

However, this would normally result in a greater ambivalence, not a positivity towards privately run water companies.

Another factor is knowledge of nationalised industries, the water industry was privatised at a time when even the oldest of those aged 18-34 today would not yet have been crawling, and even the most recent large-scale privatisation of the railways happened more than a quarter of a century ago. This generation does not have the same reference point for publicly owned and run utilities like older generations do.

Either way, whilst it may be the case that a majority of the public would like to see greater state involvement in the management of utility companies, those likely to become customers for the long-term are less convinced of their benefits. They view business leaders more positively and do not see benefits of nationalisation as clear as might be expected. Even if the legislative process to renationalise various industries were a simple task, navigating public opinion around nationalisation may be just as much of a challenge.