Kemi Badenoch has defended Margaret Thatcher’s privatisation of England’s water industry as a “success”, arguing that the ownership model itself is not responsible for the sewage, debt and service failures that have engulfed some of the country’s biggest water companies.
The Conservative leader made the comments after being asked about Andy Burnham’s plan to repeal the legal barriers preventing water companies from being brought back into public ownership.
Burnham used his Labour conference speech to describe water as “a symbol of what has gone wrong with Britain”, promising that a forthcoming Water Bill would repeal what he called Margaret Thatcher’s “ideological ban on public ownership of water companies”.
Asked by ITV News Meridian whether privatising the industry had been one of Thatcher’s biggest mistakes, Badenoch rejected the premise.
She said:
“Well, I wonder why you want to talk about her mistakes rather than her successes?”
Badenoch continued:
“She is somebody who brought a lot of wealth and prosperity to this country. Privatisation was a success.”
Her argument was that the crisis currently facing parts of the water sector is a problem of management rather than ownership.
She said:
“The issues with the water companies now, are not to do with the fact that they are privatised, but the fact that they are not being run properly.
“Nationalising them is not necessarily going to change that.”
She later added that she did not believe “Andy Burnham running the water companies is the answer”.
England’s water industry was sold off in 1989
Margaret Thatcher’s government privatised the ten regional water and sewerage authorities in England and Wales in 1989, transferring their assets and staff into private companies.
The government’s argument was that the companies needed access to private capital to fund major upgrades to an ageing water and sewerage network without requiring further public spending. Ofwat’s own history of the sector notes that privatisation allowed the newly created companies to borrow money and access private capital markets to fund investment.
There has certainly been substantial investment since then. Ofwat previously estimated that more than £120bn had been invested in water and sewerage infrastructure during the decades following privatisation.
That is the part of the record Badenoch and other defenders of privatisation point to. They argue that changing ownership would not automatically fix decades-old pipes, stop sewage overflows or improve management, and that a badly regulated publicly owned company could perform poorly too.
There is evidence supporting at least part of that argument. Welsh Water has operated without shareholders for more than two decades but has still faced serious regulatory penalties and criticism over sewage and infrastructure performance. Its chief executive recently warned that simply copying its not-for-profit model would not solve England’s water crisis, arguing that regulation and governance matter as much as ownership.
But calling the English privatisation experiment an unqualified “success” is considerably harder to reconcile with what has happened to the sector since.
Water companies accumulated tens of billions in debt
When the water companies were sold in 1989, the government cleared their debts before privatisation.
Over the following decades, the industry accumulated tens of billions of pounds of borrowing while paying enormous sums to shareholders.
Analysis of Ofwat data published by the Financial Times found that water companies in England and Wales had paid around £78bn in dividends since privatisation while building up more than £64bn in net debt. Between 2021 and 2023 alone, the companies paid £2.5bn in dividends while their debt increased by £8.2bn.
More recent analysis has put long-term water company debt even higher, at around £73bn, alongside more than £88bn in dividends paid over the decades since privatisation.
Those figures do not mean every pound borrowed was handed directly to shareholders. Water companies have invested heavily in infrastructure and face very large long-term financing requirements.
They do, however, explain why the financial structure created after privatisation has become such a major part of the political argument.
Thames Water is the most obvious example.
England’s largest water supplier has been struggling under an enormous debt burden while attempting to secure fresh investment, leading to repeated calls for the company to be placed into special administration if a sustainable rescue cannot be agreed.
Pollution performance has also been poor
The financial problems have been accompanied by growing anger about pollution.
An Environment Agency report published in 2025 found what it described as “systemic water company failure and underperformance”, with serious pollution incidents rising 60 per cent in a single year.
There were 75 major or significant pollution incidents in 2024, up from 47 the previous year. Thames Water, Southern Water and Yorkshire Water were responsible for 81 per cent of the most serious incidents.
The Environment Agency’s full environmental assessment was equally blunt, saying the nine English water and sewerage companies recorded their lowest collective star rating since the current performance system began in 2011. Only Severn Trent achieved the highest four-star rating.
The problems have continued to produce fines and enforcement action.
Southern Water was fined £2.4m in September after admitting multiple sewage pollution offences in Kent between 2019 and 2021, while South East Water was ordered to spend £30.5m on improvements following repeated supply failures across Kent and Sussex.
For customers who have experienced hosepipe bans, supply interruptions, sewage discharges and sharp bill increases, Badenoch’s description of the overall system as a success is likely to be a difficult sell.
Labour says Badenoch is living in an ‘alternative reality’
Environment Secretary Angela Eagle responded sharply to Badenoch’s comments.
She said:
“How anybody can look at the Tory record on water and call it a success is baffling.
“Rising bills, poorer services and sewage pumped into our rivers, all the while water bosses got paid millions of pounds in bonuses, that is the legacy of privatisation.”
That is Labour’s political case for giving the state the power to take failing water companies back into public ownership.
Burnham has not promised to nationalise the entire English water industry immediately.
His proposal is to remove the legal barrier preventing public ownership, giving the government greater freedom to intervene where companies fail. His broader agenda also envisages more public control over essential infrastructure, including water and energy.
That distinction is important because repealing the ban does not automatically mean every water company will become state owned.
It would instead give future governments an option that has largely been excluded from the system since privatisation.
The Conservatives are going in the opposite direction
Badenoch’s defence of privatisation also fits into a much wider economic argument being made at Conservative conference.
The party has returned strongly to Thatcherite themes, promising a major programme of deregulation and arguing that economic growth has been held back by an oversized state and excessive regulation.
Shadow chancellor Andrew Griffith has announced plans to abolish the Environment Agency and Natural England, scrap net-zero rules on new homes and undertake what the Conservatives describe as the most ambitious deregulation programme in a generation.
That creates a particularly sharp political dividing line on water.
Burnham says the failures of the industry show that the state needs the ability to take greater control.
Badenoch says those failures show that badly managed companies need better management and regulation, not nationalisation.
The argument now is not really about whether England’s water system has serious problems. On that point there is remarkably little disagreement.
It is about whether almost four decades of private ownership helped create those problems, or whether the same failures could have occurred regardless of who owned the companies.
Calling privatisation a “success” makes Badenoch’s answer to that question unusually clear.
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