On Monday, a major review into England and Wales’ water sector laid bare the scandalous state of things.
Along with the headline recommendation that the sector regulator should be abolished – something the government have since confirmed will happen – the report from Sir Jon Cuncliffe revealed a mind-boggling figure: £85 billion.
This is the estimated sum that has been extracted from the English water system by “shareholders and affiliated parties since privatisation.”
But the water sector is just one example of an essential service in the UK that has ended up paying out billions to share holders.
Here’s a rundown of some other services that have been rather profitable for shareholders, all whilst stagnating for the rest of us, and in some cases getting worse.
Water companies
Let’s start with water then. Sir Cuncliffe’s report has highlighted just how disastrous Thatcher’s decision to privatise the water companies in 1989 was.
£85 billion has been extracted through dividends and related payments since privatisation. At the same time, infrastructure has degraded, and bills have soared. Sewage spills, leakages, underinvestment in reservoirs – it’s quite literally been a s**t show, with a report from the Environment Agency last week finding the problems are only getting worse, with serious pollution incidents by water companies have risen 60% in a year.
Railways
For many, the railways are the number one example of privatisation failing. You’ll find very few in the UK who rate the railways, or believe privatisation in 1994 has improved the trains.
Whilst infrastructure (Network Rail) was renationalised after Railtrack collapsed, passenger services remain privatised creating a fragmented system. Between 1997–2022, over £3.5 billion was paid out in shareholder dividends, despite billions in annual public subsidies.
Virgin Trains and Stagecoach netted £51.2m worth of dividends from the West Coast main line railway before they walked away from the franchise.
Royal Mail
Privatised in 2013 – with 60% initially sold to investors – there were immediate profits for early shareholders. Share price surged 38% on launch day, prompting accusations of money “left on the table” by government undervaluation.
Since privatisation, around £1 billion+ in dividends paid to shareholders whilst there have been significant cuts to delivery services and industrial disputes over working conditions.
Energy companies
British Gas and regional electricity boards were privatised from 1986–1990. Centrica (British Gas’s parent) has paid over £10 billion in dividends over the last decade. As wholesale energy prices soared in 2021–2022, record profits were posted by companies like Shell and BP, with billions returned to shareholders in dividends and buybacks — amid a cost-of-living crisis. Energy regulator Ofgem admitted underinvestment in resilience, with companies focused on short-term shareholder returns.
PFI in the NHS
Private finance initiative schemes allowed private firms to fund hospitals and other public infrastructure in return for long-term repayments. NHS trusts are repaying over £2.1 billion per year for PFI contracts, some with repayment totals 5x original cost. Private equity-backed PFI firms have sold hospitals and schools at profit, with significant shareholder dividends and capital gains.
Bus services
Deregulated outside London in 1986, privatised companies (Stagecoach, FirstGroup, Arriva, etc.) dominate the market. Since privatisation, profits and dividends have continued despite service cuts and fare hikes. Some operators paid millions in dividends while receiving public subsidies and cutting routes.
Broadband and telecoms
BT was privatised in 1984, and dividends over the years have exceeded £20 billion. Infrastructure investment lagged for years — leading to Openreach being ring-fenced in 2005 and growing public demands for full fibre broadband rollouts. Public money was later used to subsidise rural broadband where BT didn’t invest adequately.
Housing
- Many associations now operate like private developers. Some large housing associations have paid significant executive salaries and interest to bondholders, while stock deteriorates and tenants complain of unsafe conditions.