Mathew Lawrence on why privatisation has been a costly failure in Britain

THE BRITISH economy has been subject to a giant experiment: privatisation on a scale more extensive than in almost any other OECD country. Perhaps most strikingly, following the lead of Augusto Pinochet’s Chile, in 1989 the Conservative government privatised the water industry in England and Wales. This outlier status remains to this day: the majority of water infrastructure in other countries is held and managed by the public. To see the disastrous effects of this experiment, one need only look at England’s crisis-ridden water companies—or brave a swim in an English river flooded with sewage.

Emblematic of these failures is Thames Water, England’s largest water company. Having accumulated debts of £14bn ($18bn), in part the legacy of a leveraged buy-out by Macquarie, an Australian investment group, it is now precariously exposed to higher interest rates. But the problem extends beyond one company.