IT’S time to stop burying our heads in the sand over the question of water nationalisation. Unlike our rivers, beaches, and streams, it’s crystal clear that privatisation hasn’t worked and water should be publicly owned. However, we need a national conversation about how to do this, and not pretend that nationalisation is free, or that public ownership would solve all the issues and challenges.

There are probably four distinct paths by which the government could nationalise the water companies; first, there’s supposedly “cost-free” nationalisation. The government could acquire them the water companies for “free” – as economists say, however, there’s no such thing as a free lunch; and expropriation could spook the bond market, increasing the cost of borrowing by billions – and that’s before the potential cost of expensive lawsuits and the fact that it would then be the government on the hook for the £104-billion infrastructure upgrade plan the water companies have committed to for 2025-2030.

Second, we could pay the full Regulatory Capital Value of water companies – £106.7-billion as per the latest calculations – although it’s widely presumed that we’d be paying a premium. Again, the government would then be responsible for the £100-billion plus infrastructure plan, leaving the taxpayer with a bill of at least £200-billion over the next five years.

Alternatively, we could acquire companies as and when they become insolvent. Ofwat has identified 10 companies with high financial risk, rendering this scenario not entirely implausible. Nationalisation could occur one company at a time, with no upfront cost, but we’d still cover each company’s share of the infrastructure investment. Whilst this method would be a cheaper, it would be a piece-meal approach, taking longer, and potentially leave the taxpayer with the worst of a bad bunch of companies’ messes to clean up.

The fourth option is to start with the question of what the British public actually wants to see from its water system – and what we’re willing to invest to solve the problem. The government would then work out the cost, and the impact, that has on the value of the industry, then acquire companies at their adjusted value – potentially next to nothing if the increased requirements revealed a true value of very little after meeting their increased environmental obligations.

Whilst the upfront cost is difficult to estimate and re-evaluation would take time, this would be the fairest route to nationalisation, although it should not be overlooked that, whichever path we chose, we’d bare the cost of any publicly-owned company’s infrastructure commitment.

I believe that privatisation has been a catastrophic failure, and we missed the opportunity to nationalise them when interest rates and national debt was low, or when they were almost bankrupt. Still, we need to think pragmatically: If the state could borrow an extra £100-billion more or even a fraction of that, would you want it used to buy back Britain’s water companies, and would you be willing for government to invest to the extra £104-billion needed to fix infrastructure?