Leading article: Water, water everywhere

After the railways, the water industry was the worst botched privatisation. The difference is that the railways now seem to be pointing in roughly the right direction, while Britain's water companies seem to be wading deeper into waves of distrust and popular fury. These have not been the best few months in the history of Thames Water, which supplies the dry and heavily populated South-East of England. The company faces a fundamental problem in imposing a hosepipe ban on its 8 million customers. Not only do those customers know well that the company loses 30 per cent of its water in leaks, but they are annoyed by rising charges, profits and directors' pay at a time of restricted service. Now, as we report today, it turns out that the company makes money by selling water to Essex Water, which does not have a hosepipe ban, while asking its own customers to limit their water use.

The fact that Thames Water's parent company, RWE, is based in Germany is often mentioned in the press, but customer attitudes appear to be thankfully free of xenophobia. It is not the nationality of the owners that bothers people, but the fact that they are in the private sector with an interest in making profits. Therein lies the problem. The British people no longer regard profit as a dirty word. But they do recognise hypocrisy when they see it. Hence the opinion poll suggesting overwhelming support for renationalisation.

The design of the privatised water industry is fundamentally flawed. Either it should be a public service, owned by the people and run on their behalf by public servants. Or it should be a commercial enterprise which charges its customers for the amount of water that they actually use, with state help for those who cannot afford it. We presently have an unworkable hybrid: profit-making companies trying to appeal to the vanishing civic responsibility of customers, most of whose water is unmetered.

There are good environmental reasons for universal water metering as the most effective means of holding down consumption, but profit-making water companies do not have the moral authority to bring it about. Renationalisation may not be going to happen, but the Government is going to have to step in to make metered water significantly cheaper than unmetered water for years to come to accelerate the changeover.