Regulatory capture is an age-old problem; one that all governments should battle to avoid. It happens when a firm or industry becomes so large, rich, ruthless and in some cases corrupt that it is impossible for its state regulator to keep it under control. The industry can outspend the regulator, employ better lawyers, lobby politicians to water down legislation, even offer well-paid jobs to the staff of its regulator. In an attempt to get them to defect 

The industry is then free to use all that power and influence and information to make excessive profits, avoid its obligations, game the system and screw its customers. 

Which brings us to the British water industry and the death of Ofwat. The regulator was an abject failure and had to go. Now it has, as a result of Sir Jon Cunliffe’s recommendations into an industry in crisis.

But repairing the damage is not just a matter of out-of-control capitalism and a new, slightly tougher regulator, as the government seems to hope. No wonder the clean water campaigner Feargal Sharkey say “not much will happen” as a result.

Basic utilities are essential to even the poorest economy. No one is going to invest in the UK if its water companies cannot ensure fresh clean water, or the electricity companies cannot connect your new factory up to the grid within a few weeks, or the gas industry has managed to opt out of storing enough gas to get the country through a bad winter. 

Serious countries ensure these things happen no matter how powerful the utility companies or how wealthy their lobbyists are because it matters to the whole economy that these basics are right first time, every time. But in the UK, the myth of privatisation still dominates, when what we really need is some hard-headed realism. 

The Cunliffe Report into the regulation of the water industry is therefore a failure. It found that Ofwat had to go, that regulators needed to merge, that this new super-regulator should have the power to block new owners of water companies, and to insist on the minimum amount of capital firms will have to hold. 

But the investigation into the state of the water industry was not allowed to look into the obvious solution – nationalisation. Nor does it hold out much hope for an immediate improvement. Management wages are still scandalously high for people who run monopolies badly, the industry needs massive levels of new investment but having filtered off billions to its shareholders, it is the customers who will have to fund that, and bills will continue to soar. 

Perhaps most worrying was that the water industry welcomed the report and its recommendations as just what it needed, adding “this fundamental change has been long overdue.” They cannot even be bothered to hide their relief. 

Which seems to suggest that the industry’s regulator has not just been the subject of regulatory capture but the whole of our body politic has been the victim of ideological capture. 

Almost 50 years on, no one can yet admit that public ownership of basic, essential utilities works, whereas private ownership is a license for spivs to rip off their customers and the country, destroy the environment, cripple growth and fill their boots. 

Regulation does not work; we can no longer afford to pretend that it does. But seemingly no serious politician is ready to take on Thatcherism.

Until they are, the country will continue to suffer while the water industry, and many others, continues to laugh all the way to the bank.