In a free market, if clean water gets expensive enough, then infrastructure overhauls to actually cut down on the leaks become economical. If everything is nationalized, you're relying on political goodwill instead to pay for those overhauls.

I have no clue how UK's "privatized water companies" work though. I'm not going to be too surprised if UK's system somehow manages to combine all the disadvantages of private ownership with all the disadvantages of state ownership in a single system.

Water companies in the UK operate under regional monopoly, so most people only get a single company they can buy water from.

The free market approach seems to require allowing water companies to even build and maintain parallel infrastructure that can't be shared, if they consider it to be economical. That would require immense capital investment, meaning the barrier to entry would likely be very high. The "efficient" case, where joining an existing pipe infrastructure is cheap, due to competition, would entail having several parallel networks of pipes running between reservoirs and people's homes. This was viewed as profoundly wasteful, even by the Thatcher government that privatised water, and that's why it's forbidden by regional monopoly.

You can't switch water suppliers, so there is no such incentive to be competitive.

It does, AFAICT, there is no competition in infrastructure or supply. There are only targets to meet on service standard and agreed price levels with the state.

The companies seem to operate on a model of doing as little maintenance as they can get away with while taking on debt and paying out to shareholders and the C-suite whenever possible. This has been done in complicity with the regulatory body who wanted to keep bills as low as possible for as long as possible, so played along with the zero-investment model.

It is a clusterfuck.