The regulator (Ofwat) also deserves a great deal of the blame. They determine the maximum prices that water companies can charge. Since the start of privatisation, they have prioritised low bills above all else and are proud of the fact that water bills fell by 45% in real terms between 1989 and 2020. The consequences are obvious - the supposed "efficiency" that pays for those lower bills inevitably means neglecting maintenance and reducing infrastructure investment. The short-term thinking that has led to this situation has been dictated by government, not shareholders.

As mentioned elsewhere in the comments, the planning system is also a huge obstacle to infrastructure investment, with numerous important projects being blocked due to spurious environmental concerns.

https://assets.publishing.service.gov.uk/media/687dfcc4312ee...

A lot of this is (imo) a desire to keep juicing returns - often encouraged by things like pension funds, which happily look the other way.

The economy always goes through these cycles - people find a way to scam/‘extract economic value’ from something no one is worried about at the time. They weren’t worried at the time, because it was well run and ‘what is the worst that can happen’.

Over time, what was working well gets blown up as part of the resource extraction, leading to the thing being a giant expensive scandal now.

The issue starts getting resolved - in the case of a public service often by necessary price increases because of stuff that wore out/deferred maintenance/disasters caused by the prior situation. If it’s a private company, bankruptcy.

Eventually, even the dumbest of the population realizes the prior attitude was wrong and they got scammed. The thing starts maybe not being terrible for awhile.

Scammers move onto another part of the economy as people are looking for them now.

After a generation or so, people forget. Lather, rinse, repeat.