To understand how things have worked is the best preparation for looking ahead. So I will not gaze into a crystal ball but explain what is happening in England and Wales. I will, however, set out and discuss some scenarios for the future. In 1989 the water industry emerged from the nationalization era which it had entered only fifteen years earlier. It was a late entrant into the world of public corporations that had emerged between the wars, and particularly after 1945—a world that was a product of Fabian thinking and wartime experience. The Fabians provided the intellectual base for ‘gas and water socialism’ in the late nineteenth and early twentieth centuries. Two world wars encouraged people to believe that the state could manage our basic industries efficiently, and the inter-war depression drew attention to deficiencies in the working of the market economy. ‘Gas and water socialism’ started in the last quarter of the nineteenth century, in the municipalities, with gas, water, electricity, and tramways. In the inter-war years there was a movement towards regional, then national operations, culminating in the post-war Nationalization Acts. Consolidation in water followed slowly. The amalgamation of municipal undertakings into ten Regional Water Authorities did not take place until 1973. It brought a host of water and wastewater undertakings onto a river basin basis. A further step was taken in 1983 with the substitution of smaller, more executive boards for the much larger bodies that had included local authority representatives. The model for nationalization in the UK developed from the experience of Herbert Morrison, a key figure in the post-war Labour Government. It involved an arm’s-length relationship with government. By the 19705, the flaws in this model were evident. The boards of the nationalized industries were required to act in the social interest, subject to breaking even financially. The definition of the social interest was the responsibility of the boards, without any clear mechanisms for ministers to influence their decisions. It was never clear what ‘breaking-even’, ‘taking one year with the next’, meant in practice. Moreover, having delegated social functions to such a public not-for-profit body, ministers found it difficult to stay clear.