Spanning energy, water, transport, communications, and postal services, the UK’s Critical National Infrastructure (CNI) forms the backbone of national security, economic stability and public welfare. Yet, decades of privatisation have left many of these vital assets in the hands of private companies, often with significant foreign ownership. This presents acute risks in an era of heightened geopolitical tensions, cyber threats and espionage, particularly involving states hostile to the UK such as Russia and China.
This article builds on earlier analyses of why renationalising the UK’s CNI is vital, focusing on the growing national security threats posed by foreign ownership, and why the Labour government must urgently use its parliamentary majority to enact legal reforms enabling renationalisation without compensation on security grounds.
Foreign ownership raises multiple security concerns
The UK government’s National Security and Investment Act 2021 (NSIA) and recent enforcement cases illustrate a shift from a historically open attitude towards foreign investment to a more cautious, security-first approach. While the UK remains open to foreign capital, investments in critical sectors are now subject to stringent screening and conditions, especially when linked to countries with adversarial relations.
UK energy sector
The National Grid plc, a British multinational headquartered in London, owns and operates the electricity and gas transmission networks in England and Wales. It is publicly listed on both the London and New York Stock Exchanges, with major institutional shareholders including BlackRock, Vanguard, and public pension funds from Norway and Abu Dhabi.
In 2024/25, National Grid raised around £9 billion via a rights issue to fund grid upgrades and energy transition investments. The company has divested significant stakes in gas transmission and distribution to foreign-led consortia, including Australia’s Macquarie and Canada’s British Columbia Investment Management Corporation. The government also nationalised the electricity system operator function, creating the National Energy System Operator (NESO) in 2024 for greater control.
Other electricity distribution companies are foreign-owned. UK Power Networks is controlled by Cheung Kong Infrastructure Holdings Limited (CKI), and headquartered in the Hong Kong Special Administrative Region of the People’s Republic of China. CKI is the largest publicly listed infrastructure company in Hong Kong with diversified global investments. Other notables are ScottishPower Energy Networks (Spanish Iberdrola) and Northern Powergrid (American Berkshire Hathaway).
Energy suppliers such as French EDF Energy, Spanish Iberdrola, and German E.ON dominate supply, with minority foreign investors from Australia, Japan, Canada, and the US. This level of foreign ownership exposes the UK to sabotage, espionage, or operational disruption risks. The UK’s gas transmission and distribution networks also have substantial foreign institutional shareholders, raising similar concerns.
Water companies – foreign-owned and failing
Since privatisation in 1989, English water companies are largely owned by foreign multinationals, private equity, and pension funds from Canada, Australia, the US, China, Hong Kong, Abu Dhabi, Qatar, Malaysia, and Singapore. For example, Southern Water is majority-owned by Australian Macquarie, who bought in shortly after the company had to pay a £90 million fine for environmental breaches.
South West Water’s parent Pennon Group has American shareholders like BlackRock and Vanguard. Wessex Water is Malaysian-owned, Yorkshire Water by Hong Kong and Singapore investors, and Northumbrian Water by Hong Kong’s CK Hutchison Holdings and US private equity firm KKR.
This period of ownership correlates with environmental scandals – over 1,000 daily pollution incidents since 2016 – and poor infrastructure investment. CEO bonuses reached £9.1 million amid ongoing sewage scandals and only 14% of rivers with good ecological status. Public support for renationalisation stands at 82%.
Regulators like Ofwat have increased scrutiny but lack veto power on ownership or executive pay. The government’s complacency on Chinese-linked CKI’s growing stake in Thames Water and other utilities has raised national security concerns, especially given CKI’s CCP ties and involvement in London’s critical infrastructure.
Royal Mail no longer ‘British’
Acquired in 2025 by Czech billionaire Daniel Křetínský’s EP Group, Royal Mail became foreign-owned for the first time in over 500 years. Křetínský’s Russian-linked business interests, including EUStream gas transmission, triggered a government NSIA investigation. The government retains a ‘golden share’ veto and safeguards on headquarters and tax residency. Union protections for jobs, pensions, and the Universal Service Obligation (USO) exist, but espionage and operational risk fears persist.
Communications and data centres
Often foreign-owned or operated, these sectors have been encouraged by UK government, but face increased scrutiny due to espionage and cyberattack risks, notably from Chinese-linked entities.
Espionage, cyberattacks, and geopolitics
In many ways, foreign ownership of CNI is a national security risk. Adversarial states may exploit ownership or operational influence to conduct espionage, sabotage, or cyberattacks. The UK’s National Cyber Security Centre (NCSC) warns of ‘pre-positioning’ by hostile actors to enable future disruptive operations.
Recent NSIA enforcement includes forced divestment of Chinese investors in Scottish semiconductors, conditions on US naval defence acquisitions, and emergency intervention in Chinese-owned British Steel. These show national security trumps commercial interests.
The rise of the BRICS nations (Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia and the UAE) reflects a growing multipolar world challenging Western dominance. Russia, a key BRICS member, maintains extensive military cooperation agreements worldwide, growing influence and complicating UK security considerations. The presence of BRICS members in UK infrastructure investment and their geopolitical ambitions reinforce the imperative for sovereign control over critical assets.
Brexit and the new dimension to data sovereignty
Brexit introduced critical challenges to data sovereignty. Previously under EU General Data Protection Regulation, the UK adopted UK-GDPR aligned with EU standards. The EU’s current free data transfer to the UK expired June 2025, prompting tech giants like Google and Facebook to shift UK user data to the US, where privacy protections are weaker.
This undermines privacy rights and exposes UK data to foreign intelligence, primarily US agencies.
Why renationalisation is essential
Renationalisation would:
- Restore government control, eliminating foreign interference risks;
- Enhance cyber resilience via centralised security protocols;
- Ensure strategic investment aligned with national priorities;
- Protect public services from profit-driven neglect;
- Reinforce democratic accountability.
Compensation not required
The oft-cited £90 billion compensation cost for renationalising water is challenged by precedent and research. The 2008 Northern Rock nationalisation involved shareholder write-downs, showing full compensation is not essential.
Labour MP and former Shadow Minister Clive Lewis and others argue the £90 billion figure is overstated, that it ignores legal mechanisms like ‘special administration’ measures that allow government takeover without full market compensation. Activists contend that shareholders who failed in their public duties should not receive full compensation.
Independent studies show renationalisation remains financially beneficial long-term, with publicly owned Scottish Water investing more per household and charging less. Recent government moves to increase customer compensation tenfold underscore sector failings and the need for systemic reform.
The Labour Government’s role in renationalising
While Labour’s parliamentary majority and manifesto commitments nominally align with renationalisation goals, the party’s recent trajectory reveals a significant departure from its traditional socialist values and a cautious, pragmatic approach that risks diluting the transformative potential of public ownership.
As described in Labour is Stepping Away from Socialist Values (Northwest Bylines), the party under Keir Starmer has embraced a centrist, managerial style prioritising political expediency over bold ideological commitments. This is typified by the government’s approach to renationalisation – side-stepping full-scale public ownership in favour of gradual contract takeovers and hybrid public-private models, as in the rail and energy sectors.
Clearly, Labour’s rail renationalisation plans do not guarantee lower fares or full public control of rolling stock, instead continuing leases from private firms and excluding freight companies from nationalisation. The creation of Great British Railways (GBR) centralises management but stops short of full reversal of decades of privatisation. Critics argue this half-hearted approach risks perpetuating inefficiencies and private profit extraction, while the public need for affordable, reliable services remains unmet.
Labour’s rethink and the EU
As recently as 2019 the Labour manifesto pledged to “bring rail, mail, water and energy” alongside “the broadband-relevant parts of BT” back into full public ownership. These plans have all been dropped or modified, apparently on cost grounds.
So Labour’s energy strategy envisions a publicly owned clean power company working alongside private firms, rather than a fully public energy sector. The water industry reforms focus on stronger regulation and special measures rather than outright renationalisation, citing financial risks linked to the sector’s heavy debt burden.
Moreover, Labour’s refusal to break manifesto pledges on the EU, despite widespread public support for rejoining the Single Market, reflects a reluctance to embrace the full scope of economic sovereignty and integration needed to secure infrastructure resilience and data sovereignty post-Brexit.
To mitigate Brexit’s damaging effects on data sovereignty, supply chains, and security cooperation, the UK must pursue re-entry to the European Economic Area (EEA) via temporary membership of the European Free Trade Association (EFTA). This pragmatic step would restore single market access, improve supply chain efficiency, enhance security collaboration, and acknowledge the UK’s geographic and economic ties to Europe.
Now legal reform is crucial – will Labour deliver?
Renationalisation for national security reasons obviously requires urgent legal reform to enable government takeovers with some level of reduced compensation. Paying full market value – especially to foreign or hostile state-linked owners – would be prohibitively expensive and politically fraught.
Labour has the parliamentary strength to enact such reforms but faces entrenched resistance from vested interests within and beyond the party. The government’s incremental, pragmatic approach risks delaying decisive action, undermining public trust and missing a critical window to safeguard the UK’s critical infrastructure.
Benefits beyond security
Full renationalisation offers:
- Lower bills by eliminating private profit margins;
- Improved service through long-term public investment and accountability;
- Better job security and workers’ rights compared to privatised models;
- Stronger economic resilience by retaining profits and reinvestment within the UK.
Partial or symbolic renationalisation risks perpetuating the status quo, with limited benefits for consumers, workers, and the environment.
A call to action if you believe in renationalising our vital services
Sustained, coordinated advocacy is essential to overcome vested interests and political inertia. We need to:
- Engage MPs and policymakers to push for legislative reforms enabling renationalisation without or with reduced compensation on national security grounds;
- Launch and support petitions demanding public ownership of essential services such as energy, water, transport, and communications;
- Raise public awareness by sharing information and personal stories illustrating the benefits of renationalisation and the risks of foreign ownership;
- Build broad coalitions across sectors and communities to amplify pressure on government.
Advocates across political, social, economic, and environmental sectors – including trade unions, consumer groups, businesses, environmental campaigners, pro-EU activists, and concerned citizens – must unite. We must demand urgent, wholehearted and comprehensive action on renationalising the UK’s critical national infrastructure.
