(1) You don't get indigestion from swimming in shit; you get it from consuming it. Perhaps the affected athletes had dinner locally and drank tap water or ate salads that had been washed in the poor-quality water. Could even come from tea(!) if the water was not boiled.
(2) Combined sewage overflow occurs in many places in the U.S., and I presume in the rest of the world as well. Many years ago it was customary to route residential gutters and downspouts (stormwater) into the "sanitary" sewer system, and the system was never equipped to handle double or triple the flow that it normally sees, when there is a storm. So the overflow goes right into the river, creek, or in this case the ocean. It is an AWFULLY expensive problem to fix, and the burden falls entirely on homeowners (not the government), who must reroute his own pipes, typically at his own cost. In the U.S. you are looking at a couple thousand dollars per residence, as a minimum. Politicians are reluctant to take this initiative because it aggravates the voters by costing them a ton of money for no visible benefit. It's not unique to the UK.
(3) God treats wastewater with natural processes, mostly bacteria. A week after a storm, the water is fine. It's a good thing, too, because people have been evacuating their digestive systems into the ground and into any available body of water, for as long as there have been people. Treatment of "waste" is a relatively new phenomenon.
(4) None of this has anything to do with Margaret Thatcher, may she rest in peace. She didn't create the problem, nor did she have the power to fix it. Nor does it have anything to do with privatization of wastewater treatment. No private contractor would have signed up to guarantee treatment of all stormwater as well as the wastewater that the system they inherited was designed to treat.
(5) What an ignorant dick you are. (Sorry, had to type that).