LONDON — Private investors could continue to hold a long-term stake in England’s water industry under plans to overhaul the sector being weighed up by Andy Burnham’s new government. The puzzle spotlights one of the main challenges facing Burnham’s 38-day-old administration — how to reconcile his bold rhetoric with the economic and legal realities of being in power. Officials are considering a “multi-stakeholder” model that would mean the water industry was owned and monitored in different ways simultaneously — for example, by private investors, their own workers or customers, and elements of national government or local leadership, three people with knowledge of the thinking said.
All were granted anonymity to discuss internal conversations. The system, nicknamed a “pie chart” by a fourth person with knowledge of the thinking, would, in theory, allow a cheaper and more gradual transition away from the fully privatized system that has existed in England since 1989. However, it would also disappoint some campaigners to Burnham’s left, including some trade unions, who want a strong focus on public ownership.
One of the three people cited above, a government official, said: “It is definitely one of the proposals that exists, and it would be a way of moving from the current situation to one where there is greater public control. But it is only one of various things, and there isn’t a favored option at the moment on the wider water sector.” This person added that it is still possible that the government could choose a model without private shareholders. Another of the three people said: “There are lots of gradations in the middle between fully privatized and fully nationalized.
The question is whether it leads the sector to better outcomes.” England’s nine water and sewerage companies oversee aging pipework that often leaks, resulting in sewage being discharged into public waterways during heavy rain, prompting public outcry. This year’s drought has triggered repeated instances of thousands of users losing access to tap water, sometimes for days. Burnham has promised an “end to neoliberalism” and said that in the water industry “the shareholders never lose, the public never win.” But he has also long made clear that he would not fully nationalize the industry, which the government previously estimated would cost £100 billion for England and Wales.
Instead, the prime minister vows “greater public control.” So far he has confirmed little about what this will look like in practice. The Department for Environment, Food and Rural Affairs has been examining the issue over the summer and invited pro-Labour think tanks and campaign groups to discuss the policy, but is still keeping several options on the table and is not expected to make a recommendation imminently. A second government official predicted the water question “could probably be strung out for another six months” — and noted that with limited funds available to the Treasury, separate decisions about whether the state should intervene in other industries, some of them unexpected, could provide a more urgent “’oh shit’ moment.” Government officials have looked at reforms to the bus network in Manchester, where a public body regulates the network but issues contracts to private operators.
They have also looked to Paris, which put the French capital’s water services under control of a municipally owned company in 2010. Another strand of thinking concerns “mutualization, ” in which ownership of a firm is held by employees or customers but is not on the government’s balance sheet. However, opinions on how to reform the sector differ between Labour-friendly groups.
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