Advisers and political allies of Prime Minister Andy Burnham have urged him to remain committed to his pledge to bring water companies into public ownership amid reports that the government is considering giving regional mayors greater powers over the sector.
Mathew Lawrence, director of the Common Wealth think tank, and Mark McVitie, a former director of the Labour Growth Group, have questioned whether increased political oversight would amount to genuine public control of the industry, The Guardian reported.
The two figures helped shape the policy thinking behind Mr Burnham’s political platform. They argue that giving regional leaders supervisory powers without transferring ownership would fall short of the government’s commitment to public ownership of essential services.
The concerns follow reports that the government is considering creating nine regional bodies covering England and Wales.
The bodies would correspond broadly with the operating areas of major water companies and could set corporate priorities while questioning company executives over issues such as household bills, water shortages and sewage pollution.
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Mr Lawrence said regional oversight would have limited impact unless authorities also gained powers over the financial structures of water companies.
He argued that genuine public control should give authorities the ability to curb dividend payments, prevent excessive financial extraction, reduce borrowing costs or ultimately bring companies into public ownership.
He also warned that giving local leaders responsibility for monitoring the companies without giving them sufficient powers could leave them accountable for problems they lack the authority to solve.
Mr McVitie similarly welcomed proposals to give regional leaders a greater say in investment decisions but said this would not, by itself, amount to public control.
He argued that regional authorities would need powers to challenge the interests of monopoly providers and reshape the financial system governing the companies.
Without such changes, he said, local authorities could find themselves operating within a system that limits their ability to tackle the industry’s underlying problems.
Mr Burnham is expected to set out a 10-year plan for utilities, covering sectors including water and energy. The plan is expected to explain how the government intends to increase public influence over the industries.
Early proposals reportedly include regional boards that would gather views from customers and organise public consultations. It remains unclear, however, whether the proposed bodies would have powers over the finances of water companies.
Government officials have played down the leaked proposals, describing them as speculative and saying the government’s final position will become clear when it publishes the plan.
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The debate comes as Thames Water continues to face serious financial difficulties. The company’s net debt has reportedly risen to £18.5 billion, compared with asset valuations of £23 billion, as discussions over its debt restructuring continue.
Mr Burnham previously backed the full nationalisation of the water industry during his parliamentary campaign. However, the financial implications of taking the companies into public ownership remain a major consideration.
Proposed changes to legislation that would allow companies to enter special administration are also being examined as a possible step towards public ownership.
Meanwhile, dissatisfaction with privately owned water companies has grown. Consumer complaints increased by 48 per cent year-on-year, the biggest annual rise recorded in 20 years, according to the Consumer Council for Water.
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The council said the increase reflected declining public confidence and growing frustration with the industry’s performance.
Government spokespersons said ministers remained committed to stronger regulation and greater accountability, with the aim of improving services for consumers and protecting the environment.
