Labour mayors are calling on Andy Burnham to bring forward his plans to put water companies into public ownership as the UK endures record-breaking heat and millions of people are placed under hosepipe bans.
During the Makerfield by-election campaign, Burnham vowed to take “greater public control” of the water sector, but is yet to set out his plans in detail since becoming Prime Minister.
Various options have been discussed for the future of England’s water sector, from full-scale nationalisation to a cooperative model, under which companies would be run as non-profits owned by customers.
It has also been suggested that combined authorities could play a greater role in managing water companies, a move that would align with Burnham’s greater ambitions around devolution.
Sadiq Khan ready to run failing Thames Water
The most immediate question for Burnham is what his Government will do with Thames Water, as it nears financial collapse with only enough cash reserves to last until the end of the year without a rescue deal.
Thames Water’s lenders have put forward a deal to inject more funds into the business and write off around half of the firm’s £20bn debt, in exchange for leniency on future pollution fines. This was rejected by the former environment secretary Emma Reynolds.
The lenders have now offered to give the Government a “golden share” that would give ministers veto powers over major decisions.
But many want the Government to go further and introduce a new model, such as public ownership or mutualisation.
Asked by The i Paper whether he would agree to the Mayor of London’s office running Thames Water, Sadiq Khan said: “The short answer is yes”.
“It’s really important that Londoners have more of a say in how our water is provided and the obvious way of doing that is giving the mayor and others in London – could be councils and the GLA [Greater London Authority] – some more powers over such an essential utility that isn’t working,” he said.
He added: “We’re hoping that Andy Burnham, as part of his drive to devolve all powers to mayors and regions, but also as part of his drive to improve essential utilities, brings about changes. We’re speaking to the Government about what that could entail.”
However, he said it was important that Londoners are not forced to “bail out” Thames Water.
There is a debate over how much it would cost the Government to bring in Thames Water; Thames’ lenders are owed £20bn and would likely take the Government to court if any deal did not reflect this.
Northern mayors push for model of shared ownership
Several Labour mayors have backed calls for a non-profit cooperative model that would see ownership of water companies transferred from shareholders to customers.
Supporters of the idea say a cooperative model offers a route to public ownership without the Government being forced to take on water companies’ debt.
The idea is that instead of profits being paid out to shareholders they would be reinvested in the business, for example to fix leaks and build new infrastructure.
However, Welsh Water is currently run under a not-for-profit model and still faces many of the same problems in terms of ageing infrastructure and sewage spills.
Tracy Brabin, Mayor of West Yorkshire, Oliver Coppard, Mayor of South Yorkshire, and David Skaith, Mayor of North Yorkshire, have backed a blueprint put forward by think-tank the Good Growth Foundation for a non-profit cooperative model.
Other mayors signalled their support for public ownership and urged Burnham to set out his plans.
“I believe essential utilities should be under public control and we’ve already taken the steps to do that with our buses,” Kim McGuinness, Mayor for the North East, told The i Paper.
“The same should apply to water, particularly where companies are failing to deliver what local people want. I want to see the Government bring forward proposals that can make that happen.”
New data shows shocking state of England’s water
Water companies face fresh criticism following publication of the latest classification of England’s waterways on Thursday.
The official assessment of 4,658 rivers, lakes, estuaries and groundwater found that just 14.3 per cent are classed as being in “good” ecological health, with many suffering due to sewage pollution.
Meanwhile, nine water companies have introduced hosepipe bans to over 23 million people as the ongoing drought depletes England’s water supply.
England recorded its driest July on record, with some areas receiving no rain. Meanwhile, water firms are losing 2.6bn litres of water each day due to leakages, per Environment Agency data.
A Government spokesperson said ministers have “taken swift action to hold water companies to account”, including through the creation of a new regulator with “greater powers”.
“The Government will always act in the national interest on these issues. We are working closely with local leaders across the country to drive the change that communities need,” they added.
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