BRIGHTON — Andy Burnham should steal the Liberal Democrats’ plan to give customers ownership of failing water companies, the party’s environment spokesperson has told The i Paper.
Tim Farron, a former party leader, said he had told ministers at the Department for Environment, Food and Rural Affairs they were “welcome to nick our ideas” on taking water in England and Wales out of private hands.
Speaking ahead of the party’s autumn conference, which kicked off on Saturday in Brighton, Farron said the current privatised system “rewards failure”.
He pointed to the fact that water companies in England and Wales have built up tens of billions in debt since privatisation in 1989, while paying out £83bn in dividends to shareholders by 2024.
The Lib Dems instead want water companies to be owned by customers through what the party calls a “Mutually Owned Public Benefit Corporation” – or mutualisation.
Under this system, the company would still be overseen by day-to-day professional managers, but customers would have a say in how things are run, and excess profits would go back into the water system rather than to shareholders.
Farron said this would work better than nationalisation, where the state owns the water companies, because that would mean “somebody in an office in Whitehall running the industry, which would not be much better than what we’ve got now”.
“But ownership by the people through mutualisation will be much more radical, much more intelligent, and a much more creative way of giving the public genuine control, whilst allowing us to leverage investment into the industry,” he said.
Burnham is ‘faffing about’ on Thames Water
Farron also criticised Burnham for not using his first few months in No 10 to take action on water companies.
Prior to becoming Prime Minister, Burnham had said he wanted greater “public control” of essential services, including water. However, no plan for how this will be achieved has yet been set out.
It was also reported that Burnham planned to put Thames Water, the UK’s biggest water company, into a form of special administration as it struggles with approximately £20bn of debt.
But within days of taking office, he appeared to back down, with one Whitehall source telling The i Paper he was “umming and ahhing” over what to do about the situation.
Farron said there had been a lot of “equivocation” and “bold noises” from Burnham over the summer about taking action on Thames Water, but that the Prime Minister was “clearly [getting] cold feet about it”.
“It frustrates me that [the] Prime Minister is faffing about because that’s the thing he could have done in his first couple of weeks,” he said.
The MP for Westmorland and Lonsdale said Thames Water could be the first step towards the Liberal Democrats’ model, despite the fight he expected from the company.
Thames Water will ‘kick and wail and scream’
Farron said he was sure Burnham had been advised that Thames Water would “kick and wail and scream” about any efforts to end private control of the company. “They will, but they’re a good enemy to have because nobody likes them,” he said.
“And if you move into special administration, then they are temporarily in state hands, and that’s your opportunity to, with relatively small expense, migrate the ownership of that company into mutual status.”
Pressure is growing on the Prime Minister to act after a consortium of more than 100 Thames Water creditors, London & Valley Water, put forward a £10bn takeover plan. The group, which holds about £17bn of the company’s debt, says it would write off billions of pounds of debt and bring in £10bn of new capital at “no cost to the government or taxpayers”.
Alistair Carmichael, a Liberal Democrat MP who chairs the cross-party Environment, Food and Rural Affairs Committee, said Thames Water could be turned around, but not by handing control back to creditors he accused of “joyriding in the family car”.
“We do not believe this opaque consortium of 100 hedge funds and others has the interests of the public, the company or the environment at heart,” he added.
A committee report said the Government should consider taking Thames Water into special administration, a form of temporary state control, before exploring options for its future, including finding another buyer.
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