Burnham to repeal Thatcher-era ban on public ownership of water companies
The government will repeal a ban on public ownership of water companies as part of ten-year transformation of the privatised water sector, the Prime Minister has announced.
Speaking at the Labour conference in Liverpool, Andy Burnham said the privatised water industry introduced under Margaret Thatcher had failed and his government would introduce a new water bill to allow it to seize greater control of the sector.
The water industry is a symbol of “what has gone wrong with Britain” and has created a system in which “shareholders never lose, the public never win,” Burnham said.
Mayors would also be given greater powers to hold water companies to account, he said.
The former Manchester mayor has consistently called for greater public control of the water and energy industries but until now has not specified whether it would extend to taking direct control of firms.
The Water Act 1989 limits government ownership of water and sewerage companies to between one and three per cent depending on the company. Burnham plans to set out further details in the so-called 10-year plan for Britain, to be published later this year, the Labour Party said.
Burnham has previously called for Thames Water, which has been struggling under a £20bn pile of debt, to be placed into a special administration regime, a form of temporary nationalisation.
The South East utility firm has left its investors facing huge losses. Placing Thames Water into an SAR could saddle the taxpayer with a bill of more than £4bn, according to a report from administration firm Teneo.
Analysts have raised concerns over how the government would fund any move to nationalise the sector beyond Thames Water.
“Question marks remain over how the government would fund any state acquisition of the water industry, however, given estimates that equity costs plus required capital expenditure could easily top £200bn – optically challenging at a time when fiscal headroom remains tight,” said Phil Ross, equity research analyst at Quilter Cheviot. “Tactically, the government may decide that nationalising Thames offers better ‘bang for buck’, and use this as a warning shot for the rest of the sector.”
In his first conference speech as Labour leader, Burnham also pledged to downgrade the triple lock on pensions to pay for a new National Care Service and introduce a new grid system called Great British Grid.