The prospect of renationalising key utilities, championed by Greater Manchester Mayor Andy Burnham, has sparked concern over the significant private debt that could be transferred onto UK taxpayers' shoulders. A new analysis from the Common Wealth think tank warns that taking back control of water companies and other utilities through state ownership may not deliver the promised benefits, but instead saddle taxpayers with billions in existing liabilities.
The report, 'The Productive State', outlines a comprehensive programme to reverse four decades of privatisation, with Mathew Lawrence arguing that direct public ownership is key to reducing consumer bills and exerting greater control over utility companies' spending. However, critics argue that nationalisation would see the Treasury inheriting substantial private debt, including Thames Water's approximately £20bn in borrowing.
Valentin Boboc highlights that this debt would not disappear upon state takeover but become a liability for taxpayers, who would face both water charges and potentially higher taxes. A central concern is that changing ownership may not address the fundamental issues preventing utility firms from being profitable or improving their business models.
The analysis suggests that even under an optimistic scenario where the state manages these businesses efficiently, transferring liabilities to the taxpayer would still mean a change of payer rather than genuine savings. The report's premise that the state has retreated from the utilities sector over recent decades is also challenged by some, who argue that Britain has developed a 'capitalist command economy' with firms remaining privately owned but heavily regulated and directed by ministers.
The timing of such a move is questioned given the UK government's current fiscal position. Public spending is near 45% of national income, representing the longest sustained period of high spending since the Second World War, with the tax take at its highest since 1948. In this environment of competing claims on public funds – including the health service, defence, pensions, and welfare – new large-scale financial commitments for nationalised industries could face significant pressure.
Furthermore, critics point out that post-war nationalised sectors have faced underfunding during periods of Treasury constraint. The report's authors argue that state interference is already extensive, making nationalisation a step to own what the state largely controls through regulation and direction.