Labour MPs and regional mayors, including those close to Andy Burnham, have presented a “third way” to the Prime Minister for gaining control of failing water companies. This model proposes transforming them into not-for-profit cooperatives run by local people.
The proposal comes amid ongoing discussions about nationalising Thames Water and concerns, reportedly held by Andy Burnham, about potential increases in government debt from such a move. Treasury projections indicate this could be a result of nationalising water companies.
The mutualised model, detailed in a report by the Good Growth Foundation, aims to remove debt risk while allowing for public control. Labour MP Helena Dollimore, supported by figures such as West Yorkshire Mayor Tracy Brabin and South Yorkshire Mayor Oliver Coppard, launched the plans.
Under the proposed model, Thames Water could serve as an initial test case. The company is currently in talks with the government regarding a potential rescue deal for its creditors, with the alternative being temporary government control through a special administration regime (SAR).
The report also recommends that the rest of the water sector would face tougher regulation, including enhanced monitoring, tighter restrictions on executive pay, and a ban on dividends unless performance targets are met. Companies failing under these conditions would be forced into SAR and subsequently into a cooperative model. MPs and mayors suggest a “bail-in” mechanism for SARs, similar to that used for failing banks, to ensure shareholders and creditors bear the cost of failure.