Uncertainty over 'public control' of utilities raises costs for companies and government
UKPulse Money Desk
The government's lack of clarity on 'public control' for utilities, two months after Prime Minister Andy Burnham came to power, is reportedly causing increased costs for utility companies and the UK government.
- Prime Minister Andy Burnham promised greater 'public control' over UK utilities to cut consumer costs and improve quality.
- Two months on, the government has not clarified what 'public control' means, beyond stating it may not necessarily mean public ownership.
- Uncertainty is leading to deferred bond issues by utility companies, rising costs, and adding pressure to UK government debt markets.
Two months after Prime Minister Andy Burnham came to power with a promise of greater “public control” over UK utilities like water and energy, the government has reportedly not clarified its intentions. This lack of clarity is said to be imposing costs on affected companies and the UK government.
The government's stated aim for public control was to reduce the “privatisation premium” paid by consumers and enhance service quality. However, it has only indicated that public control may not necessarily involve public ownership.
This ongoing uncertainty is reportedly causing utility companies to defer bond issues intended for investment, leading to increased costs. The situation is also contributing to pressures in UK government debt markets, partly due to the potential, unruled-out cost of public ownership.
Why this matters: The lack of clarity on the government's approach to utility control is impacting investment and increasing financial pressures on both companies and public finances.