A group of Labour MPs and mayors close to Andy Burnham have a pitch for him: there’s a “third way” between full nationalisation and leaving failing water companies as they are.
Burnham’s said he wants “public control” of water companies that have pumped sewage into England’s rivers while hiking bills and skipping infrastructure investment. But Treasury projections suggest nationalising them outright could add significant debt to the government’s balance sheet, and that’s reportedly worrying him.
The alternative, backed by a new report from the Good Growth Foundation: turn failing water companies into not-for-profit cooperatives run by local people. Public control, no debt risk.
Who’s behind this
Labour MP Helena Dollimore launched the plan calling for Burnham to “end the era of extraction” in the water industry, with backing from Surfers Against Sewage, West Yorkshire mayor Tracy Brabin, South Yorkshire mayor Oliver Coppard, York and North Yorkshire mayor David Skaith, and Co-operative Party general secretary Joe Fortune.
They want to test it first on Thames Water, which is close to collapse and currently in talks with the government over a rescue deal for its creditors, one that would let the company off fines and environmental obligations. If that deal falls apart, the company goes into a special administration regime, temporary government control.
How the model would actually work
Under the report’s recommendations, every other water company gets “put on notice”: tougher regulation, closer monitoring, tighter limits on executive pay, and no dividends unless performance targets are actually met. Any company that fails under those conditions goes into special administration, then converts to the cooperative model.
The MPs and mayors also want a “bail-in” mechanism for that special administration process, similar to what the Bank of England uses for failing banks, so shareholders and creditors absorb the cost of failure rather than taxpayers. Companies coming out of administration would have to become not-for-profit cooperatives rather than getting sold off to the highest bidder, which is what currently happens.
Coppard put it plainly: “Water is an essential utility that simply should not be farmed out to the private sector, that’s a lesson we’ve learned the hard way. A cooperative model would put control back in the hands of people, help keep bills as low as possible, and allow us to finally intervene in the inexorable dumping of sewage in our rivers.”
Where things actually stand with Thames Water
Burnham is genuinely weighing options for public control, but Downing Street sources say full nationalisation of Thames Water isn’t happening imminently. Feargal Sharkey has separately called for the company to be seized and put into special administration rather than rescued by its own creditors. Those creditors, for their part, have reportedly been preparing to take the government to court if the current deal collapses.
Brabin backed the cooperative plan directly: “The people of West Yorkshire have paid the price for Yorkshire Water’s failings for far too long, with repeated pollution failings and hiking bills repeatedly during a cost of living crisis. Greater public control of water companies is the only way to protect our communities and environment for future generations.”
Why the debt question matters so much here
The whole appeal of this model, according to its authors, is keeping water company debts off the government’s books entirely while still giving customers real control over how the businesses are run.
Praful Nargund, director of the Good Growth Foundation: “Mutualisation offers a different route. It delivers the public control and long-term investment we need without handing taxpayers the bill for decades of failure.”
Dollimore, MP for Hastings and Rye, framed it as urgent: “Our failing water infrastructure is a huge problem that must be a top priority for our Labour government. From pollution to outages to flooding, the people we represent experience the impact every day of this failure while paying more for the privilege. We have already taken important steps to ramp up regulation but we must now go further to protect this vital national infrastructure, while always being fiscally responsible.”
This lands as pressure keeps building on Severn Trent over executive pay, part of a wider pattern of anger at water bosses’ rewards while bills climb and rivers stay polluted. Whether Burnham actually picks up the cooperative model, or opts for something closer to full nationalisation, is likely to be one of the more consequential calls of his early premiership.
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