Good news for Andy Burnham: one of the original Thatcher-era water privatisations has already returned to public ownership. Welsh Water, serving 3 million people, went not-for-profit in 2001 after a corporate saga so convoluted it could be a Netflix miniseries. No shareholders, no dividends - just surpluses going "straight back into keeping bills down and looking after your water and beautiful environment," as the website puts it. How's that working out? After 25 years without dividend-hungry shareholders, Welsh Water usually scores high on customer trust but is middle-of-the-pack on bills and spills. It recently copped a £44.7m enforcement package from Ofwat for "serious and unacceptable breaches" in sewage plant operations - that's 7.5% of turnover, at the high end of penalties. And at £683 a year, its bills are above the industry average. Severn Trent-owned Hafren Dyfrdwy charges households £48 less. So much for the not-for-profit utopia.
A sample size of one is small, but Welsh Water is a reminder that changing ownership doesn't magically fix everything. Boring factors like access to capital, operational efficiency, technical skill, management accountability, and regulatory rigour also matter. Burnham knows this, one suspects. For all the excitement around his calls for "stronger public control," he's vague on details. His only specific commitment: nationalisation is "what should be done" at Thames Water - but even that's unclear. Does he mean full permanent nationalisation or special administration (where Thames could return to the private sector after creditors take a haircut)? The shareholders have already been wiped out, so it's a bit late for them.
For the non-Thames part of the industry, Burnham is taking a long view: a 10-year plan for more public control and ownership, but not necessarily straight-off nationalisation because that's "complicated and probably expensive." He's not wrong. Thames could be nationalised cheaply as creditors' negotiating hand weakens, but nationalising solvent water and energy companies is a different game. The two FTSE 100 water companies, United Utilities and Severn Trent, are valued at almost £10bn each - plus borrowings. Add energy transmission networks, and you're looking at National Grid's £62bn valuation (though a chunk is US assets) and SSE's £29bn. The extra gilt issuance would be hefty.
Complications? Yes, real ones. The high-voltage transmission operators are in the early stage of a £70bn five-year grid upgrade. Changing ownership could take 18 months, and the hassles would probably ensure Ed Miliband misses his 2030 clean power deadline. Water companies are in vital catch-up mode on sewage and treatment works - one reason Keir Starmer's administration didn't contemplate nationalisation. The state-managed experience at HS2, where contractors enjoyed a picnic at taxpayer expense, is the cautionary tale.
Comparisons with Burnham's Manchester bus reorganisation don't work - the Bee Network is capital-lite; utilities are capital-heavy. Nor are there lessons from bringing train operators in-house, done at zero cost by waiting for fixed franchises to expire. Water companies own their assets and have 25-year rolling licences. None of which says it couldn't be done. If you believe only the state should provide these services, nationalisation is the only way. And the state can borrow more cheaply. But Sir Jon Cunliffe's Independent Water Commission "compared outcomes in countries reasonably similar to England and Wales" and found "no one model is universally better than another." It stressed "strong and evidence-based regulation is critical."
So what might Burnham's 10-year plan actually look like? Probably a rejigged version of what Starmer's government already intends. The clean water bill aims to "shift the sector away from a system where water companies mark their own homework" with stronger regulation. Burnham could inject more local direction, along the lines of his devolution agenda. Cunliffe's report praised how Burnham's Greater Manchester Combined Authority had shown "how more regional water planning can be achieved through voluntary cross-sector engagement." It recommended formal "strategic boards" with local political leaders. Elected mayors should have "opportunities to influence, inform and be informed by plans for the water system." That ticks several boxes for Burnham.
Would it add up to "greater public control"? Not if you mean owning every water company outright. Pure nationalisation advocates won't be satisfied. But politically, Burnham could say he's taken the current government's bill and given it an injection of Manchesterism. The threat of harder measures in the next parliament could hang in the background. In a fiscally constrained world, that's the pragmatic route. Thames could still be treated separately - all options on the table. Even the water commission acknowledged a Welsh Water-style not-for-profit model "might present one possible exit route" for companies in special administration. But for the sector as a whole, Burnham's "stronger public control" will likely morph into a stronger role for local authorities in planning and directing. As Welsh Water has shown, this is a world of tradeoffs.