Prime minister Andy Burnham has pledged change to the way water companies are owned and run in his first Labour Party Conference speech since taking up residence in Number 10. This will leave many business water customers wondering just what the future holds.
Mr Burnham’s speech in Liverpool naturally covered many topics and the headline writers may have led on his pledges over the pensions triple lock and Brexit, but for business water customers, his views on the water industry may be of particular interest.
Clarity on this issue has been long awaited, with Mr Burnham having previously hinted that he viewed renationalisation favourably. This would raise some questions, such as whether water would come under a single state monopoly.
If that were so, it would mean that companies would no longer be able to switch water supplier as there would be no choice. However, this is not what Mr Burnham has proposed. Instead, the prospect is rather more nuanced.
How Does Andy Burnham Propose To Change The Water Industry?
The first mention was brief but drew on a familiar attack line for the prime minister. Criticising the privatisation policies of the 1980s, Mr Burnham listed water among the industries he believed this should not have happened to.
If his initial mention was in passing, the next was very explicit, calling the state of the water industry “a symbol of what has gone wrong with Britain”, in which the “shareholders never lose and the public never win.” He cited sewage dumping as a prime example of this.
These were strong words, but, more importantly, they were backed with some clear proposals:
- A “strengthened” Water Bill will be presented to parliament
- A central feature of the bill will be “the repeal of Margaret Thatcher’s ideological ban on public ownership of water companies”
- It will start a “ten-year journey to a very different water system”
- Stronger public control, with mayors given new powers to hold water companies to account
- Tougher penalties for shortcomings
- An end to “loopholes” used to pay executives “excessive bonuses”
Which Water Companies Might Be Nationalised?
These pledges come after months of speculation that a Burnham premiership would involve the wholesale nationalisation of water. Other reports suggested that this might be reserved for particular companies that were either performing very badly, in financial trouble, or both.
There is, of course, one company that fits both those criteria: Thames Water, with the uncertainty over the government’s intentions leading to some creditors threatening legal action as the threat of nationalisation has stymied a potential takeover.
Mr Burnham did not mention Thames directly, but he did state: “Where private companies serve the public interest, we will support them. But the consequences will be clear for those who do not, including taking back control or public ownership.”
Therefore, what we now know is that the stated position of the government is not that the whole industry should be nationalised, but that commercial water suppliers will be kept on a tight leash and, if they are failing their customers, a takeover by the state is an option.
Mr Burnham added that this was not “anti-business”, arguing that companies need their utilities to be “functional and affordable”, just like the rest of the economy.
“As someone said to me recently, there’s a reason why you can’t build all over the water works and the electric company on the Monopoly board,” he added.
Clearly, therefore, the government under Andy Burnham is not planning to play its own game of monopoly with ownership of water suppliers.
Is It Time To Change Your Business Water Supplier?
A key question for business water customers is whether the prime minister’s point about the need for their water services to be “functional and affordable” rings true. Do these words accurately describe the water service your firm gets today?
If they do not, your solution does not rely on waiting for the government to decide your provider is not doing its job properly and nationalise it.
In any case, this is something that may happen with major companies like Thames with a large domestic customer base and responsibility for a lot of infrastructure (including the planned White Horse Reservoir in Oxfordshire), but not your provider.
Many smaller providers for businesses may not attract headlines, but could still let down their customers by not providing good customer service, by not responding quickly to problems, by not helping you to use water more efficiently and, above all, over price.
However, you can respond to this by switching today to get a better all-round deal. Our switching service makes it easy and it doesn’t depend on what the government may or may not do next year or the year after.
As Mr Burnham’s comments did make clear, the water firms that meet their requirements will not be taken over and, in this regard, he may have disappointed some of his more radical supporters. But this statement does provide some clarity on the future of the water industry.
What Can You Do To Hit A Failing Water Supplier In The Pocket?
The prime minister may have had Thames in his sights when he talked about nationalisation, but his mention of sewage dumping came just after the latest case of a water firm being penalised for this.
Southern Water was the company in trouble, hit with a £7 million fine for an incident in 2021 when sewage was poured into a stream near Whitstable in Kent, killing fish in an area with a shell fishery.
The company was fined the same amount in July for two previous incidents at pumping stations, at Margate in 2019 and Broadstairs in 2021 respectively.
Incidents like this can lead to water company executives having their bonuses blocked, under new powers given to Ofwat in 2024. But water companies have been seeking loopholes to get around this by paying bosses in a different way.
This being the case, Mr Burnham’s pledge to prevent such dodges may be welcomed. But the fact that this may be necessary might be an indicator that the most effective way to hit failing water companies in the pocket is for companies to move their business elsewhere.
It is not something that domestic companies can do, but your firm has the right to switch and we now know that the government is not planning to take this choice away.
