Key allies of Prime Minister Andy Burnham have cautioned him against retreating from his commitment to place water companies under public control, as information has surfaced regarding his strategy to grant mayors expanded authority over the sector.
Mat Lawrence and Mark McVitie, both prominent figures who joined Burnham's initiative during the summer, have each expressed concern that granting politicians supervisory powers over essential services rather than ownership stakes will fall short of the prime minister's original undertaking.
Their warnings emerge following reports that Burnham is contemplating the establishment of regional bodies tasked with holding water companies in England and Wales to stricter standards. According to reports on the proposal, these bodies would involve local political leaders, public health officials, customers and environmental representatives, with authority to challenge company executives on pricing and sewage overflow incidents. Lawrence and McVitie contend that this arrangement would not satisfy Burnham's pledge to bring "the essentials of life" under public ownership.
Will oversight deliver real control?
Lawrence, director of the Common Wealth thinktank, questioned whether supervision without ownership can genuinely constrain privatised operators.
Putting mayors in charge of water services is a successful model the world over. But the critical question is will public oversight without ownership provide meaningful control over privatised companies or not.He elaborated on the specific powers that would be necessary:
Can they ban dividend payments, stop financial extraction, reduce the cost of capital that determines overall cost, or choose to take the service back into public hands to run for the public benefit? If the answer is no, devolving oversight risks handing over responsibility without the power to fix the problem.
McVitie, the former director of the Labour Growth Group, echoed these concerns while acknowledging potential benefits.
Local leaders having real power over water investment would be a positive step. But public control has to mean more than public scrutiny.He raised the fundamental tension at the heart of the proposal:
The question is whether the public interest can actually be enforced in the face of the interests of monopoly operators. A functioning system needs to raise the required investment at a reasonable cost, prevent financial extraction when services fail, and ensure that operators which are no longer viable can be restructured.
McVitie concluded with a stark warning about the risks of the current approach:
Regional boards may improve planning, but unless the financial model is made to work for the British people, rather than the other way round, we risk giving local leaders more responsibility for a system they don't have the power to fundamentally change.
What structure is being considered?
According to recent reporting on the government's plans, Burnham is understood to be considering the creation of nine regional bodies, roughly matching the geography of the largest water companies operating in England and Wales. These boards would be tasked with establishing company objectives and holding executives accountable over bills, supply shortages and sewage discharges.
The boards are expected to engage with customers and conduct public consultations, though it remains uncertain whether they will receive financial control over the companies themselves. Government sources have characterised the reports as "speculation" and indicated that fuller details will emerge in the 10-year plan.
The Independent Water Commission has previously recommended eight new regional water system planning authorities in England and one national authority in Wales, suggesting that the government's thinking aligns with expert recommendations on structural reform.
The Thames Water question
In the immediate term, Burnham confronts a critical decision regarding Thames Water, the financially troubled company at the centre of a creditor-led rescue attempt. At the end of March, the regulated asset value of Thames was estimated at £23 billion, while its net debt had risen substantially. During his campaign to become an MP, Burnham stated he would nationalise Thames, though doing so could require several billions of pounds in public expenditure.
The government has been exploring alternative routes to intervention. Burnham has been reported to be considering changes to insolvency law and the special administration regime to facilitate public takeover of failing utilities. Special administration could represent a pathway to eventual nationalisation without the immediate fiscal burden of a full purchase.
Thames Water's creditors have previously proposed a golden share arrangement and greater local authority involvement as an alternative to nationalisation, but the government rejected that earlier rescue plan.
Growing customer dissatisfaction
Public frustration with the water industry continues to intensify. The number of complaints filed by households against water companies has surged 48 percent year on year, marking the steepest annual increase in two decades, according to the Consumer Council for Water.
Mike Keil, chief executive of the Consumer Council for Water, characterised the figures as a reflection of widespread discontent: "Just how dissatisfied many people still are with the state of the water sector and the enormous task water companies face in rebuilding consumer trust."
A government spokesperson responded to the mounting criticism: "Our water industry has not been working for people for far too long. We're bringing in tougher regulation, stronger enforcement and greater accountability, so water companies deliver for customers and the environment."
What comes next
Burnham intends to release a "10-year plan" for Britain in November, which will include detailed proposals for bringing utilities such as water and energy companies under public control. This document is expected to clarify whether the regional bodies will possess genuine financial authority or remain limited to oversight and consultation functions, a distinction that will prove decisive in determining whether the government's approach satisfies its own stated ambitions for public ownership of essential services.
The plan will also address the future of Thames Water and establish the government's broader strategy for utility reform across England and Wales.
