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Public ownership of the water industry in England and Wales is the best way to cut bills, reduce pollution and invest in repairing infrastructure, according to a wide-ranging people’s commission into the industry.
Set up by four academics with expertise in economics, water governance and the law to “fill the gaps” of the government-appointed Cunliffe commission, the inquiry will present its findings to MPs on Monday.
Ewen McGaughey, a professor of law at King’s College London who is one of the academics involved, said: “We all want clean water, and in the latest YouGov poll 82% of the British public said that we should bring our water into public ownership.
“Our recommendations are that the British public is right, the evidence supports them, and we should move to a new modern, public water system because this is the best way to cut bills, stop pollution, invest in repairs and give everyone a voice. We can have clean water or privatised water but we can’t have both.”
The Cunliffe inquiry into the water sector, which is due to report this month, was prevented from considering public ownership by the remit imposed by ministers. Its interim report last month was criticised for failing to recommend clear actions to end the crisis in the water industry.
McGaughey believes ministers could bring water companies into public ownership for minimal cost through the special administration process, which is built into the 1991 Water Industry Act. It can be triggered if a company cannot pay its debts or is not performing its statutory requirements, which include treating wastewater rather than dumping it into the environment.
Shareholders and creditors such as bondholders would be given “appropriate value” for their stakes, which McGaughey argues would, in effect, be nothing.
The people’s commission report says a shift to public ownership would provide transparency, reduce costs, improve democratic participation, remove the focus on shareholder profit to wholly focus on the public interest and improve cooperation and collaboration between water companies.
Evidence suggests that the top-performing utilities internationally – in Sweden, Denmark and Japan – are in public ownership, the report says. It provides evidence that the costs of water company plans for the next five years have been inflated by the privatised companies and that the privatisation model makes capital investment hugely expensive.
McGaughey criticised the figure of £99bn commonly cited as the cost of taking over the industry in England, because it is based on an estimate from a thinktank that was funded by water companies.
When debt levels of water companies are taken into account, the appropriate value of a water company in law can be close to zero. Thames Water, for example, is about £20bn in debt.
Once a water firm is under special administration, rather than transfer it to another private company it could be kept under public ownership.
The commission says public ownership is not the same as nationalisation. Public ownership means a company that is run to service the public and the environment and has public ownership of water infrastructure but could include some private-sector involvement via not-for-profit companies.
The report’s authors – McGaughey, Dr Kate Bayliss, an academic who has investigated the opaque structure of the privatised water industry, Prof Becky Malby, of Ilkley Clean River Group, and Frances Cleaver, a professor of political ecology at Lancaster University – said there was a once-in-a-lifetime chance for major reform of the water industry that must not be missed.
“There is a better future for the water sector in England and Wales, and it is vital that we have the ambition and the courage to reach for it,” the report says. “Getting there requires political will to unravel the complicated web of interests. Drawing on the evidence we present here and the UK’s vast experience in reforming vital services, we show that it is possible to conserve and protect water now and for the future.”
