There should be guidelines requiring politicians who advocate for “stronger public control” of crucial sectors to clarify their intentions. While public “ownership” typically denotes nationalization, Andy Burnham’s references to increasing public control over water and energy suggest a more nuanced interpretation. What does he really mean?
For example, would he oppose the government’s ongoing water initiatives, particularly the significant regulatory overhaul in England and Wales set to occur this autumn through the clean water bill? Or is he merely suggesting that Thames Water should be placed under special administration, a move that might happen regardless of any new prime minister’s influence?
In the energy sector, most actions already require government intervention. The national energy system operator was nationalized in 2024 and is responsible for planning the gas and electricity frameworks. It is currently developing a “strategic spatial energy plan” that will outline infrastructure development until 2050. Projects like nuclear power plants or renewable energy installations require state-supported price contracts. Additionally, the Treasury has control over which energy levies are included in bills and which ones are funded through general taxation.
Meanwhile, Ed Miliband, the energy secretary, established a unit named “Mission Control” to monitor his clean power strategy for 2030. Although he had the authority to restructure the electricity market, he opted not to implement “zonal pricing.” Miliband has also recently completed a review of Ofgem, the regulatory body accountable to Parliament, which determines price controls for transmission firms and energy distributors, capping supplier profit margins at 2%. Absent nationalization, what additional control mechanisms are truly lacking? Not many, it seems.
Water might present more opportunities for intervention since Thames’ future is uncertain. It has now been a year since the company’s creditors initiated discussions with Ofwat, the regulator, regarding a contentious rescue plan that would erase billions in debt in exchange for new funding and leniency on pollution penalties for up to a decade.
Burnham may be disheartened by the prospect of a special arrangement for Thames that could allow U.S. hedge funds to become significant stakeholders. Many share his skepticism, especially as creditors have proposed three plans that Ofwat has yet to approve.
However, the option of special administration does not guarantee increased public control. While often referred to as “temporary nationalization,” the administrator is still obligated to maximize value for creditors, which might entail selling to private buyers. Although the government would have more latitude to intervene, Burnham needs to specify how he envisions this process. Currently, ambiguous statements will likely hinder Thames negotiations, as ministers are unlikely to endorse any plan—be it recapitalization or administration—until Labour’s leadership situation becomes clearer.
Burnham’s views on water clearly extend beyond the Thames situation. On the campaign trail in Makerfield, he accused water companies of “profiteering” and called for United Utilities, serving north-west England, to forgo its £266 million dividend payment in August, suggesting those funds should instead be used to reduce customer bills.
The stock market reacted calmly to his remarks, but the response could be different if he were to assume the role of prime minister. A prime minister attempting to override an independent regulator and prohibit dividend payments during a cost-of-living crisis would create significant repercussions, impacting how companies can raise capital. If Burnham’s ambitions truly reach that level, it would be more rational for him to advocate for outright nationalization. Notably, United Utilities recently raised £800 million in new equity based on a more stable regulatory outlook with the clean water bill on the horizon.
What is Burnham’s stance on this bill? This question is crucial, as current Labour ministers could argue that the proposed legislation aims to introduce the tighter controls he advocates. The bill proposes to dissolve Ofwat and establish a new super-regulator that would absorb staff from the Environment Agency. According to the King’s Speech, this new body aims to “shift the sector away from a system where water companies mark their own homework to stronger, active supervision and oversight through a powerful new regulator capable of integrated management of the water system.”
Does this proposal align with Burnham’s definition of increased public control? Instead of using vague terminology, it would be more productive for him to articulate how his vision diverges from existing frameworks or the proposals currently on the table. Does he possess concrete alternatives, or is he simply tapping into public discontent over rising bills while lamenting the privatizations of the Thatcher era?
Ambiguity poses risks, not only in potentially confusing voters who interpret “public control” to mean nationalization—a concept that polls favorably—but also in capital markets that may seek clarity regarding regulatory intentions in water and energy under a potential Prime Minister Burnham. A clear response regarding the clean water bill would be enlightening. Does he support it? The answer should be straightforward: yes or no.
