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The boss of one of Britain’s biggest water companies has called on rivals to join together to avert any threat of nationalisation by a potential incoming Labour government, amid growing concern about the financial health of the sector.
Liv Garfield, chief executive of Severn Trent, has sent an email to other utility bosses inviting them to an “off-the-record roundtable” to discuss options for the future of the industry, including their reinvention as “social purpose companies”.
Garfield said that although Labour did not at present want to nationalise the industry “politically, there is significant pressure to ‘do something’ about utilities”.
The Labour party under Sir Keir Starmer — which is far ahead in the opinion polls ahead of a general election next year — has dropped plans by former leader Jeremy Corbyn to return water and energy companies to public ownership.
Instead, the Financial Times reported in May that a Labour government would carry out more modest reforms including the creation of a new regulator.
But questions around the ownership of the industry have intensified in recent days following the abrupt departure of Thames Water’s chief executive Sarah Bentley, amid concerns over the company’s £14bn debt pile. The government is working on a contingency plan to rescue Thames Water in the event the company collapsed.
The UK’s largest water company received £500mn from investors in March but is pressing for a further £1bn.
Water bosses are concerned that the collapse of one water utility could have a “domino effect” as confidence drains from the sector. Public pressure for renationalisation of water has also been mounting after unknown quantities of sewage poured into rivers and coastal waters, risking public health and closing beaches this summer.
A YouGov poll last year found that 58 per cent of Conservative voters thought water should be brought back under public control.
In a sign of the troubles facing the water industry, the GMB union on Friday announced that more than 1,000 water workers at United Utilities had voted to strike over pay and “in protest at years of under-investment in the system”.
Steve Whittle, GMB organiser, said: “There is real frustration from our members. They’ve seen their pay slashed in real terms for several years, while shareholders and directors trouser fortunes. Meanwhile, the infrastructure is left to crumble through a lack of investment.”
Garfield, who was paid £3.2mn this year, proposed to host the round table with Will Hutton — the Observer journalist best known for books critical of capitalism including The State We’re In — according to the leaked email, which was first reported by the Evening Standard.
Garfield writes: “Whilst it is clear Labour will not include nationalisation in its next manifesto, they are also not keen on entering into the election race championing the status quo.”
She adds: “One idea we believe might be attractive to the Labour leadership is repurposing utilities and utility networks into a new breed of declared social purpose companies — companies that remain privately owned, who absolutely can (and should) make a profit, but ones that also have a special duty to take a long-term view.”
Garfield says that utility sectors such as water, energy and telecoms, should have “clear social purpose” while remaining highly profitable.
Hilary Schan, co-chair of the leftwing pressure group Momentum, accused the Starmer leadership of putting “corporate interest before public good” by resisting pressure from the Labour membership to nationalise the water industry.
Severn Trent declined to comment.
Labour did not immediately respond to requests for comment.