Nationalisation or mutualisation? Debate over rail and water in Labour and Co-op Parties

Labour has denied water industry claims it was considering mutual models instead of full state ownership of the water industry

Suggestions that an incoming Labour government would favour a mutual model for the water industry over full nationalisation has met with a denial from a party spokesperson.

But at the same time, Labour & Co-operative MP Luke Pollard has argued that a mutual model for rail services would offer an effective safeguard against reprivatisation by subsequent governments.

In a blog post on the website of the Co-op Party – Labour’s sister organisation – Mr Pollard wrote: “Let’s create shareholdings that turn our great public utilities into truly great mutually owned public utilities.”

Mr Pollard’s comments came as Labour denied suggestions from within the water industry that it was privately considering a mutual alternative.

Speaking at the GMB Congress in Brighton last week, Labour leader Jeremy Corbyn backed the union’s water nationalisation campaign, “Take Back the Tap”.

He told delegates: “The privatisation of water has been a failed and unpopular experiment. It’s been bad for workers in the industry and bad for bill payers.

“The only people it hasn’t been bad for is the rich shareholders who have extracted huge amounts of dividends on the back of household bills.”

But Susan Davy – chief financial officer of Pennon Group, which owns South West Water – had claimed in an interview with Financial Director website that Labour was considering a mutual option instead.

“They’re pretty consistent in the way they’re talking about it in the media,” she said. “But behind the scenes we’re beginning to see a bit more differentiation in how they’re talking about it.

“Their preference seems to be moving towards what we would call mutualisation, where you have some sort of model that allows customers to be owners. That’s where we can have a much more informed conversation.”

Her remarks prompted a firm response from Labour, with a spokesperson telling The Guardian newspaper: “As we announced in the general election, the next Labour government will take public ownership of water by issuing bonds in exchange for shares in the companies.

“We are not considering mutualisation.”

But writing on the Co-op Party website, Luke Pollard warned that straightforward nationalisation was open to the risk of reversal.

“Labour’s superb 2017 manifesto advocated bringing the railways and utilities back into public ownership,” he said. “The next Labour government will bring these former state assets back into state ownership.

“But then what? We’ve seen from the antics of Tory prime ministers since 2010 that selling public goods off at below market rate is a tactic they’ll use in pursuit of their dogmatic view that the private sector should run our trains and provide our water, power and gas.”

Looking at the issue of transport, he warned: “Labour needs to be very cautious that in ending rail privatisation we are not simply holding the assets on ice for the Tories to re-privatise later.

“That is why co-operators need to be loud in our advocacy for genuine democratic public ownership. This means once the railways have been nationalised, let’s mutualise them. Let’s create shareholdings that turn our great public utilities into truly great mutually owned public utilities.”

Luke Polland (c) Co-operative Party / Tehmoor Khalid / Krzysztof Kseba

He added: “Where the cost of upfront nationalisation is too great, let’s create co-operative insurgencies within the share ownerships of those utilities. These co-op share clubs would reinvest profits back into expanding the mutual ownership proportion over time. Decisions would be democratically made and those in charge held accountable in ways that utilities are not at present.”

Mr Pollard said there was caution about “old school socialism” as well as mainstream capitalism, leaving room for a co-op alternative, which would be “a powerful tool for re-imagining a fairer Britain.”

He said Mr Corbyn “has done much to create an environment where these policies could be welcomed”.

And he added: “Once a Labour Government has renationalised, then a Labour and Co-operative government, one and the same, integrated and determined, must mutualise.

“The Tories cannot privatise what they don’t own. As co-operators we know that mutual businesses are fairer, more accountable, more environmentally friendly and come as standard with the interests of individuals and our communities at heart.”

Claire McCarthy, general secretary of the Co-operative Party, says that with infrastructure starved of investment and executive pay soaring at an even faster rate than customer bills, there’s “a growing consensus that water privatisation has failed”, and that public ownership would provide a more accountable and efficient model.

“Too often public ownership is derided as a return to the past,” she said. “This is a red herring. That is why the Co-operative Party has put forward radical proposals for modern forms of public ownership in the water, rail and energy sectors. There is a strong case that through democratic public ownership we can achieve increased investment and productivity as well as providing greater safeguards against future re-privatisation and under-investment.

“Thirty-eight Labour & Co-operative MPs stood last summer on a manifesto calling for public ownership of water, energy and rail. This is a vision shared by both parties. As the Labour Party works in coming months to develop its plans for government, we will be working to make the case for models that have accountability to tax payers, consumers and and staff at their heart.”

• This article was amended on 13 June, correcting a reference to “renationalisation” in paragraph 2 to “reprivatisation”.

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