Gareth Thomas: Labour should drop water and energy nationalisation

The Labour/Co-op MP says voters were put off by the potential cost of nationalisation and favours mutual options for utilities instead

The Labour/Co-op MP for Harrow West, and former chair of the Co-op Party, shares his thoughts on the future direction of the Labour Party as it prepares to choose its next leader.

The next Labour Leader should confirm they will not support nationalising the water and energy industries. Having that commitment in our manifesto helped us lose the General Election and has helped condemn consumers to another five years of rising bills, unaccountable bosses and huge profits to often overseas owners. 

Labour’s critique of water and energy privatisation remains powerful and the demand for change completely justified, but the solution we proposed was wrong, and the error cost us heavily.

The price tag of nationalising both industries at a combined total of anything from £50 to £200bn, depending on who you believed, helped to make our plans for government seem hugely costly, with the regular doorstep refrain of “Where’s the money going to come from?” allowing the fear of big tax rises for people on low to middle incomes to be exploited by our opponents.

Owning the future is key to winning elections but plans for energy and water renationalisation helped to give the impression that we were looking backwards to solutions from previous decades.

The huge cost of water and energy nationalisation also made it harder to sell bringing Royal Mail and the Railways back into public ownership – both far less costly and more sensible.

Had we been successful, long legal battles and an inevitable Tory commitment to reverse nationalisation would have diverted Government attention from the investment both industries need to play their part in tackling the climate emergency and delivering much better value for money.

These plans would have seen a huge increase in power for Whitehall at a time when the appetite for devolution to England’s regions is growing and the need to give local people more direct power and agency themselves has never been more obvious.

Ownership matters, both energy and water are to varying degrees private monopolies so poor regulation has not surprisingly led to higher prices, insufficient investment and excessive profit taking. But giving power to the state; to Whitehall Departments isn’t going to suddenly make these industries more democratic; if anything, the real decision makers will become even more remote.

Both energy and water would benefit from genuinely having to answer to the public they serve, and not mediated through civil servants or Ministers however talented. Real public ownership with companies, owned by a mix of the very customers who depend on them and the very staff who provide the actual services, would help to lock out profiteering and create authentic responsibility to those stakeholders without the huge costs of nationalisation.

True it would take longer with tougher regulation required over a sustained period and first all companies would be required to put a number of consumers and staff on their boards and secure the approval of consumers for any increases in bills. Over time working with the existing owners we should convert water companies into mutuals, still in the private sector but owned by the public and employees.

A new Energy Security Board should be established which prioritises its responsibility to energy consumers, employees and other stakeholders alongside securing the nation’s energy supply. We should champion the expansion of energy co-operatives to spread ownership, accelerate the transition to renewables & put customers in charge

Why shouldn’t our neighbours, our friends, those we work with have a say on the big choices these crucial services face on how to tackle climate threats and what to do to help the most vulnerable in our country. Why should those who work in London; in Westminster have more control than those in Grimsby, Redcar or Ipswich over how the energy and water they need are managed? Of course you would still have trained professionals doing the day to day delivery of the actual services but the big, strategic choices about how & at what cost, would be democratically driven.

There are those on both left and right who have a vested interest in keeping the debate about the future of energy and water services limited to a binary choice of privatisation or nationalisation. 

The opposition from senior advisors to Labour’s current leadership to co-operatives and mutuals was a real disappointment. It is true there was a headline commitment to increase the size of the Co-operative sector but on big choices about different ownership our 2019 manifesto opted for civil service control or the status quo.

There is another way. It’s called public ownership; it puts the people of this country in the driving seat. It’s what has made businesses like John Lewis, Waitrose, the Co-operative Group in the UK or Credit Agricole, Rabobank and Navy Federal in Europe and the United States so successful.

At the risk of understatement, after our worst defeat since 1935 a little imagination will be required to improve our chances. Given the sheer cost of our energy and water plans they are a good place to start. Instead of nationalisation let’s opt for the cheaper, the longer but the more radical option of putting the public and employees in charge.