As the fallout continues from the postmaster scandal, and the pollution crisis in the water industry prompted the government to replace Ofwat with a new regulator, mutual options are back on the UK agenda.
Scandals over sewage spills and the financial crisis at Thames Water prompted the government to commission are review from Sir Jon Cunliffe, former deputy governor of the Bank of England.
On his recommendation, ministers will replace the powers of Ofwat, the Drinking Water Inspectorate, the Environment Agency and Natural England.
“The government will abolish Ofwat,” said environment secretary Steve Reed. “In the biggest overhaul of water regulation in a generation, we will bring water functions from four different regulators into one.
“A single, powerful regulator responsible for the entire water sector will stand firmly on the side of customers, investors and the environment and prevent the abuses of the past.”
But Co-operatives UK, the apex for the UK co-op sector, says more drastic measures are needed than a regulatory overhaul, post on X: “‘Ofwat has failed’ Yes. But so has the whole model. Bonuses for failure. Dividends while rivers flood with sewage. No real voice for the people who pay for and rely on water services. A new regulator isn’t enough. We need a new ownership model. Let’s talk about mutuals.”
Co-ops UK has long called for such a measure, with CEO Rose Marley telling the Times last September: “If Thames Water was owned and controlled by the people that drank from it and swam in it, would they pump sewage into it?”
Thames, the UK’s largest water company, has been struggling to survive for a year and a half and has reported a £1.65bn loss; it it fails the government would have to step in.
Its creditors have offered a rescue deal worth about £5n – contingent on a regulatory reset, which could mean flexibility on pollution, penalties and the time needed to deliver improvements.
Related: Is it time for a co-operative water supply?
Mutualisation, as an alternative to privatisation and or nationalisation, could help organisations like Thames find a way out of their hole, campaigners hope.
‘There’s a reason why cooperatives and mutuals continue to demonstrate a fairer, equitable and sustainable and more desirable way to run a business,” Marley wrote in the Times. “And yet, mutualisation is rarely presented as a solution. When things go wrong, why do we discuss only privatisation or nationalisation? Why is there seldom any dialogue around allowing people – the customers, the community, the local infrastructure – to participate in ownership and decision making?”
Meanwhile, Gareth Thomas, minister responsible for the Post Office, said it was time for “a fresh vision” for the service, which is still reeling from the Horizon scandal which saw thousands of innocent postmasters pursued, and 900 wrongly convicted, after faulty accounting software flagged up non-existent shortfalls.
Plans for mutualisation of the service have been under discussion for more than a decade, but were forced onto the backburner by the scandal.
Related: Co-operatives UK joins Post Office mutualisation talks with government and unions
“We all know, sadly, the grim legacy… so this is about fixing the fundamental problems,” Thomas told the BBC.
He said the Post Office needs to be transformed to restore trust from postmasters and public, with a 12-week consultation to include options of mutual ownership or a BBC-style charter.
But any change in ownership structure is unlikely before 2030, with work needed first to replace the Horizon IT system and implement recommendations from the inquiry into the scandal.
