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31 October 2017

Public ownership can mean more than just renationalisation

In Wales, a publicly owned co-operative has transformed water services. 

By Gareth Thomas

The ownership of Britain’s utilities matters, but the way in which the argument is so often framed is stuck in the past. This isn’t just a straight choice between the current privatised model or returning to the nationalised gas and electricity boards of old. Instead, there is a strong case for a very different type of public ownership – one that transforms the way these vital services are provided and which, crucially, involves those most directly affected by how the business operates – its consumers and workers.

The privatisation of the utility companies under Margaret Thatcher was supposed to lead to the creation of a competitive market in which customers would shop around for the best deal. But more than a quarter of a century later, six companies dominate the energy market, making excess profits, with too many of their customers paying over the odds.

Add in the widespread concerns about some business practices, ever increasing executive pay, the rising use of zero hour contracts to cut pay and staff, poor customer service; concern about levels of investment, and high levels of debt servicing to avoid tax, and the idea the free market is working is difficult to take seriously.

Theresa May seems to be keeping everyone in suspense as to whether she will or won’t go ahead with plans for an energy price cap. But with firms already withdrawing their cheapest rates and apparent pre-emptive increases in standard tariffs, all the Conservatives seem to be achieving is to end the little competition that does actually exist in the energy market whilst still arguing the rigged, broken system we have now is essential.

Polls have confirmed widespread support for Jeremy Corbyn’s decision to instigate a debate on more public ownership of the utilities. In the Co-op party, we share the view that ownership matters. We want to put the public centre stage in the decisions about how these vital services are run.

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At our conference earlier this month, Corbyn asked the Co-op party to bring forward new ideas on ownership as he begins the urgent task of translating Labour policy ambitions into detailed plans for Government.

After austerity and years of damaging cuts, there will be many competing priorities for government funding, so a credible plan to deliver all of the different elements of our vision will be essential.

Whilst there are powerful arguments in favour of rail and Post Office renationalisation, I think a very different approach will be needed to ensure energy and water are run in the interests of consumers and the country.

Awel Co-op, north of Swansea, is a community energy co-op. They own wind turbines which provide energy for people living nearby, protecting the outstanding natural beauty of the area and supporting local people in the valleys. Or there’s Westmill in Oxford; a community-owned solar energy farm run by its members, meeting local people’s need for this energy and keeping profit in the local community.

Also in Wales, Glas Cymru (Welsh Water) is a mutual with no shareholders, and run on a not-for-profit basis solely for the benefit of customers. When Welsh Water took over from the previous privately owned company in 2001, they were near the bottom of the rankings in terms of water quality, and customers paid the highest prices for their water of anywhere in the UK. Sixteen years later there have been big improvements with environmental standards raised, and customers are getting a much better deal. Indeed, across the water industry, tougher and better designed regulation could help create more accountable mutual businesses, run in the public interest, not overseas owners.

Old style nationalisation that forced government to buy out the big utility businesses, handing bumper cheques to hedge funds, overseas businesses, and already very rich individual shareholders would be a poor use of taxpayer money.

Instead, a windfall tax on the energy industry to fund the expansion of co-operative and community-led energy schemes would help to finance a transformation in both how energy is provided in this country and crucially also, who benefits from the way it is delivered. In Germany and the United States energy co-operatives and community-led schemes are successful and powerful elements of their energy industries.

It’s time to end the dominance of shareholder-led firms, and ensure that our most basic energy and water needs are in future provided efficiently, and effectively, by the many for the many.

Gareth Thomas is the Labour (Co-op) MP for Harrow West. 

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