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Labour plans to re-nationalise water sector

The Labour party plans to re-nationalise the UK water industry if it comes to power after the General Election on 8 June.

The party’s manifesto, launched today, promises to create nine new public bodies to run the water and sewage system in England. The pledge comes in a section of the manifesto entitled ‘Widening Ownership of Our Economy’ which also commits the prospective Labour administration to reverse the privatisation of Royal Mail, and to re-nationalise rail companies and energy networks.

“Many basic goods and services have been taken out of democratic control through privatisation,” reads the manifesto. “This has often led to higher prices and poorer quality, as prices are raised to pay out dividends. For example, water bills have increased 40 per cent since privatisation…

“Across the world, countries are taking public utilities back into public ownership. Labour will learn from these experiences and bring key utilities back into public ownership to deliver lower prices, more accountability and a more sustainable economy. We will… Replace our dysfunctional water system with a network of regional publicly-owned water companies.”

By ending the practice of paying dividends to shareholders, bills would be reduced by around £100 a year per household, according to a source close to the party.

“Under Labour, rather than answering to its shareholders out to make a quick buck at the expense of increasing household bills and worsening service quality, utilities will be accountable to the bill payer, helping ease the burden of those struggling with the cost of living crisis,” said the source.

In a discussion on the BBC Radio 4 Today Programme this morning, shadow chancellor John McDonnell admitted that the proposal for nationalising water companies had not yet been fully costed, because there were various mechanisms for how the move could be achieved and these would be subject to a consultation.

He added: “We will seek to negotiate and we’ll look at the option of how we bring it back into public ownership. One is, yes, an outright purchase. That could be done and we wouldn’t want to set the price for that now because that would affect the negotiations. Also we could offer bonds for shares in [an] exchange scheme. There are different mechanisms that can be used which minimise the overall cost but maximise the advantages of bringing it back into public ownership.”

The water industry was privatised under the government of Margaret Thatcher in 1989.

Author: James Brockett,
Topic: Policy & Regulation
Tags: economy , water companies

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