UK Labour figures propose not-for-profit model for failing water companies

A group of Labour MPs and regional mayors has proposed turning failing water companies in England into not-for-profit cooperatives, presenting the model as an alternative to both continued private ownership and full nationalisation.

The proposal, set out in a Good Growth Foundation report, would place companies emerging from special administration under cooperative ownership rather than selling them to the highest bidder. Supporters say local customers would gain greater control while company debt would remain off the government’s balance sheet.

The group says Thames Water, which is in talks over a creditor-led rescue and faces the possibility of temporary government control if those talks fail, could be the first test case. The plan also calls for tougher monitoring across the industry, tighter limits on executive pay and a ban on dividends when performance targets are missed.

Under the proposed approach, shareholders and creditors would bear the cost when a company fails through a mechanism modelled on bank bail-ins. Companies that could not meet strengthened regulatory conditions would enter the special administration regime and then be converted into cooperatives.

Supporters include Labour MP Helena Dollimore and the mayors of West Yorkshire, South Yorkshire, and York and North Yorkshire. They argue the structure could address pollution, infrastructure failures and rising bills while limiting taxpayer exposure.

The proposal has not been adopted as government policy. Downing Street is considering options for greater public control of water, while government sources have said immediate nationalisation of Thames Water is not planned. The debate comes as the company’s financial position and potential rescue remain unresolved.