Renationalisation and legitimacy – too fringy for Labour?
Having inserted the surprise pledge to renationalise the water sector into its general election manifesto earlier this year, it is worthy of note that when the Labour Party’s annual conference kicked off in Brighton on Saturday, not a single scheduled fringe event concerned itself with water renationalisation. In fact, while we must wait to hear over the next few days what is said on the main conference stage, no water specific topic made it into the fringe agenda at all.
This is interesting in light of the fact that legitimacy is now one of the top items on the bill for the sector. While discussion of the subject in industry circles pre-dated Labour’s manifesto pledge, it has undoubtedly been intensified by it.
For instance, speaking at the Consumer Council for Water’s Customer Matters event last Tuesday, Ofwat chief executive Cathryn Ross put legitimacy front and centre of a speech that covered PR19 and delivering for customers. She said: “You’d have to have been on Mars (pictured) for the last 12 months or so, not to have noticed that the basis of provision of some of our essential public services is coming under scrutiny to a deeper extent than I recall in the last 30 years or so.
The Labour manifesto for the last election included the water industry in a list of industries that the party planned to renationalise.” She urged companies not only to go further in terms of price and service delivery for customers, but also to be “exemplary corporate citizens” in the face of “starkest challenge to the sector’s legitimacy since privatisation”.
If the Labour fringe agenda suggests the party’s clamour to reform water has abated somewhat, the same cannot be said of the Financial Times. Last week the paper carried another article criticising practices in the sector – this time questioning the ethics of PwC’s dual role as Ofwat’s delivery partner at PR14 and advisor to a number of water companies. The timing of this is interesting in light of a recent challenge to PwC’s PR19 cost of equity work for Ofwat.
The FT article followed a separate piece a couple of weeks ago which slammed the privatisation model and Ofwat’s track record since as an economic regulator – which Ross rebutted in a letter in response.