‘Complicated and expensive’: Burnham is right about the risks of nationalisation | Nils Pratley

A dam on Welsh Water’s Elan valley reservoir network. The company converted to not-for-profit status in 2001. Photograph: RooM the Agency/Alamy View image in fullscreen A dam on Welsh Water’s Elan valley reservoir network. The company converted to not-for-profit status in 2001. Photograph: RooM the Agency/Alamy ‘Complicated and expensive’: Burnham is right about the risks of nationalisation Nils Pratley Track record of Welsh Water shows public ownership is not the answer to all the woes in the utilities sector G ood news for Andy Burnham: one of the original 10 water privatisations from the Thatcher-era has returned to public ownership already. Thanks to a complicated turn-of-the-century corporate saga, Welsh Water, serving 3 million people, converted to not-for-profit status in 2001. It has no shareholders. Financial surpluses go “straight back into keeping bills down and looking after your water and beautiful environment”, as the website blurb puts it . How’s it going? After a quarter of a century without dividend-hungry shareholders to feed, has the model proved its superiority? Not exactly. Welsh Water usually has high scores on customer trust metrics but its performance on bills and spills tends to be middle of the pack. Welsh Water recently received a £44.7m “enforcement package” – a fine by another name – from Ofwat for “serious and unacceptable breaches” in operating its sewage plants that “resulted in excessive spills to the environment”. Most companies have copped penalties in the regulator’s industry-wide investigation but, as a percentage of turnover – the regulatory yardstick of seriousness – Welsh Water’s 7.5% was at the high end. On bills, it is above the industry average at £683 a year . Severn Trent-owned Hafren Dyfrdwy, licence-holder in parts of north-east and mid-Wales, charges its households £48 less. A sample size of one is small, obviously. But Welsh Water is a reminder that it is too simplistic to think all the sector’s woes can be cured simply by changing the ownership. Boring factors such as access to capital, operational efficiency, technical skill, management accountability and regulatory rigour also tend to matter. Burnham knows as much, one suspects. For all the excitement generated by his calls for “stronger public control” over water and energy, he is vague on details. His only specific commitment has been to say nationalisation is “what should be done” at Thames , and even that statement is not wholly clear. Does he mean full permanent nationalisation? Or is he talking about special administration, which is different since it could mean a return to the private sector for Thames once its creditors have taken the inevitable haircut on their debt? (The shareholders have already been wiped out). For the non-Thames part of the industry, Burnham seems to be taking a long view. “It is about a 10-year plan of more public control, more public ownership,” he has said. “I don’t think you nationalise the whole thing necessari