‘Our mutual friend?”

Briefings in the last week suggest Andy Burnham is exploring mutualisation, cooperatives, and non-profit models as the future for English water. The details remain sketchy. We don’t know precisely what is being proposed, or whether “mutual”, “co-operative” or “non-profit” are being used interchangeably. What is important is that they shouldn’t be. They describe different models with different legal structures, ownership arrangements, and governance.

Whatever emerges, one thing is already clear: any announcement that privatisation has failed and alternatives are being seriously considered would be a major victory for the campaigners and MPs who have spent years pushing this issue up the political agenda. It reflects sustained public pressure and the ideas developed by members of the Compass’ Our Water, Our Way coalition, who have consistently argued that England needs a fundamentally different approach to water ownership and governance – an approach rooted in the principles of democracy, affordability and community power that Burnham has championed.

‘Mutuals’ are a frustratingly large category of company structure. The Cooperative Party, Reform UK and the Lib Dems all have policies on water that fall under ‘mutuals’. These range from the Lib Dems’ preferred non-profit model like Welsh Water, to cooperatives owned by workers and/or customers, to Reform UK’s position that water companies should be 50% owned by the government and 50% by “British pension funds“.

But if reports of Burnham’s interest in mutualisation, cooperatives and non-profit models are true, they raise bigger questions.

READ MORE: ‘The political cost of keeping Thames Water privatised’

After 37 years of the failed experiment of privatisation, why are we still searching for a third way instead of learning from what works almost everywhere else in the world?

Around 90% of the world’s water systems are publicly owned. Mutualising a company the size of Thames Water would itself be one of the largest governance experiments ever attempted. The world’s biggest water cooperative, SAGUAPAC in Bolivia, serves around 1.5 million people and does not operate sewerage services. Thames Water serves 16 million people.

DEFRA has admitted through Freedom of Information requests that it cannot properly estimate the costs of public ownership. Yet instead of establishing those facts, we’re contemplating a model with almost no international precedent.

Of course, water companies should operate in the interests of customers and workers. But mutuals are not the best route to achieving that.

To figure out what actually should be done, we need to answer two simple questions: who owns the assets, and what exactly do they own?

Nobody outside Thames Water truly knows the condition of its infrastructure, the scale of future liabilities or the full extent of its financial problems. We’re debating the colour of the curtains before inspecting the foundations.

That’s why the next step is obvious. Thames Water should enter the Special Administration Regime (SAR).

This isn’t because public ownership is predetermined, but because good policymaking starts with evidence. SAR would stabilise the company, expose the true state of its finances and infrastructure, and provide the information needed to decide its long-term future. It would also place a moratorium on interest payments, allowing revenue currently diverted to debt servicing to be spent maintaining and repairing assets instead.

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Mutualisation alone does not solve those problems. Removing shareholders does not remove financial extraction. Welsh Water, despite operating as a non-profit, still loses around 41% of its annual revenue servicing debt – comparable to Thames Water. Rebranding an organisation does not repair leaking pipes or unlock cheaper finance. If infrastructure remains inside a corporate body rather than returning to public ownership, borrowing costs are likely to remain significantly higher than government-backed finance, while existing debts may simply be inherited.

The danger is that we change the badge on the door while leaving the underlying economics largely untouched.

There are governance questions too. Britain’s legal framework for co-operatives and mutuals offers surprisingly weak long-term protection. Organisations created with a public purpose can later be sold or fundamentally altered. MyCSP, established as a mutual to administer Civil Service pensions, began with employee ownership and government backing. Within two years, private equity had acquired a controlling stake.

If we’re redesigning one of Britain’s most important public utilities, we need to build something even Thatcher would have struggled to unravel.

There’s two questions left to ask. Firstly, where are cooperative ownership models for water actually working?

Water cooperatives exist across countries including Finland, Denmark, Austria, Canada and the US. But they are overwhelmingly small rural or community systems. In Finland, only 20 cooperatives serve more than 2,000 households, with the largest serving around 4,000. In the United States, most serve fewer than 3,300 customers and rely on government support.

There is no established international model for a cooperative owning a complex urban water and sewerage network on the scale of Thames Water; let alone England’s wider system.

Meanwhile, England’s water challenges are becoming more nationwide than regional. Climate change, population growth and local water shortages demand coordinated investment across river catchments and strategic water transfers between regions. Fragmenting ownership risks making that coordination harder.

Public ownership of infrastructure does not mean every service must be delivered directly by the state. Many successful water providers combine public ownership with services delivered by public bodies, charities, mutuals and private contractors where appropriate. The crucial distinction is that the infrastructure remains publicly owned and strategic decisions are taken in the national interest.

The last question left to ask is who’s advocating for this and why? In leaked emails sent ahead of Labour’s return to government, CEO of Severn Trent, Liv Garfield, advocated for “re-purposing utilities and utility networks into a new breed of declared social purpose companies – companies that remain privately owned” (e.g. Welsh Water). 

We know there is a sensible route forward.

First, place Thames Water into Special Administration. Second, commission an independent feasibility study comparing every credible ownership model on cost, resilience, governance and long-term value. Third, legislate for whichever model the evidence supports.

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That is how serious governments reform essential infrastructure.

Because England does not need another experiment. It needs a water system that works.

Start with Special Administration. Follow the evidence. Learn from international experience. Then build a water system designed to last for the next century, not merely the next news cycle.

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