Water companies and other utilities could be re-purposed into a "new breed of declared social purpose companies" if Labour wins the next general election, the boss of Severn Trent PLC (LSE:SVT) has suggested in a letter to other industry bosses.
Amid worries about the financial resilience of water companies and criticism of high utility bills paying for bumper dividends and bosses pay, the chief executive of the FTSE 100-listed giant, Liv Garfield, suggested utility bosses form a taskforce and work with the Labour party to avoid the re-nationalisation of these former state-owned industries, with the threat looming larger after the crumpling of Thames Water in recent days.
“Whilst it is clear Labour will not include nationalisation in its next manifesto, they are also not keen on entering into the election race championing the status quo. The leadership thinks there is room for improvement and, politically, there is significant pressure to ‘do something’ about utilities,” she wrote, in a letter leaked to the Evening Standard.
One idea she suggested might be attractive to the Labour leadership is “re-purposing utilities and utility networks into a new breed of declared social purpose companies – companies that remain privately owned, who absolutely can (and should) make a profit, but ones that also have a special duty to take a long-term view”.
Garfield said Labour has been made aware that her proposed utility industry taskforce is looking to test various ideas.
This takes place against the background of privately owned giant Thames Water being locked in emergency talks after its chief executive stepped down, with a buyer sought and the government standing ready to temporarily nationalise the debt-laden firm if it does collapse.
With the focus spreading to other water companies after Ofwat flagged concerns over "financial resilience", rivals Yorkshire Water raised £500mln to shore up its balance sheet and Southern Water was reported this morning to be scrambling to do the same.
Amid growing criticism of the water sector over its record on pollution, sewage and leaks, Garfield says that it and other utility sectors such as energy and telecoms should have “clear social purpose” as well as aiming to make profits.
But at least one other CEO contacted by the Severn Trent boss has said they are not interested