Why the GGF paper proposing mutuals for water is wrong

The paper fails to make a convincing case for mutualisation instead of public ownership of water companies in England and Wales. • It shows no awareness that when the same issue arose with the railway network 25 years ago, the Blair government tried creating Network Rail as a private not-for-profit ‘mutual’, which was later taken into public ownership because it did not deliver public control or economic efficiency. • Internationally, water co-ops are marginal, used in some countries for thinly populated rural areas. The largest water co-op in the world serves less than 1m. people, in the Bolivian city of Santa Cruz. • It mistakenly claims that Welsh Water and John Lewis are consumer mutuals, and fails to discuss the known governance problems of mutuals • The GGF paper misrepresents its own polling results as supporting mutuals as the only option, whereas almost all groups except Reform voters preferred public ownership. • It repeatedly assumes that public ownership would require compensation to the private owners, but somehow the shareholders would not demand compensation for mutualisation. • It argues that mutualisation can provide public control, but insists that control by elected councillors must be kept to a minority • It wrongly implies that public ownership would mean that costs would have to be covered out of taxes, whereas they would continue to be covered entirely by customer bills, as now. • The proposals are driven by a UK rule about the debt of public companies which treats it as government debt, and so a new operator must remain private. But this rule is not used by EU countries and the USA, which have significantly lower borrowing costs than the UK. • It makes proposals for ‘voluntary’ mutualisation, which could lead to company profits being used to pay shareholders instead of invested in water and sewer age systems. • It contains some useful suggestions, for example setting rules for the levels of breaches of duty which would lead to a company being taken into public ownership – yet if applied, it would lead to the automatic Special Administration of Welsh Water – which the GGF use as a model for their proposed mutuals.