The group pushing for renationalisation of the water industry has urged shareholders – particularly those representing pension funds – to exit their investments in the sector now.

Cat Hobbs, the founder of We Own It, which campaigns for nationalisation of public services, also told Utility Week that the value put on the sector should take into account the dividends paid to shareholders over the years, which she estimates at £56 billion.

She said the group would look towards the Scottish model as a template but admitted that nationalisation “is not a panacea” and that the case of Northern Ireland showed public ownership alone would not necessarily lead to further investment.

Hobbs was speaking at the launch of The People’s Plan for Water, which received the support of a number of Labour MPs, including shadow chancellor John McDonnell, as well as Green and SNP representatives. It sets out a vision for a national water industry with “democratic accountability” and a commitment to plough all profits back into the service. She also outlined a plan for an elected “supervisory board” to the industry called Participate, which represent consumer voices.

The proposal, based on suggestions submitted by 600 people to We Own It’s website, highlights several examples of renationalisation worldwide but admits that none replicate the scale of transition that would be necessary in the UK.

Hobbs called on the industry to support the proposal, adding: “The people working in the water industry are part of a really vital service and there’s a huge amount of experience that we don’t want to lose.

“To the senior directors I would hope they would accept a lower salary to do meaningful work because right now it is not really fair the way it is set up.”

Fundamentally flawed

Water UK responded by saying that the plan had been fundamentally flawed from the start because it was based on unreliable data. The group said We Own It had provided no answers as to how renationalisation would help the UK tackle the twin issues of climate change and an increasing population. It also accused the group of distorting the picture of the last 30 years and failing to acknowledge the improvements made.

Hobbs, who founded We Own It in 2013, pointed to statistics culled from a number of different polls, which showed that support for public ownership of water (83 per cent according to a 2017 survey by the Legatum Institute) was higher than for any other sector apart from the NHS (84 per cent).

On the cost of renationalisation, Hobbs said: “From our point of view, the privatised water industry has a lot to answer for. They started with zero debt in 1989 and built a debt mountain of £51 billion. We will have to honour that debt when we take the water industry over. That can be taken into account when deciding how this works financially.

“Our position, which is different from Labour’s, is that nobody should be investing in water because water is a basic human right and a public service. If people have their pension funds, or shares in water, they should be getting out now and we don’t believe they should be compensated because shareholders have received £56 billion already.”

She went on to stress that pension funds were only “a very small percentage of the wider picture” and said We Own It had already urged the USS fund to sell its c11 per cent stake in Thames Water.

She added: “The responsible thing to do is to look at the market and the trends, at what would happen if we got a Labour government and protect their pensions by investing in something else. Pension fund managers should be thinking about their responsibility.”

Unique model

The People’s Plan for Water makes several references to the Scottish model of public ownership as a possible direction for England, pointing out that investment per household is 35 per cent higher than south of the border.

Asked about the situation in Northern Ireland, where NI Water was only allocated £900 million of a requested £1.7 billion for the most recent investment window, Hobbs said: “Public ownership alone isn’t a panacea. We have to have proper investment in our public services. We have to move away, in general, from the ridiculous policy of austerity, which is damaging our public services across the board. Public services are the backbone of the economy and we need to invest in them properly.

“We need to follow the Scottish Water not the Northern Ireland model in terms of how the funding is managed. Water is a profitable industry. It’s not rocket science to take that money from our bills and make sure it is being reinvested back into infrastructure.”

She said Wales would have to be treated as a separate case and accepted the benefits brought by not-for-profit ownership but stressed accountability to the public was still needed.

She said many of the details of how a renationalised industry would work in practice still needed to be calculated. The People’s Plan includes a bevvy of suggestions from its supporters of projects to be invested in – from public fountains, to free water for those on benefits and discounted grey water harvesting for toilets and gardens. It also includes a proposal for a national system to cross-subsidise bills in more expensive areas. However, none of this is costed nor is there any indication of how these disparate ideas would be collected into a coherent policy.

Hobbs pointed to the remunicipalisation of water in Paris as a success story but admitted there was no direct parallel anywhere in the world to We Own It’s proposal.

She said: “We are the only country that has handed over our assets and infrastructure, which is a particularly bonkers way of doing it. So, yes it’s easier for cities elsewhere, who can wait for the end of contract and take it into public ownership.

“Nobody has copied our model and that is not a coincidence. The calculations are that we would save £2.3bn a year on not shelling out on dividends and lower costs of borrowing to invest.”

Devastating impact

A spokesman for Water UK said: “The figures that We Own It rely on have been shown to be wrong by a number of different reports from independent economists and analysts, which means their case is fundamentally flawed right from the start. The campaigners don’t seem to understand the devastating impact on pensioners, savers and the economy as a whole if a government forced through a takeover of the industry at a price well below market value.

“We Own It don’t explain how the big challenges faced by the water and sewerage industry – like climate change and an increasing population – would be addressed by a substantial reorganisation of structures and ownership. There’s no attempt to acknowledge the many improvements made since privatisation in 1989 – let alone the further benefits, such as falling bills, improved services, and increased investment – that companies have set out for future years. They also have no credible answer to the well-documented problems caused by governments not providing state-owned industries with enough money to do their jobs properly.

“Thirty years of water privatisation has delivered huge benefits for consumers and the environment. People now enjoy world-class quality water, our rivers are healthier, wildlife is flourishing, our beaches are cleaner, and we have major plans for even more improvements. We have the expertise, the organisation, and the access to the substantial amount of investment needed for the future. And that’s how we’ll be able to continue providing customers with safe, secure supplies of water and improving our precious environment for many years to come.”