Utilities: To Own or Control
The future of public utilities must be shaped by evidence not ideology. The UK’s experience with privatised utilities demonstrates that a data driven approach, prioritising control first with ownership as a fall-back, offers the most effective path forward. This ensures private sector efficiency is harnessed where it delivers while public accountability remains non-negotiable.
Data from the water sector reveals a stark reality. Since privatisation, companies have paid out £72 billion in dividends while underinvesting in infrastructure, leading to rising leakage rates and a 200% increase in sewage dumping. Stricter control is the immediate solution, with regulators like Ofwat enforcing performance-based penalties, including banning dividends and bonuses for companies failing to meet environmental and service targets. If these measures prove insufficient, public ownership should follow.
In energy, private suppliers extracted £1.3 billion in profits in 2022, even as 4.5 million households fell into fuel poverty. The UK’s underinvestment in renewables, spending just £6 billion annually against the £10 billion needed to meet net-zero targets, leaves the country vulnerable to volatile global energy markets. As the Russia/Ukraine and America/Iran conflicts have shown, reliance on fossil fuels exposes the UK to geopolitical risks. Accelerating renewable energy projects, supported by a robust grid, would reduce this dependence and enhance energy security. A hybrid model with public ownership of transmission infrastructure and strict oversight of private suppliers can ensure affordability and sustainability.
The rail sector illustrates the limitations of the control-first approach. While Network Rail remains publicly owned, private operators continue to prioritise profits over service, with punctuality lagging at 65% compared to Germany’s 85%. These failures not only inconvenience passengers but also undermine public trust and impose economic costs through lost productivity. The government’s use of the Operator of Last Resort to take over failing franchises shows that control alone is failing the public, and stronger measures, including full renationalisation, are likely necessary.
The grid is the backbone of the energy transition. Without urgent upgrades, the UK risks missing its net-zero targets as renewable energy projects are delayed or curtailed due to insufficient transmission capacity. These upgrades are critical for climate goals, energy security, and economic resilience, ensuring businesses and households have reliable, affordable energy. The Russia/Ukraine and America/Iran conflicts have illustrated the geopolitical risks of energy dependence, making it clear that the UK must prioritise energy independence. Expedited planning processes, similar to those used for defence projects, are necessary to ensure the grid can support the growing demand for renewable energy, unlocking economic opportunities in green industries and the phase-down of fossil fuels.
The principle is clear: control first, ownership when it fails. But that control must be rigorous and enforceable. This approach is not about ideology but about using data to drive decisions. It was ideology that got us into this mess, and ideology is not the answer to fix it. By adopting this evidence-based approach, the UK can build a utility system that is responsive, accountable, and fit for the challenges of the 21st century.