Water Firms as Not-for-Profit Cooperatives: A New Proposal 2026

The proposal to turn failing water firms into not-for-profit cooperatives is gaining traction among MPs and regional mayors, offering a 'third way' to achieve public control without the debt burden of nationalization. This innovative model aims to address the crisis in the water sector, where companies like Thames Water have pumped sewage into waterways while hiking bills and failing to invest in infrastructure.

Why Cooperatives Over Nationalization?

Nationalizing water companies could add significant government debt, according to Treasury projections, which concerns figures like Andy Burnham. The cooperative model, where companies become not-for-profit entities run by local people, removes this debt risk while still allowing for public oversight and accountability.

Supporters argue that this approach ends the 'era of extraction' in the water industry, as Labour MP Helena Dollimore stated. The model has backing from Surfers Against Sewage, several mayors, and the Co-operative party, signaling broad political and environmental support.

The Thames Water Test Case

The proposal suggests testing the cooperative model first with Thames Water, which is near financial collapse and in talks with the government over a rescue deal. If the deal fails, the company would enter a special administration regime (SAR), but a cooperative structure could offer a more sustainable solution.

Key Recommendations from the Report

The Good Growth Foundation report outlines stricter regulations for the entire sector, including enhanced monitoring, tighter restrictions on executive pay, and a ban on dividends unless performance targets are met. Companies that fail to comply would be 'put on notice' and face potential conversion to cooperatives.

Benefits of a Cooperative Water System

• Public control without increasing national debt
• Local accountability with community and worker representation
• Reinvestment of profits into infrastructure instead of shareholder dividends
• Environmental protection with tougher regulation and monitoring

This model aligns with the growing movement for public ownership and democratic governance of essential services. By placing water in the hands of not-for-profit cooperatives, the sector can prioritize long-term sustainability over short-term profits.

Challenges and Considerations

Transitioning to cooperatives requires careful planning to ensure financial stability and operational efficiency. There are concerns about the capacity of local boards to manage large-scale infrastructure, but with proper support and regulation, these can be addressed.

The proposal is part of a broader debate on how to reform public utilities, and it offers a pragmatic middle ground between full nationalization and the status quo. As the water crisis deepens, this cooperative model could become a viable solution for other failing industries as well.

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