Water firms as not-for-profit cooperatives: MPs urge PM 2026

The debate over failing water companies has taken a new turn as MPs and mayors urge the Prime Minister to consider turning them into not-for-profit cooperatives, offering a “third way” between nationalisation and the status quo. This proposal aims to address the financial collapse of Thames Water while avoiding the debt burden of full state ownership.

Why the push for not-for-profit cooperatives?

Labour MPs and regional mayors, including those close to Andy Burnham, argue that mutualised water companies could provide public control without increasing government debt. Treasury projections show that nationalising water firms would add billions to public borrowing, a concern for fiscal conservatives within the party.

The model would transform water companies into not-for-profit entities run by local people, with any surplus reinvested into infrastructure rather than shareholder dividends. This approach is seen as a pragmatic solution to the crisis of sewage discharges and underinvestment.

The role of Thames Water as a test case

Thames Water, which is close to financial collapse, is the prime candidate for a pilot. The company is currently in talks with the government over a rescue deal that would waive fines and environmental obligations. If no deal is reached, it will enter a special administration regime (SAR), effectively temporary nationalisation.

Proponents believe that converting Thames Water into a cooperative could avoid the need for SAR while ensuring accountability. The report by the Good Growth Foundation, supported by Surfers Against Sewage and several mayors, outlines how this could work.

Key recommendations from the report

The report calls for stricter regulation across the entire water sector, with a “put on notice” approach. Companies would face enhanced monitoring, tighter restrictions on executive pay, and a ban on dividends unless performance targets are met. This would apply to all firms, not just those in crisis.

Supporters include MP Helena Dollimore, who said the era of “extraction” in the water industry must end. The mayors of West Yorkshire, South Yorkshire, and York and North Yorkshire have also backed the plan, along with the Co-operative Party.

Comparison: Nationalisation vs. Cooperatives

Key takeaways from the cooperative proposal

• Third way avoids nationalisation debt while enabling public oversight.
• Thames Water could serve as a pilot for the model.
• Stricter regulation would apply to all water companies.
• Local people would have a say in how their water is managed.
• Environmental obligations would be prioritised over shareholder profits.

FAQ

As the row over water nationalisation continues, the cooperative proposal offers a fresh path forward. It remains to be seen whether the Prime Minister will embrace this “third way” to fix the sector’s deep-rooted problems.