Exclusive: Common Wealth report argues debt, pollution and underinvestment justify process known as special administration
Ministers could bring water companies into public ownership for minimal cost through a process designed to safeguard vital public services when the companies running them are failing, a thinktank report has argued.
According to the report by Common Wealth, ministers could use a process known as special administration to take over a company like Thames Water and, rather than transfer it to another private company, keep it under permanent public ownership.
Writing for the thinktank, Ewan McGaughey, professor of law at King’s College London, said that while a figure of £99bn was commonly cited as the cost of taking over the industry in England, this was based on an estimate from a thinktank paid for by water companies.
According to McGaughey, the estimates use a metric known as regulatory capital value, designed by the industry regulator Ofwat for calculating maximum dividends. This takes the assumed value of companies in 1990 and adds on capital investment per year and inflation but, the report said, takes no account of real market values.
