Andy Burnham, Britain’s new prime minister, began his leadership with a full-throttled rebuke of the past 40 years of British policymaking. Rejecting the sweep of privatization introduced by Margaret Thatcher, Mr. Burnham said he would bring in a new political and economic model.
A central pillar of that approach will be more government control over utilities and services that were handed over to private companies starting in the late 1980s, like water and energy.
Mr. Burnham was ushered into office extraordinarily quickly. A little over a month ago, he was the mayor of Greater Manchester in the northwest of England, without a seat in Parliament. Now he is vowing to remake Britain, and little is known about the details of his economic agenda.
One result has been the start of a vivid debate about privatization — whether it went too far and how best to fix its failings. Mr. Burnham calls for more “public control” of services, not necessarily government ownership. But the vagueness of the term has left a lot open to interpretation and speculation. It has come to encompass everything from a socialist turn into widespread nationalization to tighter regulation of utilities.
Mr. Burnham said that later this year he would release a 10-year plan to increase public control and reduce the cost of essential services like water, housing, energy and transportation.
Mr. Burnham should create the “feeling that the state is back and it’s on our side,” said Danny Sriskandarajah, the chief executive of the New Economics Foundation, a progressive British research group. “That’s what’s been missing.”
Arguments about ownership frame the debate.
As prime minister in the 1980s, Ms. Thatcher fundamentally reshaped the British economy. Her 11-year tenure increased private homeownership, greatly enhanced the financial services industry and diminished manufacturing. Her government also privatized huge segments of the economy, including energy, telecommunications, airports and water.
The resulting companies were floated on the stock market. The idea was to bring about mass public ownership through these shares, but many companies ended up in private hands and most were delisted from stock exchanges.
The forceful opening of the British economy led to wealth creation and prosperity. It also wrought regional inequality through deindustrialization in the north and accelerated the shift to an economy more dependent on financial and business services, which were clustered in London and the southeast.
“In the 1980s, Britain took some wrong turns,” Mr. Burnham said on July 20, standing in front of No. 10 Downing Street, just moments after he became prime minister. “Political power was centralized, economic power privatized, large parts of the country deindustrialized, and they still haven’t recovered.”
But is ownership really what makes the difference in how well a utility or service, like trains, is run? Economists and policy strategists aren’t decided either way.
Mathew Lawrence, the founder of Common Wealth, a British think tank, who has presented his ideas to Mr. Burnham’s team, is in favor of some public ownership.
“Public ownership and public provision are not panaceas, they are tools,” he said, and shouldn’t been seen as “magic wands that fix everything.”
But previous periods of nationalization, such as after World War II, had notable successes, including the building of more public housing and the transformation of the energy system from an inefficient patchwork of thousands of companies into a few centralized and regional systems.
Ownership is important because it enables profits to be returned to the government, Mr. Lawrence added, and then a choice can be made about how to spend them in the public interest.
Others are less convinced. Diane Coyle, a professor of public policy at the University of Cambridge, said that how services were regulated and the sectors were organized to create competition mattered more than if they were run by private firms or public agencies.
There’s a strong argument, she said, for a system where state-owned companies compete with private enterprises. That way, public ownership can lead to diversity in business models, more competition and more informed oversight.
“People obsess too much about ownership,” said Ms. Coyle, who has influenced policymaking in Manchester and at the national level. “It isn’t the ownership, it’s the structure of the market that makes a difference in the kind of outcomes for consumers and citizens.”
Some government takeover is already happening.
More nationalization is already underway in Britain. On several occasions it has been an act of last resort.
Under the previous prime minister, Keir Starmer, the government had started to bring the railway system under full public ownership and was pulling more than a dozen train operators into one public company, Great British Railways. Several operators were already nationalized by the previous Conservative government for financial or operational failings.
One of Mr. Starmer’s last acts as prime minister was to complete the nationalization of British Steel, which operates the country’s last blast furnaces for making steel. It seized control of the company last year after its Chinese owner, Jingye, appeared to be trying to shut down operations.
Water companies could be next. In the late 1980s, Britain went further than almost anywhere else in the world when it privatized the water authorities of England and Wales, selling off assets such as pipes, land and reservoirs. After decades of private ownership, much of the county is fed up with rising bills, pollution and chronic underinvestment that followed a period when billions of pounds were paid out in dividends. A few years ago, every major water and wastewater company was under investigation for dispensing sewage in rivers and other waterways.
The poster child of the failure is Thames Water, the country’s largest water company. Weighed down by enormous debts, it has been on the brink of financial collapse for years and faces the possibility it will be temporarily nationalized. It currently has only enough cash to last until the end of the year. Last month, the government rejected a rescue plan by Thames Water creditors, which include the large American funds Apollo Global Management and Elliott Management. Mr. Burnham will need to decide what to do about Thames Water.
For some, it could be a test case for the rest of the industry. GMB Union, one of Britain’s largest labor organizations, has called on Mr. Burnham to “take decisive action and nationalize Thames Water.”
Public ownership is about politics, not just economics.
It’s one thing for the government to prop up operators of essential utilities offering substandard services or in financial distress. It’s another entirely to bring companies and services into public ownership on the argument that it’s a superior model.
For some services, the public has taken a side. More than 80 percent of Britons believe water companies should be run in the public sector, and 70 percent say the same for energy, according to recent polling.
Still, widespread nationalization of services is unlikely.
Mr. Burnham said he wanted to be a “business-friendly” leader. His method of public control is likely to be influenced by changes he made to the bus system in Manchester, where a franchise model allows a local authority to set the routes, fares and other conditions, while private companies bid on contracts to operate the service. And so, in his 10-year plan, private companies are expected to play an important role.
“The state has withdrawn too far on the basic essentials,” said Mr. Sriskandarajah of the New Economics Foundation. “But its re-entry doesn’t need to be 20th-century socialism.”
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