A policy paper released on Monday, titled 'The Productive State', outlines a plan to reverse decades of privatisation in the UK by taking control of failing utility companies through a 'bonds for shares' mechanism and establishing state-owned competitors. The blueprint, authored by Mathew Lawrence, a close ally of Andy Burnham, is being published by the Mainstream Labour group as Burnham prepares to be sworn in as MP for Makerfield and is widely expected to seek the Labour leadership.
Proposed Reversal of Privatisation
The essay criticises the long trend of privatisation, arguing it is at the heart of the UK's growth and productivity struggles due to loss of control over basics that make life more expensive. It introduces the concept of a 'privatisation premium'—a regressive hidden tax in everyday bills that transfers wealth from households to investors, forcing the government to subsidise inflated costs with welfare transfers.
According to the paper, 'For millions of households, the basic non-negotiable expenses of life – rent, energy bills, water charges, transport fares, the cost of care – now consume so large a share of their income that insecurity has become a permanent condition.'
Mechanisms for Public Control
The paper advocates for a framework of greater state intervention without blanket nationalisation, which would cost hundreds of billions. It proposes several methods: using a 'special administration regime' for financially distressed companies like Thames Water; a 'bond-for-share exchange' for healthy utilities, requiring legislation and likely legal challenges; and setting up commercial public corporations, which would need major borrowing.
Lawrence stated, 'The essay envisages a state that owns, invests and provides to make life affordable. A politics that takes back control of the foundations of a decent life: clean water, cheap energy, warm homes, reliable transport, built and run by institutions that answer to the public.'
Political Reactions
Miatta Fahnbulleh, a former minister advising Burnham, called the paper 'an important contribution to the debate on how we fix this, deliver the change that people are crying out for and start to rebuild our broken economy.' Labour peer Stewart Wood described it as a 'valuable contribution to rethinking a social-democratic case for a more active state.'
The Labour MP Yuan Yang, a member of the Tribune group, said, 'Change requires a diagnosis and a solution that matches the scale of our challenges, and a broad consensus is emerging within the Labour party on the need for bolder measures to tackle the cost of living crisis at its root.'
Long-Term Vision
The ultimate goal, according to the essay, is 'an economy … in which the essentials of life are treated as rights rather than revenue streams, and society builds the abundance, security, and stability it currently lacks.' Burnham's allies have previously discussed a 10-year project to bring large parts of Britain's water and energy sectors into public control, starting with Thames Water and potentially including National Grid.
