Mayors and other local leaders could be given powers to oversee water firms

Key allies of PM issue warning as details emerge of his plan to give mayors powers to oversee water companies

Key allies of Andy Burnham have warned the prime minister not to back down over his promises to put water companies under public control, after details emerged about the prime minister’s plan to give mayors more oversight of the industry.

Mat Lawrence and Mark McVitie, who helped provide an intellectual underpinning to Burnham’s project over the summer, have both warned that merely giving politicians oversight of key utilities rather than financial control will fall short of what the prime minister promised.

Their comments come after it emerged the prime minister is considering creating a set of regional bodies to hold water companies in England and Wales to greater account, including by questioning bosses on bills and sewage spills. Lawrence and McVitie warned this would not be enough to deliver Burnham’s promise of bringing “the essentials of life” under public control.

Lawrence, the director of the Common Wealth thinktank said: “Putting mayors in charge of water services is a successful model the world over. But the critical question is will public oversight without ownership provide meaningful control over privatised companies or not.

“Can they ban dividend payments, stop financial extraction, reduce the cost of capital that determines overall cost, or choose to take the service back into public hands to run for the public benefit? If the answer is no, devolving oversight risks handing over responsibility without the power to fix the problem.”

McVitie, the former director of the Labour Growth Group, added: “Local leaders having real power over water investment would be a positive step. But public control has to mean more than public scrutiny.

“The question is whether the public interest can actually be enforced in the face of the interests of monopoly operators.