From public to private to … mutual? Restructuring water supply governance in England and Wales

A little over a decade after privatization, the water supply industry in England and Wales is undergoing a period of restructuring; many water companies have withdrawn from equity markets, some have separated asset ownership from operation and maintenance, and others have made proposals to return water supply infrastructure to public control through ‘mutuals’ or ‘customer corporations’. This paper situates the restructuring of the water industry within broader debates over ‘associative self-governance’ taking place in Britain. Underpinned by a conceptual framework drawing on insights from regulation theory, in which governance models are enacted through regulatory practice, the interrelationship between restructuring and re-regulation of the water supply industry is analyzed. The paper argues that the failure of the post-privatization regulatory model to contain the contradictions between stable returns and the efficiency imperative, on the one hand, and politically acceptable rates of return and the equity imperative, on the other, led to a re-regulation of the water supply industry, which was a key factor in restructuring. Restructuring has entailed multiple strategies (diversification, internationalization, vertical de-integration, mutualization, securitization), which are briefly analyzed. In contrast to analyses which depict restructuring as a ‘retreat of the market’, the analysis presented in this paper emphasizes the continuity of the commercial governance model applied in the water supply industry in 1989. In interpreting restructuring as an industry response to re-regulation of services provision, the paper interrogates the incentive structure underpinning current proposals for a ‘mutual’ future for public services in Britain.