Burnham-aligned Labour faction sets out renationalisation plan

A Labour group close to Andy Burnham has published a detailed plan to reverse four decades of privatisation, taking failing utilities into public ownership and building state-owned competitors in energy, water, housing and transport.

The paper, titled The Productive State: A Framework for Manchesterism, was released by Mainstream, the Labour group that has acted as the organising vehicle for Burnham’s leadership ambitions.

Mainstream describes itself as the home for Labour’s “radical realists” and says the party must offer a popular and practical left politics to take on the populist right. The group is positioning the Productive State as the economic programme underpinning a prospective Burnham premiership.

It comes after Burnham was sworn in as the MP for Makerfield, days after winning the seat with 54.8% of the vote, and amid widespread expectation that he will seek to challenge for the role of Prime Minister.

The blueprint was written by Mathew Lawrence, Director of the think tank Common Wealth, and Alex Williams, the organisation’s principal US economist.

Lawrence, who has worked with Burnham on his thinking around public control of utilities, drafted the essay independently of the Greater Manchester mayor but inspired by his agenda.

Miatta Fahnbulleh, the former minister advising Burnham on policy, described it as an important contribution to the debate on rebuilding the economy.

The paper argues that the privatisation of essential services is a central and overlooked driver of Britain’s cost of living crisis, growth malaise and rising public spending.

It contends that transferring energy, water, housing, transport and care to private owners created an economy that extracts where it should invest and prices for profit where it should provide for use.

The document calls this a “privatisation premium” – a regressive cost it says is embedded in every bill and fare and redistributes income from households to financial investors.

At the centre of the proposal is what the authors call the Productive State: a “third pillar” of economic policy sitting alongside the market and the welfare state, in which the government directly owns and operates capital in essential sectors through arm’s-length public corporations.

The paper frames this as distinct from postwar nationalisation, with operationally independent corporations borrowing in their own name rather than industries run under direct ministerial control from the Treasury.

A sequenced route to public ownership

The blueprint sets out a sequenced route to public ownership rather than blanket nationalisation. It proposes taking failing utilities into public hands through the special administration regime, pointing to Thames Water’s financial position as the clearest near-term route, with debts restructured and equity diluted or extinguished.

For solvent utilities, it suggests a “bond-for-share” exchange in which shareholders swap equity for government bonds over time.

It also calls for GB Energy to be given a genuine trading mandate and balance sheet, and for a network of regional public housing corporations to build on public land at the postwar scale of council housing.

The paper draws repeatedly on Burnham’s record in Greater Manchester as a working model, citing the Bee Network of re-regulated buses, expanded council housing and the Good Growth Fund.

It describes the Greater Manchester programme as the practical proof of concept for the framework and argues the logic should be scaled nationally, with energy and water under national public corporations, housing and transport at city-region scale, and care through municipal providers.

The numbers behind the plan

The authors set out a series of figures to support the case. They claim privatised transport, energy and water companies have paid out close to £200 billion in dividends since the mid-1990s while delivering lower investment rates than their publicly owned predecessors.

They state that 28% of the typical water bill in England goes to debt servicing, against 10% for publicly owned Scottish Water, and that nearly a quarter of the typical electricity bill in 2024/25 was estimated to be corporate profit.

The paper also cites the average annual cost of residential care in England now exceeding £50,000.

Notably, the document is critical of the current Labour government’s approach, arguing that welfare transfers, tighter regulation and planning reform each address symptoms while leaving private ownership of essential sectors intact.

It says Labour’s programme is more serious than anything attempted in a generation but cannot resolve the structural drivers of the crisis because it operates within the constraints of the privatisation settlement.

On fiscal policy, the paper argues that Chancellor Rachel Reeves’ switch to targeting public sector net financial liabilities was an improvement but did not go far enough, and calls for a move to a public sector net worth framework that would count physical assets such as water networks and housing stock.

Burnham’s by-election victory has positioned him as the leading contender to replace Starmer, who has said he would stand in any leadership contest. Under Labour rules, a challenger requires the backing of a fifth of the party’s MPs in the House of Commons.

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