Leader: Utilities are still fine public servants

Win or lose, Jeremy Corbyn has radically changed the political landscape this summer, reintroducing a left-wing narrative that has been missing from UK politics since New Labour rose to power in the 1990s. Whatever your colours, and whatever the result of the weekend’s leadership election, there’s no denying that the re-emergence of the hard left has profound implications for utilities (see Lobby, p10).

The most obvious area of debate will be around Corbyn’s personal desire to renationalise UK infrastructure, including energy companies (although he’s been uncharacteristically quiet on water). There are additional implications around the potential strengthening of union power that will be of interest to those running utilities.

Undoubtedly, a Corbyn victory would spook investors. But it’s not all bad: Corbyn’s new political narrative can be seen as an opportunity for the sector. Throughout 25 years of privatisation, regulated energy and water businesses have remained fiercely driven by the very public service ethos that Corbyn advocates. He would take issue with their financing model, but here too they have a strong story to tell. Take CKI, the Hong Kong-based family investor behind Northern Gas Networks, UK Power Networks and Northumbrian Water. NGN chief executive Mark Horsley praises them to the skies in this week’s interview (see p6), echoing claims from other utility leaders about CKI and other overseas investors, that we simply wouldn’t have the quality of public services we have today without them. For understandable reasons, such investors have hitherto preferred to stay in the shadows – but perhaps now is the time to tell their story.

It’s a slightly different conversation on the liberalised energy supply side of the market. As Nigel Hawkins explains (see p11), a full privatisation would be near-unaffordable – but a price control, say, would be relatively easily achievable. This is not a million miles away from the backstop tariff proposed by the CMA this summer, and while it’s a long way from a free market, it’s not necessarily a disaster for private investment, which elsewhere favours the certainty of a regulated return.

A leadership contest is a long way from an election and even if Corbyn wins this weekend, the prospects of a Red revolution in Number 10 are distant. But as the UK’s political debate changes colour and tone, utilities have nothing to be ashamed of, and nothing to fear from a public debate.