A close ally of Andy Burnham has published a policy paper calling for a long-term programme of state intervention in Britain's utility sectors, framing public ownership not as ideological ambition but as a practical answer to the cost of living crisis.

Mathew Lawrence, director of the thinktank Common Wealth, is the author of the paper, titled The Productive State. It has been published under the banner of Mainstream, the Labour grouping associated with Burnham's leadership campaign, and released on the day Burnham was sworn in as MP for Makerfield. He is widely expected to mount a bid to succeed Keir Starmer as prime minister within weeks.

The paper's central contention is that four decades of privatisation have created what it terms a "privatisation premium": a transfer of wealth from ordinary households to investors that has made energy, water, housing and transport unaffordable for millions of people. It goes on to say that by taking away public authority over the necessities of daily life, the same dynamic has stifled economic development and productivity. "For millions of households, the basic non-negotiable expenses of life now consume so large a share of their income that insecurity has become a permanent condition," the paper writes.

Lawrence sets out three mechanisms through which the state could gradually reassert control. Where a company has already entered financial distress, as Thames Water has, the government could intervene through a special administration regime without needing to acquire shares at market value. For financially stable utilities, the paper proposes a bond-for-share exchange, in which the state issues government bonds in return for equity rather than paying cash upfront. The third route is the creation of new publicly owned commercial corporations to operate alongside existing private providers. Lawrence acknowledges that the bond-for-share approach would require new legislation and would face legal challenge, while building state competitors would demand substantial borrowing.

The paper is careful to distinguish its proposals from wholesale nationalisation. Burnham has consistently used the phrase "public control" rather than state ownership, a distinction that has done little to calm concern in financial markets, where his positioning on utilities has been closely watched. The essay argues that rebuilding public provision is not in conflict with fiscal discipline, describing it as "fiscal prudence" rather than an alternative to it.

Several well-known Labour figures have endorsed the pamphlet. Miatta Fahnbulleh, a former minister who has been advising Burnham on policy, described it as an important contribution to the debate on fixing the economy. Stewart Wood, the Labour peer who served as an economic adviser to Ed Miliband, said it offered a valuable rethinking of the social-democratic case for a more active state. Labour MP Yuan Yang, a member of the Tribune group and a contributor to Burnham's policy thinking, said a broad consensus was forming within the party around the need for more decisive action on the cost of living.

The timing is deliberate. Burnham's arrival in Westminster marks the formal start of what his allies expect to be a short but intense contest for the Labour leadership. The Productive State is positioned as an intellectual framework for that campaign, providing policy substance to arguments Burnham has been making for some time about returning the essentials of life to some form of public accountability. His allies have previously spoken of a ten-year programme of reform, starting with the water sector and potentially extending to energy transmission companies including National Grid.

Whether the proposals prove durable beyond a leadership contest will depend partly on how Labour's parliamentary party responds. For now, the paper signals that if Burnham reaches Downing Street, a significant shift in the relationship between the British state and its privatised infrastructure would be among his first priorities.