Andy Burnham shelves Thames Water control plans over costs
Andy Burnham has shelved plans to bring Thames Water under public control amid concerns it could land taxpayers with a multi-billion-pound bill, reports BritPanorama.
The Prime Minister had been evaluating a move to place the troubled utility into a special administration regime (SAR), allowing the government to assume partial control until a buyer was found. This decision comes as Thames Water continues to struggle with significant financial issues.
Burnham had positioned greater public oversight of utilities as a central aspect of his leadership agenda, with Thames Water, which services a vast region including London and surrounding counties, seen as a key opportunity to enact this promise. However, officials are now expressing reservations about the potential burden on taxpayers.
The Times reported that Thames Water’s current financial situation raises alarms, as government estimates indicated that the SAR could require over £2 billion from the public purse. Furthermore, analysis from advisory firm Teneo suggested that an 18-month SAR could escalate costs to £4.1 billion.
Ministers are now pausing any immediate actions due to concerns surrounding legal risks and financial implications, opting instead to seek a “viable option” for the company’s administration. This reassessment is expected to take several months, diminishing the likelihood of any government intervention in the near future.
A Whitehall source shared, “There is no quick or clean solution without an enormous price tag attached. It is very challenging and there are significant legal risks. It’s not off the table, but further work is being done on potential solutions before a decision can be taken.”
Meanwhile, on Monday, creditors vying for control of Thames Water presented their proposals for a boardroom overhaul. The London & Valley Water (L&VW) consortium, including major investors Apollo and Elliott, announced their intention to appoint former chief executives of Yorkshire Water and BT Openreach as non-executive directors.
In addition, Mike McTighe, a turnaround specialist, and Dame Bernadette Kelly, a former Permanent Secretary at the Department for Transport, would also join the board to assist in the turnaround efforts.
Thames Water is contending with nearly £20 billion in debt and recently warned investors of the possibility of running out of cash before year-end, further complicating the situation. Former Environment Secretary Emma Reynolds has already dismissed the L&VW’s turnaround proposal.
The complex dynamics surrounding Thames Water’s future illustrate the challenges that public utilities face in balancing financial viability and accountability. As decisions unfold, stakeholders remain watchful, highlighting a keen interest in both fiscal stewardship and public service amid a climate of uncertainty.
