Incoming prime minister plans intervention for Thames Water
Incoming prime minister Andy Burnham is reportedly planning to put Thames Water into a special form of administration as he pledged to take greater “public control” of Britain’s utilities, reports BritPanorama.
Britain’s largest water firm is struggling under a £20 billion debt burden, risking nationalisation as it faces the prospect of being placed into a special administration regime (SAR) to ensure essential services continue while a buyer is sought.
Thames Water has signalled that it could run out of funds by the end of 2026 unless negotiations with creditors and the government yield an agreement.
The Sunday Times reported that an emergency SAR is under consideration, a move which may place a £2 billion burden on taxpayers, covering operational costs until the end of 2027.
Thames Water’s chief executive, Chris Weston, warned: “If they put us into a SAR, the government would have to fund us for the period of time that we were in the SAR.”
An ally of Mr Burnham expressed that if taxpayer money is required, the public should gain control over the company to rectify its issues and secure water supply for communities and businesses.
No precedent exists for a water company being subjected to an SAR, although energy supplier Bulb underwent a similar process in 2021 prior to its acquisition by Octopus Energy, which involved repaying £3 billion to the government for the funds received during its rescue.
Mr Weston has sought urgent clarification from Mr Burnham about his plans for the water sector, emphasizing that without a financial agreement, the utility could face immediate cash shortages.
Mr Burnham, expected to assume the role of prime minister on Monday, has indicated his intention to propose a 10-year strategy aimed at renationalising the water industry, prioritising the public interest and raising questions over the fate of Britain’s largest water supplier.
Previously, he acknowledged the complexities and costs of full immediate renationalisation, advocating instead for a staggered approach to reform.
In statements made in June, Mr Burnham criticized the current water industry, stating, “It’s not an industry that’s run in the public interest, and you know these are industries run with the private vested interest, but the public have no choice but to use them.”
He emphasized the need for significant reform aimed at enhancing public control and ownership, particularly identifying Thames Water as a strong candidate for such measures.
Discussions among creditors are ongoing as they aim to secure a deal for Thames Water after Environment Secretary Emma Reynolds previously remarked that the £10 billion plan proposed by creditors fell short of adequately safeguarding customers and environmental standards.
Reportedly, Ofwat was near to accepting a proposal from a consortium that sought to inject £10 billion into Thames Water in exchange for a four-year waiver on new sewage-related fines.
Mr Weston stated the need for government clarity, asserting, “The big unknown is what the new prime minister wants to do when he comes in. We’ve had no conversations with him and it would be better to know what he’s thinking.”
Thames Water, which serves around 16 million customers in London and the South East, reported a pre-tax profit of £226.4 million for the year ending March 31, a recovery from the previous year’s £1.65 billion loss. However, overall debt rose to £19.77 billion, from £17.73 billion, reflecting ongoing capital investment needs.
A Thames Water spokesperson reiterated their commitment to collaborating with all stakeholders to achieve a stable financial footing while advancing essential infrastructure improvements for their customer base.
Mr Burnham’s office has not provided additional comments at this time.
