Thames Water investors say temporary nationalisation would slow its recovery | Thames Water
Investors in Thames Water have told the Labor government that temporarily nationalizing the struggling company would slow its turnaround, following Andy Burnham’s calls for key utilities to be brought under public control.
As Keir Starmer’s grip on power weakens, the mayor of Greater Manchester suggested at the weekend that renationalising water and energy would be part of his policy agenda if he becomes prime minister.
Thames Water will be broke by November unless new investment is made, but says it is on the verge of signing a creditor-led rescue deal with water regulator Ofwat. It will require six weeks of consultation over the summer and around a month to consider responses before moving forward.
Without a deal, the company could be placed in a “special management regime” where a government-appointed administrator would take over; This process is considered a type of temporary expropriation.
The London & Valley Water consortium, a group of Thames Water creditors involved in the rescue deal, said such an approach would make it harder to repair the struggling company.
“Thames Water urgently needs £10bn to stabilize the company, fund significant improvements for customers, clean up local rivers and achieve full compliance as quickly as possible,” the group said in a statement.
“Creating further delays with private management is not the right answer when there is a highly reliable market solution ready to be implemented. This will only restart the process of fixing Thames Water after two years of hard work, increasing uncertainty for employees, destabilizing the supply chain, delaying returns and making it harder to deliver the improvements customers deserve.”
The consortium told the Sunday Times, which first reported its concerns, that its plan was “the quickest and most reliable way to solve Thames Water’s complex problems, without any government funding or cost to taxpayers”.
Under Starmer’s leadership, the government, including Chancellor Rachel Reeves, have expressed support for an industry solution to Thames Water’s problems.
However, some potential rivals for the Labor Party leadership, including Burnham, have expressed support for the nationalization of water companies after years of industrial problems.
A “completely different path” was needed to address decades of deindustrialisation and privatization in Britain, he told Channel 4 News on Saturday. “What is that path? Bring more things under stronger public control: energy, housing, water, transportation,” he said.
Investors’ concerns about Burnham’s attempt to return to parliament and challenge Starmer in the by-election led to a sharp fall in the share prices of listed water companies on Friday. Severn Trent and Pennon, which owns South West Water, lost more than 8% and United Utilities lost more than 6%.
The Thames has been trying to stave off financial collapse for more than two years after accumulating debt of £17.6bn in the decades since it was privatised. Bosses tried to sell the company last year but faced embarrassment when their preferred bidder KKR pulled out of the deal at the last minute.
Ofwat is reportedly ready to accept what are known as “commitments” from the company; This will lead to the company committing to fixing the issues causing the original problem rather than paying fines to the government.
But there are pressures on the potential deal, which was first submitted to the regulator in June 2025.
