Andy Burnham ‘to put Thames Water into special administration regime’
New prime minister Andy Burnham is reportedly planning to put Thames Water under private management, vowing to take more “public control” over Britain’s utilities.
Saddled by a £20bn pile of debt and on the brink of nationalisation, Britain’s biggest water company is in danger of being subjected to a special administration regime (SAR) that will allow essential services to continue until a buyer is found.
Thames Water has warned it will run out of money by the end of 2026 if a deal is not reached with creditors and the government.
The Sunday Times reported that an emergency SAR plan was being considered, which risks leaving the taxpayer liable for £2bn, which it estimates the company will need to continue operating until the end of 2027.
Chris Weston, chief executive of Thames Water, told the paper: “If they put us in the SAR, the government will have to fund us for the time we are in the SAR.”
Meanwhile, Mr Burnham, an ally of the new prime minister, said: “If it is going to cost the taxpayer £2bn to keep the company afloat then the taxpayer needs to get something in return, which means control, so we can fix the company and secure the water supply for thousands of families and businesses.”
There is currently no precedent for a water company to be included in a SAR. However, energy supplier Bulb was subject to similar measures in 2021 before its assets were sold to Octopus Energy. forced to pay back £3bn to the government as part of a commitment to return taxpayer funds to rescue the firm.
Mr Weston demanded urgent clarity from future prime minister Mr Burnham on his plans for the sector, revealing the ailing public service could run out of cash within months unless a funding deal is struck.
Mr Burnham, who is expected to be appointed prime minister on Monday, has signaled he wants to introduce a 10-year plan to renationalise the water industry and has cast a question mark over plans for Britain’s biggest water supplier, saying reform is needed to put the public interest first.
Last month, he announced that he would not advocate immediate and full renationalization due to its complexity and expense, but instead proposed a gradual implementation.
Speaking to reporters at Makerfield in June, Mr Burnham said he believed the water “industry was broken”.
He said: “This is not an industry run for the public good and you know these are industries run by private interests, as I said, but the public has no choice but to use them and so they are trapped and it is not fair at all.
“So we need serious reform, and it’s about a 10-year plan with more public control and more public ownership.
“I don’t think everything should be nationalized immediately because it’s complicated and probably expensive, but you look at different situations in different parts of the country.
“I would say there is a very strong case for Thames Water to solve the problems of public ownership.
“But you know there may be a different timeline for changes elsewhere…in other parts of the country. You have to do it in a way that is financially manageable, but you have to get us to a water industry that prioritizes the public interest rather than private interest.”
Creditors have already been sent back to the drawing board and are scrambling to secure a rescue deal for the water supplier after Environment Secretary Emma Reynolds warned last month that she did not believe £10 billion plans for Thames Water did not go far enough to protect customers or the environment.
Ofwat is reportedly close to accepting a proposal from the London & Valley Water consortium to inject £10bn into the debt-laden company in exchange for a four-year exemption from new fines for sewer leaks.
Mr Weston said the group was in talks with creditors about extending funding to 2027 to give more time for a deal, but the government needed clarity and “the sooner the better”.
He said: “The biggest unknown is what the new prime minister wants to do when he takes office. We have not had any discussions with him and it would be better to know what he thinks.”
The UK’s largest water supplier, which serves 16 million customers in London and the South East, reported pre-tax profits of £226.4 million for the year to March 31; This is a marked improvement on last year’s loss of £1.65bn.
However, results for the full year showed debts rose from £17.73bn to £19.77bn as the group continued to withdraw funds for capital investment.
A Thames Water spokesman said: “We continue to work with all parties to reach an agreement that supports Thames Water’s long-term financial stability and ensures the uninterrupted delivery of our biggest infrastructure upgrade in 150 years, as we continue to meet the needs of our 16 million customers.”
Mr. Burnham’s office declined to comment further.
