Britain18 July, 20263 min read
Andy Burnham Weighs Special Administration For Thames Water Amid £20bn Debt Fears
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Thames Water carries about £20 billion of debt and faces cash crunch. Burnham weighs special administration and pushes for direct public ownership of Thames Water.
Thames Water under SAR
Lenders and ministers are bracing for a decision on Thames Water as incoming prime minister Andy Burnham weighs whether to use special measures or a special administration regime (SAR) to keep the UK’s biggest water company operating. The BBC said Thames Water is about £20bn in debt and that its lenders have warned they would pursue payment in full of outstanding debts in the event of full nationalisation, potentially leaving the government with a multi-billion-pound bill. In a Sky News interview on Sunday, Labour’s deputy leader Lucy Powell said: "Let's see" when asked if a Burnham government would nationalise Thames Water, adding that the government has powers to bring a distressed water company under special measures.
The London Evening Standard reported that Thames Water told households in W5, W7 and W13, including the Mountfield Road area in Ealing, west London, that "your water supply has been fully restored" after a repair to a damaged water main was completed. The Evening Standard also said Thames Water has around 16 million customers across London and the South East and is struggling under a £20 billion debt pile as it faces a potential SAR threat.
Creditors seek public control
The Guardian reported that London & Valley Water (L&VW), a consortium of 100 institutional investors holding £17bn of Thames Water’s £21bn debt, said it is open to government involvement while indicating it does not include public ownership. Mike McTighe, described by the Guardian as leading the governance overhaul and building the new board, said the consortium wanted to meet new ministers "as soon as possible" to discuss working together in the best interests of customers, including by enhancing public control of the company’s operations. The BBC said lenders have offered to write off £9.4bn of Thames Water’s near £20bn debt pile and put £3.35bn of cash into the company, but that the deal has previously been rejected by the government as being "weak" and bad for consumers and the environment.
In the same BBC report, a Department for Environment, Food and Rural Affairs spokesperson said Thames Water customers have been let down for far too long and that customers are left to pick up the bill. The BBC also noted that Emma Reynolds objected to the creditors’ approach, saying she did not want a scenario where Thames Water customers had to "pick up the bill for the company's failures".
Legal fight and taxpayer risk
The BBC said lenders are preparing a legal challenge if a Burnham-led government attempts to nationalise the UK’s biggest water company, with sources close to the creditors telling it they would pursue payment in full of outstanding debts. The BBC quoted a government line that it was "prepared for any eventuality" as Thames Water warned it has enough cash to last until the end of this year. The Independent reported that Thames Water warned it will run out of money by the end of 2026 if a deal is not found with its creditors and the government, and that an emergency SAR being considered would risk leaving the taxpayer liable for the £2bn the company estimates it needs to keep running until the end of 2027.
A Burnham ally told The Sunday Times that if the taxpayer is asked to fund the company, "that means control, so that we can fix the company and secure the water supply for thousands of families and businesses." The i Paper said Thames Water supplies 16 million customers from Gloucestershire to London, Kent and Essex and that an emergency SAR would be an unprecedented move for a water company that could leave the taxpayer with a £2 billion bill.