Andy Burnham has shelved plans to bring Thames Water under public control amid concerns it could land taxpayers with a multi-billion-pound bill. The Prime Minister had been weighing up placing the beleaguered utility into a special administration regime (SAR), which would enable the Government to assume partial control of the firm until a purchaser was identified.
Government concerns over taxpayer burden
Burnham had positioned greater public oversight of utilities as a central pillar of his leadership agenda, with Thames Water, which covers a large area of London and the Thames Valley as well as Oxfordshire, Berkshire, Wiltshire and Gloucestershire, anticipated to be amongst his earliest opportunities to deliver on this commitment.
However, Government officials have expressed apprehension about the taxpayer burden of an SAR regime, The Times reported, with Thames Water estimating the move could require the Government to provide more than £2bn.
The administration costs could have escalated considerably further, with a 2024 analysis by advisory firm Teneo estimating an 18-month SAR for Thames Water at £4.1bn.
Alternative solutions being explored
Ministers have stepped back from any immediate action due to anxieties surrounding the financial implications and potential legal challenges, and are instead examining whether a "viable option" exists for placing the company into administration, according to The Times.
This assessment is anticipated to take several months, rendering it progressively less likely that Thames Water would be placed into any form of administration by the Government.
"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," a Whitehall source told The Times.
Creditors propose boardroom overhaul
On Monday, the creditors competing for control of the utility outlined their proposals for a boardroom overhaul.
The London & Valley Water (L&VW) consortium, which includes major investors Apollo and Elliott, announced it would install the former chief executives of Yorkshire Water and BT Openreach as non-executive directors of the firm, as reported by City AM.
They would be joined by Mike McTighe, a turnaround specialist and chair of Openreach who has been advising Thames Water, and Dame Bernadette Kelly, a former Permanent Secretary at the Department for Transport.
Thames Water's financial struggles
Thames Water has been grappling with a near-£20bn debt mountain and last month cautioned investors that it faced the prospect of running out of cash before the end of this year.
Former environment secretary Emma Reynolds has previously rejected L&VW's turnaround plan.
