Andy Burnham is set to push Thames Water into special administration, an unprecedented move for a water company that could leave taxpayers with a £2 billion bill. Thames Water, which supplies 16 million customers across Gloucestershire, London, Kent, and Essex, has warned it will run out of cash by the end of 2025 unless a deal is reached among its creditors, regulator Ofwat, and the government.
Special Administration Regime Considered
The incoming Prime Minister faces a decision on how to handle the struggling utility. A special administration regime (SAR) would allow essential services to continue while a buyer is sought. In his first speech as Labour leader on Friday, Burnham pledged greater “public control” of utilities, stating that managing the cost of essentials is necessary for “inflation, public spending and the rest of the economy.”
Putting Thames Water into administration suggests Burnham’s team believes no private-sector solution is viable, with the utility’s creditors owed £17 billion. The emergency SAR risks leaving taxpayers with a bill for the £2 billion Thames Water says it needs to operate until the end of 2026.
CEO and Government Reactions
Chris Weston, Thames Water’s chief executive, told The Sunday Times: “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.” A Burnham ally added: “If it is going to cost the taxpayer £2 billion to keep the company afloat then the taxpayer needs to receive something in return - that means control, so that we can fix the company and secure the water supply for thousands of families and businesses.”
Labour deputy leader Lucy Powell told Times Radio that Burnham wanted to tackle “the privatisation model” for utilities. She said: “Andy’s been really clear that that model is something that he wants to look at and take on, so that these things work in the interests of ordinary consumers and bill payers. The government already has powers to step in if necessary and has powers for special measures, as it’s called.”
Creditors’ Proposal and Company Response
Thames Water does not believe a SAR is necessary, as it has not breached its license with Ofwat and has enough cash for the short term. The utility’s creditors proposed a deal injecting £3.35 billion of fresh equity alongside £6.25 billion of new borrowing while writing off £9.6 billion of existing debt. This plan faced criticism because creditors also sought leniency on future penalties for sewage spills. The company has set aside £555.2 million for potential environmental, legal, and regulatory provisions.
A Thames Water spokesperson 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 while continuing to meet the needs of our 16 million customers.”
