Burnham shelves Thames Water administration plans over costs
Andy Burnham has paused plans to take public control of Thames Water over fears that it could saddle the taxpayer with a bill running into the billions of pounds.
The Prime Minister had been considering putting the struggling utility into a special administration regime (SAR), which would allow the government to take partial control of the company until a buyer was found.
Burnham had made greater public control of utilities one of the cornerstones of his pitch for power, and Thames Water was expected to be one of his first opportunities to do this.
But government officials have raised concerns about the cost to taxpayers of a SAR regime, The Times reported, which Thames Water has said could force the government to shell out more than £2bn.
The cost of administration could have spiralled even further, with a 2024 report by advisory firm Teneo putting a £4.1bn price tag on an 18-month SAR for Thames Water.
Ministers have backed down from any immediate move over fears around the costs and potential legal challenges to the plans and are instead exploring whether there is a “viable option” for putting the company into administration, The Times reported.
Thames Water faces £20bn debt pile
This work is expected to take several months, making it increasingly unlikely that Thames Water would be put into any kind 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.
On Monday, the creditors vying for control of the utility set out their plans for a shake up of its board.
The London & Valley Water (L&VW) consortium, which includes heavyweight investors Apollo and Elliott, said it would appoint the former bosses of Yorkshire Water and BT Openreach as non-executive directors of the company.
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 has been battling with a near-£20bn debt pile and last month warned investors that it would run out of cash by the end of this year.
Former environment secretary Emma Reynolds has previously snubbed L&VW’s turnaround plan.