Andy Burnham will not announce a formal takeover of Thames Water this week after the utility company’s investors offered the government a deal to fend off nationalisation, The i Paper can reveal.
It had been widely reported that the new prime minister had been planning to put Britain’s biggest water company into a form of special administration as soon as this week after he pledged to take greater “public control” of Britain’s utilities.
It was even suggested that he would announce a radical overhaul of England’s water industry that would transfer ownership from shareholders to customers – an idea that is understood to have been of interest to Burnham.
However, The i Paper has learned that there are no plans to make the announcement this week, with a No 10 source “categorically” denying that there ever were.
Reports Thames could be taken into special measures this week
This is contrary to claims made earlier in the week by multiple Whitehall sources who suggested the plans had been delayed. One source said: “I think they are now umming and ahhing over what to do with Thames Water.”
It is understood that officials in the Department for Environment, Food and Rural Affairs (Defra) have signalled there are no imminent plans to place the water company in a special administration regime (SAR).
There had been reports the troubled water company would be placed into an SAR this week – a process that would allow Britain’s largest water company to continue operating under government supervision while its long-term future is decided.
But on Tuesday, Thames Water’s main investors offered the Government a “golden share” to avoid nationalisation, which would give ministers greater oversight and control. This would include giving ministers the power to veto major decisions such as mergers.
The London & Valley Water consortium – the creditor group that holds £17 billion of the company’s debt – said it recognised that Burnham wanted to see “water companies create greater local public control and involvement to strengthen accountability”.
The creditor group also suggested giving more control to local authorities, with “enhanced representation” for local and regional leaders.
‘The Government will act in the national interest’
Burnham pledged to take greater “public control” of the nation’s utilities with the “courage to fix the big things that politics has neglected” in his first set-piece speech as Labour leader on Friday.
But earlier this week the PM’s official spokesman appeared to soften the position on nationalisation following the offer by Thames Water creditors.
Asked whether the PM would push forward with nationalisation after the offer was made, his spokesperson said: “The company remains financially stable, but we’re prepared for all eventualities, including a special administration regime if that were to become necessary.
“But as we have consistently said, the Government will always act in the national interest.”
He added that Thames Water’s proposal will be considered carefully and refused to comment on “specifics of a commercial proposal whilst that process is underway”.
When pressed again whether that meant the PM was relaxed about leaving the troubled water company under private control, he added: “The Prime Minister is clear about the benefits of public control. What I’m saying is that the company remains financially stable.
“We’re prepared for all eventualities, including a special administration regime if that were to become necessary.”
The water company serves 16 million customers across London and parts of southern England but has faced severe criticism for accumulating a debt pile approaching £20 billion while allowing infrastructure to decay and discharging billions of litres of raw sewage into the River Thames.
A Government spokesperson said: “The Government will always act in the national interest on these issues.
“The company remains financially stable, but we stand ready for all eventualities, including applying for a Special Administration Regime if that were to become necessary.”
In offering the golden share scheme on Tuesday a spokesman for London & Valley Water said: “Thames Water is a company of national importance, and we look forward to working with the new Government to secure a long-term solution which delivers greater public control and the best outcome for customers.
“We continue to believe that the L&W plan is by far the fastest and most reliable route to solving Thames Water’s complex problems and improving outcomes for customers and the environment, and achieves this without any government funding or cost to taxpayers.”
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