Andy Burnham is facing renewed pressure to bring Thames Water under public control after a cross-party group of MPs called on ministers to walk away from negotiations with the US hedge funds now effectively running the stricken utility. In a new report, the House of Commons Environment, Food and Rural Affairs Committee (Efra) said the government should consider emergency legislation to take charge of the company's finances and stabilise it, rather than continuing talks with the consortium of roughly 100 hedge funds and distressed-debt investors that control Thames Water's ÂŁ20bn debt pile.
Committee Says Talks With Creditors Should End
Efra chair Alistair Carmichael said it was extraordinary that the special administration regime (SAR) — the legal mechanism used to place a failing water company into temporary public control — could not be triggered for Thames Water on the basis of its performance alone. Environment secretary Angela Eagle has previously suggested that current law makes an SAR difficult to invoke because the hedge funds that bought up Thames Water's debt have kept the business running while negotiating a restructuring of its liabilities, rather than allowing it to fall into insolvency.
The committee argued that Ofwat and the government should step back from negotiating with the consortium altogether, saying the investors lack the expertise needed to turn around an essential public service while continuing to collect interest on the company's debt. Carmichael was blunt about the toll the crisis has taken on public confidence, saying Thames Water's "16 million customers have largely lost faith in it," and pointed to years of sewage discharges, rising bills and burst pipes as evidence the company cannot simply be handed back to the same investors.
The Case for Special Administration
MPs said ministers should explore every alternative, including formally placing Thames Water into special administration or introducing fresh legislation to draw a line under the saga and put the company on a stable footing ahead of a future sale. Carmichael suggested that any liabilities the government took on in the short term could ultimately be offset once a new buyer for Thames Water was found.
The report also raised concerns about how little scrutiny was applied to the US-led consortium, London & Valley Water, before it took control of Thames Water's debt. The group's leading members include Elliott Investment Management — co-run by Paul Singer, a major Donald Trump donor known in financial circles as one of the most aggressive investors in the world — alongside Silver Point Capital, BlackRock and M&G. MPs said the consortium's approach appeared to rely on extracting value from debt rather than delivering the swift turnaround Thames Water needs.
Creditors Defend Their Rescue Plan
A spokesperson for London & Valley Water rejected the committee's characterisation, insisting the group has never controlled Thames Water or taken a dividend from it, and that its members stepped in only to cover a serious shortfall in revenue so the company's investment programme could continue. The consortium said its proposal would wipe out billions of pounds of debt, bring in ÂŁ10bn of fresh capital, and install a new board with specialist expertise, while ensuring no dividends are paid and customers are shielded from the cost of the restructuring.
The committee's intervention follows a Commons debate triggered by a petition, backed by more than 200,000 signatures and organised by the campaign group Windrush Against Sewage Pollution, calling for a referendum on returning the privatised water industry to public ownership. Sixty-four MPs took part in that debate earlier this year, reflecting the scale of political frustration with Thames Water's long-running problems.
With Thames Water's cash reserves expected to come under renewed strain, ministers now face a decision that could shape the future of England's water industry well beyond one company. Burnham has previously indicated he would like to see the sector brought under a longer-term public-interest model, though the government has also cautioned that a full nationalisation of the water industry would be costly and complex to unwind. For now, the Efra committee's report piles further pressure on ministers to choose between backing the hedge funds' rescue plan or taking the more disruptive route of special administration.
