Burnham mulls insolvency law shake-up to help bring utilities under public control
Andy Burnham is examining changes to the UK's insolvency laws in an effort to make it easier to bring struggling utilities, including Thames Water, under public control. The prime minister has pledged to reshape how Britain's essential services are run over the next decade, but officials say the existing "special administration regime" could act as a roadblock, since it is designed to protect creditors' returns rather than facilitate public ownership.
Officials identify two key obstacles: companies can only enter administration if insolvent or unable to provide basic service, which is not currently the case for Thames Water given continued creditor support, and administrators are legally obliged to maximise returns to creditors, making a cheap public takeover difficult. Thames Water is carrying around £20bn of debt, with many of its creditors US-based hedge funds likely to mount an aggressive legal challenge to any change. One proposed fix, backed by Labour backbenchers including Helena Dollimore and Andrew Pakes alongside the Good Growth Foundation, is to amend the special administration regime through the forthcoming water bill.
- Burnham considers changing insolvency law to enable public ownership of utilities
- Thames Water, £20bn in debt, seen as key test case
- Creditors, mostly US hedge funds, expected to fight any legal changes
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Water companies provide essential services such as supplying drinking water and treating sewage. Thames Water serves millions of people in and around London and south-east England, but it has about £20bn in debt. Andy Burnham is the mayor of Greater Manchester; the government has also promised changes to how essential services are run.
A special administration regime is a legal process for dealing with a struggling provider while keeping its services running. Under current rules, it can be used only if a company is insolvent or cannot provide basic services, and administrators must seek the best return for creditors, the people and organisations owed money. Changes to that process could affect how and when a water company might come under public control, as well as the claims of its creditors.
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The strongest fair case each way — we don't pick a winner.
The case for
Supporters argue that essential services like water must be restructured to prioritise public interest and consumer welfare over financial returns to distant hedge fund investors. They contend that creditors have already extracted substantial value whilst Thames Water's £20bn debt has demonstrably failed to deliver reliable service to British households, and that adapting insolvency rules to enable public ownership when private structures have collapsed would align accountability with consumer protection—a justified intervention in a sector too critical to treat like ordinary commercial enterprises.
The case against
Opponents caution that retroactively changing insolvency law to deprioritise creditor returns undermines the rule of law and investor confidence that allows capital markets to function. They argue that creditors made investments in good faith under established legal frameworks, and breaking those commitments sets a dangerous precedent that will make future private investment in infrastructure costlier and less willing; there are better solutions through tighter regulation without rewriting property rights, and foundational principles of contract sanctity and legal stability matter more than this particular policy goal.