Andy Burnham is reportedly weighing up a major shake-up of England’s insolvency laws as part of a broader push to bring struggling utilities like Thames Water under public ownership.
Sources close to the Prime Minister say he is looking at a range of options to clear the path toward reshaping how the country’s water and energy companies are run. At the centre of those discussions are existing rules around special administration, which insiders say could act as a serious ‘roadblock’ to any meaningful reform.
Special administration is the legal process used when a company providing essential public services collapses or faces financial crisis. Under current rules, the process is designed to keep services running while a solution is found, but critics argue it makes it far too difficult for the government to step in and take direct control without running into legal and financial complications.
Thames Water has been at the heart of the debate for months. The company, which supplies water to around 16 million people across London and the South East, has been drowning in debt and facing intense scrutiny over sewage dumping, leaks, and years of underinvestment. Its financial situation has become so precarious that the prospect of it entering special administration has been openly discussed by regulators and politicians alike.
Burnham has made no secret of his ambitions to fundamentally change how Britain’s essential services are run. Since taking office, he has repeatedly pointed to the water industry as a prime example of privatisation gone wrong, with shareholders extracting dividends while infrastructure crumbles and rivers fill with sewage.
But turning that political ambition into reality has proven complicated. The legal framework surrounding utilities is dense, and any move toward renationalisation, even partial or temporary, risks triggering legal challenges from investors and creditors who stand to lose out.
That is why the insolvency law angle is being taken seriously. By changing the rules around how special administration works, the government could potentially make it easier and cheaper to bring a failing utility into public hands, rather than handing it back to private investors or selling it off to another company.
It is a bold move, and not without risk. Altering insolvency law is a significant step that could have knock-on effects across other industries and could spook investors in the wider infrastructure sector. Critics are likely to argue it sets a dangerous precedent, effectively changing the rules of the game after private companies have already committed capital.
Supporters, however, will point out that the current system simply is not working. Thames Water is just the most visible example of a broader pattern across the water sector, where companies have loaded themselves with debt, paid out billions in dividends, and left the public picking up the tab for environmental damage and crumbling pipes.
Burnham’s team has not confirmed the specific details of what is being considered, but the fact that insolvency reform is on the table signals just how seriously Downing Street is taking the challenge of delivering on its public ownership promises.
Any changes to the law would need to pass through Parliament and would almost certainly face fierce opposition from business groups and Conservative MPs, who would frame it as an attack on investor confidence in Britain.
For now, the discussions remain at an exploratory stage. But with Thames Water’s financial situation showing no signs of stabilising, the pressure on Burnham to act, and to act boldly, is only going to grow.