Andy Burnham urged to nationalize Thames Water as crisis deepens

Andy Burnham has been told to rip up existing plans for fixing Thames Water and consider more radical options. The prime minister is facing calls for emergency legislation to protect the public water supply, with warnings that failure to act would undermine trust in his government.

Call for immediate state takeover

Tax accountant Richard Murphy, known as the architect of ‘Corbynomics’, insists that Burnham must introduce emergency legislation immediately. He argues that a new state-owned company is needed now, with a management team in waiting and steps ready to take over the existing company’s systems. Murphy points to the 1971 nationalisation of Rolls-Royce after its collapse as a blueprint, saying a similar national emergency exists today.

Thames Water is essentially financially insolvent, with real doubt over its survival into 2027, according to Murphy. He notes the company is failing its regulatory obligations, including clean water supplies and clean rivers and beaches. Murphy recommends that emergency legislation should nationalise the assets and undertakings of Thames Water, not the company itself, leaving all financial liabilities for the old company to settle. “There is no time to wait,” he said.

Legal and financial paths to public ownership

Ewan McGaughey, a professor of law at King’s College London, says Burnham must be prepared to go to court to take Thames Water back into public control. He argues that public ownership of failed water companies this year could cost close to zero, using the special administration procedure within the 1991 Water Industry Act. McGaughey estimates that privatisation would cost up to £22bn extra for bill payers from 2025 to 2030, or £176 a household a year, in returns on capital to shareholders and banks.

McGaughey highlights the failures of privatised water: England has among the highest bills in Europe, nearly every river is illegally polluted, taps run dry, and a trillion litres leak each year. Shareholders have taken over £85.2bn in dividends since privatisation in 1989, while billions of pounds in sewage treatment and pipe repair costs remain. He advises Burnham to prepare for legal challenges from creditors, but says there is no reasonable prospect of success for them.

Cat Hobbs of We Own It wants Thames Water’s licence taken away immediately. She has written to the government and Ofwat, calling for bill rises to be blocked and Thames Water brought into public hands. “It is absurd that Thames Water is now asking its creditors for a further £2.4bn to stay afloat,” she said. Hobbs says public ownership would deliver savings of £3bn to £5bn a year from cheaper financing costs, and notes that when Network Rail’s debt moved to the public sector, bond yields fell from 3% to 2.2%.