Thames Water is an early test for Andy Burnham’s public control agenda

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Thames Water’s creditors are preparing to offer the government a “golden share” in a bid to prevent Andy Burnham from nationalising the ailing utility.

So what? Thames Water has emerged as an early test of Burnham’s pledge to “put life’s essentials back under stronger public control” and to right what he has called the “wrong turns” of the 1980s. The UK’s biggest water provider

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  has been on the brink of bankruptcy for years;

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  is labouring under a mountain of debt; and

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  has consistently missed environmental targets.

Backstory. When companies in England and Wales were privatised in 1989, they had zero debt. One of the aims, Margaret Thatcher said at the time, was to mobilise billions of pounds worth of private sector investment to improve environmental standards.

What happened? With its local monopolies, the sector became a cash cow for overseas investors. Its debt surpassed £80bn last year, key infrastructure has been allowed to crumble and the amount of sewage pouring into rivers has become a national scandal. 

Thames Water is a microcosm. Between 2006 and 2017 the utility was owned by Macquarie, an Australian investment firm that loaded it with debt and came to be known as the “vampire kangaroo.” Evidence submitted to parliament’s environmental audit committee in 2024 said debt “was taken out not to fund capital investment but to fund generous dividend payments” and that more loans were then taken on to pay the interest, creating a vicious cycle.

The result. Thames Water is the worst-performing utility when it comes to sewage spills. In 2024 it was reported that the company had failed to complete 108 upgrades to its sewage treatment plants promised in 2018. That year the amount of raw effluent Thames Water discharged into rivers rose by 50%, and it was responsible for 33 out of 75 serious pollution incidents.

Thames Water by the numbers.

£20bn – current debt pile

298,081 – hours of raw sewage discharged in 2024

£122.7m – record fine issued by Ofwat in 2025

40% – the amount bills increased in 2025

Shareholder payouts are only part of the problem. Another is the high rates of interest charged by Thames Water’s creditors. In February it received a £3bn loan to save it from insolvency at 9.75% interest – more than double the average rate on a high street mortgage. This loan came with £800m in fees, and the lenders were able to sell the debt on, with one lender immediately making a 17% profit, according to an analysis by the New Statesman.

Negotiations. Creditors now effectively own Thames Water after its shareholders walked away in 2024, declaring the utility “uninvestable.” Earlier this year they proposed a takeover that would have forgiven half of the utility’s debts, while injecting £3.35bn of equity and providing £3.25bn of credit, in return for leniency on sewage spills. It was rejected by the environment secretary. Their latest offer could give the government a veto over other shareholders.

Time is of the essence. Last week Thames Water warned it will run out of money in November if it does not receive a fresh injection of cash. In this scenario, the company would fall into a special administration regime, a form of temporary public ownership that will ensure the taps of its 16m customers do not run dry while a new buyer is found.

A golden share may not be enough to persuade Burnham. While campaigning in Makerfield, he said public ownership “is what should be done” with Thames Water.

This would be expensive. Temporary public control would cost £2bn if it takes until the end of 2027 to find a new buyer, although the government would be paid back in the event of a sale. Meanwhile Thames Water’s creditors are preparing legal action if Burnham opts for full nationalisation, a move that could leave taxpayers to foot the bill for its debt.

The cost of nationalising the entire sector is roughly £100bn, according to The Department for Environment, Food and Rural Affairs.

What’s more… Yesterday Thames Water announced a hosepipe ban affecting 10m customers due to low rainfall.

Photograph by William Barton/Alamy