Key facts
- UK Environment Secretary Angela Eagle stated the government is prepared to change laws to reform the water industry.
- Ministers are considering taking Thames Water into public ownership.
- Current insolvency laws are considered inadequate for dealing with the behavior of Thames Water's owners.
- A legislative vehicle is expected soon to facilitate potential reforms.
- Thames Water faces significant debt and has been fined for environmental and financial misconduct.
UK Environment Secretary Angela Eagle has indicated the government is prepared to change laws to reform the water industry, including potentially taking Thames Water into public ownership. Eagle stated that current insolvency laws are not equipped to handle the aggressive financial strategies employed by the hedge funds that own much of Thames Water.
Speaking in her first major interview since taking office, Eagle emphasized her determination to reform the sector, a priority also pushed by Andy Burnham. She suggested that a forthcoming water bill could provide the necessary legislative framework for these changes, noting that while Thames Water is not technically insolvent, its current operational and financial behavior is problematic.
The situation surrounding Thames Water is poised to be a significant test for the prime minister's agenda regarding public control of utilities. Eagle also commented on the broader issue of infrastructure development, expressing a desire to accelerate projects and streamline processes, contrasting the current situation with her experience in previous governments.
Thames Water is currently burdened by approximately £20 billion in debt and has faced substantial fines, including a record £122.7 million for sewage spills and improper shareholder payouts. Its owners, which include major hedge funds, are reportedly seeking a £10 billion deal to renegotiate the company's debt and avoid nationalization. Eagle's predecessor had previously opposed such a deal, citing concerns over taxpayer value.
While special administration is a potential route, Eagle noted that it requires a company to be technically insolvent, which Thames Water is not. However, legal experts suggest that the government has the power to revoke the company's license for failing to meet its statutory duties, even without a formal insolvency declaration.