A cross-party group of MPs has ramped up pressure on Andy Burnham to seize control of the struggling utility giant Thames Water, demanding that ministers terminate negotiations with the consortium of US hedge funds currently managing the firm.
The firm, which is saddled with £20bn in debt, is effectively being steered by a group of 100 hedge funds and distressed-debt investors. In a scathing new report, the environment, food and rural affairs committee (Efra) has urged the government to consider emergency legislation to take control of the company’s financial affairs to prevent further instability.
Alistair Carmichael, chair of the Efra committee, condemned the current deadlock, labeling it “unbelievable” that the special administration regime (SAR)—the mechanism for managing failing water companies—cannot be triggered on performance grounds alone. Environment Secretary Angela Eagle has previously suggested that existing laws are insufficient to trigger an SAR, as the creditors have kept the company afloat while stalling for a deal to renegotiate liabilities.
The committee’s report calls for an immediate end to negotiations with the consortium, known as London & Valley Water. “Thames Water’s 16 million customers have largely lost faith in it,” Carmichael said. “They are sick of seeing their waterways polluted, their bills going up, and drinking water gush through broken pavements. We believe Thames Water can be turned around, but not by giving the keys back to the people who have been joy-riding in the family car.”
The MPs argue that the creditors, which include high-profile firms like Elliott Investment Management, are operating in an “opaque” manner. They allege that while these investors draw out negotiations to protect their own interests and reap millions in interest, they are simultaneously seeking relief from up to £1bn in environmental fines related to pollution and poor service.
“The government should reject offers from the company’s creditors in return for relief from fines,” the committee stated. “We do not believe this opaque consortium has the interests of the public, the company or the environment at heart.”
The intervention follows growing public unrest, including a 200,000-strong petition calling for a referendum on the potential renationalisation of the UK water industry. The Efra committee warned that insufficient due diligence was performed on the consortium and expressed deep concern that the investors’ strategies are focused on “extracting value through debt” rather than long-term infrastructure investment.
In response, a spokesperson for the London & Valley Water consortium insisted their proposal is the “fastest route” to recovery. They claimed their plan would write off billions in debt, provide £10bn in new capital, and ensure that no dividends are taken until the firm is stabilized, all without cost to the taxpayer.
A Defra spokesperson maintained that the government is considering all options to resolve the crisis, stating: “Thames has been failing the public for a long time, and this government has been clear that nothing’s off the table.”
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