13 Nov 2026
We Own It director, Cat Hobbs, wrote to the government on the 16th of October, demanding they bring Thames Water into Special Administration.
On the 4th of November, the Department for the Environment responded to deny they currenly have the powers to bring Thames Water into Special Administration.
Today, Cat Hobbs has written back to the government to outline the inaccuracies on which their response was based. She explains how and why Thames Water must be taken into Special Administration now. Read the letter below.
Dear Prime Minister Andy Burnham, Chancellor John Healey, Environment Secretary Angela Eagle and Chris Walters, Interim Chief Executive at Ofwat,
Thank you for your reply to my recent open letter about water bill hikes and Thames Water.
You have said that the question of whether or not a deal with Thames Water is approved is “ultimately a matter for Ofwat to decide whether to consult on the Consortium's proposal.” This is not true, given that the previous Secretary of State Emma Reynolds clearly stepped in to say no to the previous proposal from the creditors, to defend the interests of households and the environment.
The Secretary of State, Angela Eagle, has the power to apply to the courts for special administration, which Thames Water has more than met the threshold for. The Minister also has the power to block any deal that Ofwat puts out to a consultation.
Subsection 7 of Section 12A of the Water Industry Act 1991 states: ‘If, within the time specified under subsection (3)(d), the Secretary of State directs the Authority not to make a modification, the Authority must comply with the direction.’
You have said that “There is a high bar for the use of a Special Administration Regime”, saying that Thames Water is currently “stable”. This is an astonishing claim and cannot be the case given that the shareholders (the official Ultimate Controllers of the company) have written down their shares and walked away. The creditors, not the shareholders, are negotiating with the government and Ofwat to recover their debt, and they have recently agreed yet another bailout with an extortionate interest rate. At the end of October the global ratings agency S&P downgraded the company deeper into junk territory.
The risks of enabling Thames Water to limp on at the expense of households instead of bringing the company into special administration are huge:
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If the latest deal on the table from the creditors is agreed, this would set a precedent for water companies to flout the rules or be able to offer, effectively, bribes to flout the rules, across the industry
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This is likely to lead to all privatised English water companies lobbying for similar dispensations
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Effectively means there is no standard - water companies can buy their way out of fines - there is no meaningful enforcement of a framework against sewage under this government
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The knock on effect of this is environmental devastation for our already long-suffering rivers and seas and there is an economic impact too (on seaside towns, reputation, tourism, health not to mention rising bills)
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Perhaps more immediately relevant to the government is that it will make a mockery of the promise to halve sewage pollution by 2030 made originally under Starmer’s government
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It will also make a mockery of any new water legislation billed as fixing the industry, any attempts by mayors to deliver “public control” and of course the bold and important claim to be tackling Thatcher’s privatisation
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It’s important to be clear that the scenario that follows here isn’t the status quo or business as usual. It is the privatised water industry calling the shots in a way that has never before been allowed, dictating the standards and simply informing government and the public about what they deem to be “realistic” while continuing to profit at our expense and ignoring any notion of what might be reasonable
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This scenario is so directly counter to your promises to tackle 40 years of neoliberalism and ideological privatisation that it raises another very direct political risk to your government which is that cynicism amongst the public will go through the roof
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The reputational risk of this is impossible to overstate. Burnham’s claims to be different, to be standing up for ordinary people rather than elite interests (a message that resonates on the left and the right amongst the public), to have anything of substance to offer in terms of public services will be trashed
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The damage is likely to be irreversible, paving the way for failure at the next general election
In terms of the feasibility of taking Thames Water into special administration, I reiterate that:
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Thames Water shareholders who have already written down their shares are still investing elsewhere in the economy
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Blair’s government stood up to Railtrack shareholders when that company went bust and they were paid just a quarter of what they wanted
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When Network Rail’s debt of £31 billion was transferred to the public sector (expected to rise to £50 billion - the equivalent of £72 billion today) bond yields actually fell from 3% a year to 2.2% a year.(1)
Thames Water shareholders have extracted billions since privatisation rather than investing - money for dividends, debt repayments and infrastructure improvements came from household bills.(2) If the government brings Thames Water into special administration, its debt pile will be drastically reduced through this process. Under public ownership, as now, this debt will be paid for by household bills, but the cut to the debt as well as the savings over time (from reduced borrowing costs and removing shareholder dividends) will lighten the burden on households.
The specific context around Thames Water is recognised by a range of experts and policy voices who may disagree on the ultimate end goal for the water industry:
1. Economics professor Dieter Helm is clear on the affordability of bringing Thames Water into public hands:
“In the muddle of government accounting, it is nevertheless likely that the government could even make a net profit through nationalisation of Thames Water, since the bills should exceed the costs of the business activities over time and gilts are cheaper than commercial loans.” (3)
2. Law professor Ewan McGaughey also outlines the affordability of Thames Water:
“Shareholders should be paid nothing. Most have already written off their investments. Secured creditors should also be paid close to £0, because markets have already priced the debt as junk, and the repair costs for Thames Water’s broken sewage and pipe networks to 2029 alone are over £23 billion, exceeding the £20 billion debts. The company has systematically breached its primary statutory duties to keep sewage treatment and pipes in good repair, and shareholders and creditors have profited from this pollution. Creditors might well sue — likely led by the American fund, Elliott Management, which is well known for its litigious business strategy. However, creditors are very likely to lose in court because in law they are due only “appropriate value”, not “market value” for their claims.” (4)
3. A recent paper written by Public First which was paid for by Water UK, the industry body:
“It is worth saying here that the particular circumstances of Thames Water – effectively a distressed asset where debt holders may take a loss – is not relevant to the wider sector…
Government could, in principle, produce an upfront compensation figure below enterprise value. That is clearest where a company is already financially distressed: a special administration or consensual restructuring can crystallise losses that private investors and creditors already face. Thames Water is the obvious example.” (5)
I urge you to reflect on the specific risks to the status quo of the water industry and the risks for this government’s political prospects created by not bringing Thames Water into special administration.
Thank you for your time and I look forward to hearing from you.
Cat Hobbs, Director
We Own It
Notes:
1) Professor David Hall evidence for EFRA Select Committee, information about bond markets at https://bondvigilantes.com/blog/2014/12/duration-duration-duration-review-bond-market-returns-2014/
2)’Ownership without investment’, Greenwich University, 2024 https://gala.gre.ac.uk/id/eprint/47165/3/47165%20HALL_Ownership_Without_Investment_In_English_Water-net_Capital_Extraction_2024.pdf
3) Dieter Helm blog, 12th August 2026 https://dieterhelm.co.uk/publications/nationalising-water-the-thames-numbers-dont-add-up/
4) ‘Crystal Clear: The Solutions for Clean, Running Water’, Professor Ewan McGaughey, September 2026 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7481359
5) ‘Public control, private costs?’, Public First, September 2026 https://pf.global/reports/public_control_private_costs.pdf
