Prime Minister Andy Burnham has asked advisers to “rip up” current plans to fix Thames Water and suggest “more radical options”, according to a report in The Guardian yesterday evening.

 The article says:

“Burnham previously said he would nationalise Thames, which is running out of cash and recently asked its creditors for an additional £2.4bn, but is struggling to find a way to do so without spending billions of pounds, getting tied up in a lengthy court battle, or both.”

Quoting from sources “familiar with the prime minister’s thinking”, The Guardian says Burnham has now told policy officials across Whitehall “to contemplate options that were not previously considered feasible, even if that means spending taxpayer money and going to court.”

The article, which is published both online and in print today, also quotes the following comment from professor in law Ewan McGaughey at King’s College, London:

“The government’s best option is to start a special administration process for Thames Water before it runs up more debts, and sends billions more overseas.

“An orderly transition to public ownership does not require that banks in control are bailed out – on the contrary, the law says polluters should pay.”

Thames Water, London & Valley Water consortium (L&VW), Ofwat and other regulators have been engaged in constructive discussions

On Friday last week Thames Water announced that it had reached a recapitalisation agreement with Class B Creditors - but cautioned that there was "no certainty Class B Terms will ultimately be implemented".

Announcing the deal, the water company said Thames Water, the London & Valley Water consortium (L&VW), Ofwat and other regulators have been engaged in constructive discussions regarding the proposed recapitalisation of the heavily indebted utility.

However, the Class B agreement does not impose any obligation on the company or the Thames Water group to propose a Recapitalisation - whether on any terms proposed by L&VW or otherwise.

Currently, the terms of the Recapitalisation (other than the treatment of the Class B Creditors), continue to be discussed between the company and its relevant stakeholders.

Thames Water cautioned:

“As engagement remains ongoing, there is no certainty that the Recapitalisation will be finally agreed or, therefore, that the Class B Terms will ultimately be implemented.”

Discussions with the company's remaining financial stakeholders in relation to the terms of the Recapitalisation are also expected to continue.

Click here to read the Guardian article in full