The regime change we need for Thames Water

Terry Barker says nationalisation changes who owns the shares, it does not change the rules, while James Wallace says the powers to intervene already exist. Plus a letter from Philip Clayton

Andy Burnham’s instruction to officials to look at all options for Thames Water and not feel constrained (Burnham urges officials to come up with more radical options for Thames Water, 19 October) is welcome, but the options will fail unless they answer the right question.

Thames Water is not ill-regulated. It is extractively regulated. For 30 years the rules have allowed dividends paid from borrowing, debt loaded on to customers and sewage discharged into rivers as the cheaper alternative to investment. The creditors now asking for a further £2.4bn are not an aberration; they are the system working as designed.

Nationalisation changes who owns the shares. It does not change the rules. A publicly owned Thames under the present regime would inherit the same debt and the same incentive to defer repair; within a decade “public control” would mean ill-regulation by another name.

The Cunliffe review’s single water regulator closes one gap. It leaves the larger one: water is still regulated apart from the air, land and soil it moves through, though sewage in a river is a land, soil and water problem at once.

The prime minister’s 10-year plan needs a single environmental regulator, with a duty of candour, for air, water, land and soil, with three plain service duties: the service is delivered to standard, the money raised is spent on the service, and the charge is fair to the household that pays it. That, not ownership alone, is what a well-regulated industry looks like. Terry Barker Honorary professor of environmental sciences, University of East Anglia

Your report that Andy Burnham has instructed his team to explore radical solutions to the Thames Water crisis is welcome. But one solution already exists: the special administration regime (SAR), which could bring the company under temporary public control to stabilise and restructure it in the public interest.

The forthcoming clean water bill may revisit legislation enabling greater public ownership, but reform must not delay action under existing powers. The Water Industry Act 1991 provides for special administration where statutory conditions are met. Thames Water’s financial instability, service failures and environmental record provide compelling grounds.

We at River Action urge the government and Ofwat to petition the high court to place Thames Water into an SAR. A creditor deal will not address the causes of its decline. An SAR offers restructuring that prioritises customers, communities and the environment over creditors.

The government should also commission an independent feasibility study of alternative ownership, governance and financing models, including public, mutual and not-for-profit options.

No new legislation is needed: the powers and grounds to intervene in Thames Water already exist. Water is an essential public service. Its future must be secured in the public interest. James Wallace CEO, River Action

If Thames Water is effectively bankrupt, I can’t see why shareholders should get compensation. Broke is broke. Rather than old-style nationalisation, I would turn it into a social enterprise and put it under the control of its engineers.

There would be no shares, no dividends, and all profits would be reinvested in infrastructure, such as pipes and new reservoirs. Philip Clayton London