Good Law Project asks Ofwat to dispel ‘legal inaccuracies’ on SAR for Thames

(by Karma Loveday)

The Good Law Project (GLP) has called on Ofwat to "take appropriate steps to ensure that the public are not misled by legal inaccuracies with respect to the availability, purpose or mechanics of the special administration process for Thames”.

The legal campaigner said it was moved to write to the regulator in light of media reports which cite Defra ministers’ reasons for not putting Thames Water into special administration.

GLP said the first oft-cited reason is that Thames is neither technically insolvent nor unable to provide basic services. It then contended, in a letter to the regulator, that this is only true because Ofwat accepted undertakings made by the company in 2024 in lieu of enforcement action for Thames’ loss of an investment grade credit rating. It said Ofwat could now call time on these undertakings: “There’s no reason for Ofwat to keep waiting. The regulator has full authority, and a clear legal duty, to call time on this failing plan. This would make the company insolvent at the stroke of a pen.”

The second main reason ministers cite for not progressing special administration, GLP said, is that “government would have to pay a ‘significant price’ to take Thames Water into special administration, because of a so-called legal duty to maximise returns to the creditors”.

The campaigner challenged that this duty does not apply: “The Water Industry Act 1991 is clear. When a company goes into special administration, the overriding duty is to make sure that water and sewage services are properly delivered. Any bid – like the current proposal from Thames Water’s creditors – which can’t deliver services that are up to scratch is legally irrelevant, regardless of whether it is the best result for creditors.”

GLP urged Ofwat to “correct the government’s legal errors” on both counts.