Burnham mulls insolvency law shake-up to help bring utilities under public control

The Guardian reports that Prime Minister Andy Burnham is considering changing the UK's insolvency laws to make it easier to take control of key utilities like Thames Water, which operates water and energy services. Burnham's administration is examining the possibility of amending the special administration regime (SAR) to facilitate the public takeover of these essential services.

This move could help deliver on Burnham's promise of a 10-year plan to bring utilities under public control, but it could also lead to legal challenges from Thames Water's creditors. The current SAR regime requires companies to be insolvent or unable to deliver basic services, which does not apply to Thames Water. Furthermore, the regulator overseeing the administration prioritizes maximizing returns to creditors, making it difficult for the government to take ownership without paying a significant cost.

Labour MPs and a thinktank have proposed amending the water bill to include new triggers for special administration, including lower financial thresholds and environmental metrics. They also suggest a "bail in" mechanism to force shareholders and creditors to absorb losses before taxpayers, with regulators overseeing the process instead of the courts.

However, this approach may still face legal challenges from the company's creditors, who have vowed to contest any changes to the special administration process.