A river charity is taking legal action against the environment secretary, Steve Reed, accusing him of an unlawful failure to publish his policy on taking failing water companies into temporary nationalisation.
Lawyers for River Action argue that Thames Water has breached its duties and violated its licence conditions seriously and repeatedly, making it the clearest possible case for special administration.
Special administration is a temporary insolvency and restructuring process for companies that provide essential public services such as water, energy and transport. It is designed to ensure continuity of service while the company is stabilised and restructured.
There is a bespoke special administration regime (SAR) for the water industry, which was created in 1991 and is designed to prioritise customers and services while putting financial interests second.
Reed has said that the government is stepping up preparations to take Thames Water into special administration, indicating he will reject pleas from the company’s creditors for leniency from fines and penalties.
Thames Water’s largest creditors control the utility and have made efforts to cut some of its debts and have offered to provide £5.3bn in new funding to try to turn it around.
But River Action’s head of legal, Emma Dearnaley, said the time to use the SAR process was now. “Enough is enough,” she said. “Why hasn’t the secretary of state used special administration to fix the water sector, starting with Thames Water?
“The government has the power but won’t use it, or even explain when it might trigger this process. Apparently, the government has no policy at all. That’s a fundamental failure of transparency and accountability, and it’s unlawful.”
River Action has lodged an application for a judicial review against the secretary of state.
The claim argues that the government has failed to publish its policy on when it would use the SAR process, breaching core public law duties, and that ministers have failed to develop a policy at all, breaching obligations under habitats regulations and other planning and environmental laws.
Under section 24 of the Water Industry Act 1991, special administration can be triggered by a water company’s failure to meet performance standards, including environmental pollution, and a breach of its statutory or licence duties in ways that are “serious enough to make it inappropriate for the company to continue to hold its licence”.
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River Action argues that Thames Water clearly meets that threshold and has done so for years. Serious pollution incidents by Thames and other water companies were up 60% last year compared with the year before, data has revealed.
There were 75 serious pollution incidents in 2024, up from 47 in 2023, Environment Agency figures show. Three companies were responsible for 61, or 81%, of the incidents: : Thames Water with 33, Southern Water, 15, and Yorkshire Water, 13. Thames Water’s serious incidents more than doubled.
A spokesperson for the government said: “We are unable to comment on an ongoing legal challenge.”
Thames Water was approached for comment.
