Labour is being dragged to court to force it to nationalise Thames Water

River Action has begun a legal challenge against environmental secretary Steve Reed. Lawyers for the charity argue that Thames Water has met the conditions for Special Administration for years now and that Reed has failed in his legal obligation to publish his policy on the matter. Pressing ahead with the Special Administration Regime (SAR) would bring Thames Water into temporary nationalisation. But that could be extended to long-term publish ownership.

Thames Water: huge failure

There are glaring reasons why River Action is making the case for SAR. Thames Water is already around £19bn in debt. When it was privatised, the utility was debt free. Capital funds who took private ownership of the company racked up the debt to pay out huge shareholder dividends.

The environment is another key issue. The water company has overseen a huge rise in serious pollution incidents, on top of a 50% increase in raw sewage discharge in 2024 to 300,000 hours of spills.

River Action is also pointing to investors apparently losing confidence in Thames Water. Big capital has even asked the government to place Thames Water above the law in order to make it a more attractive prospect. That’s how great a case charities like River Action have over the privatisation failure.

Also in May 2025, Thames Water received the largest ever fine from regulator Ofwat (which the government is abolishing) for breaching sewage dumping rules and issuing illegal dividends. The fine was £123m.

It’s difficult to argue against nationalisation of water: a basic utility every person and business in the country needs every day. Especially when Ewan McGaughey, professor of law at King’s College London, has informed Keir Starmer that bringing the water industry into public ownership would actually cost nothing. McGaughey then went further, suggesting the government should introduce a legal provision for water companies to compensate us for the environmental and financial issues they’ve caused. That’s instead of us paying them a penny.

“Unlawful”

River Action’s head of legal, Emma Dearnaley, told the Guardian it’s time for SAR:

Enough is enough. 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.

Thames Water paid £2.3 million in bonuses to executives in April alone. 27 Labour MPs representing constituencies that must use Thames Water (as it’s a natural monopoly for such areas) have demanded that the company retrieve the bonuses and invest the money in infrastructure to stop the record sewage spillages.

Indeed, the government should remove all profiteering from the water industry and use that money to invest in the wastewater system. Meanwhile, River Action’s legal challenge will pile pressure on Reed.

Featured image via the Canary