The Liberal Democrats have called for Thames Water to be placed immediately into special administration as part of a wider plan to convert failing water companies into customer-owned mutuals.
The party says companies brought into the proposed model would be professionally managed, jointly owned by their customers and required to reinvest any financial surplus in the water network rather than distribute profits as dividends.
The proposals form part of a policy motion due to be debated at the Liberal Democrat autumn conference on Tuesday, 22 September. They are party policy proposals and have not been adopted by the Government.
Immediate action sought over Thames Water
As a first step, the Liberal Democrats are demanding that the Government place Thames Water into the Special Administration Regime, commonly known as SAR, and use that process to begin moving the company towards mutual ownership.
Special administration is a statutory mechanism intended to ensure that essential water and sewerage services continue when a company can no longer operate normally. Placing Thames Water into the regime would require Government action and legal procedures; the company has not entered special administration as a result of the Liberal Democrat announcement.
The party argues that the financial and environmental problems surrounding Thames Water provide an opportunity to replace the existing ownership structure with a company run for the benefit of customers.
Customer-owned mutual model proposed
Under the plan, failing companies could become mutually owned public-benefit corporations. Customers would hold a stake collectively, while professional managers would remain responsible for day-to-day operations.
Surpluses would be directed back into infrastructure and services instead of being paid to shareholders. The Liberal Democrats say this would remove the pressure to generate private profit without transferring historic company debts directly to taxpayers.
The conference motion also proposes an additional environmental trigger allowing special administration where a water company has demonstrated chronic or particularly serious environmental failure.
Detailed legislation would be needed to establish how customers would exercise ownership rights, how boards would be appointed and how existing debts and investors would be treated during a conversion.
Party targets regulator-industry revolving door
The Liberal Democrats have also published Freedom of Information findings which they say demonstrate a revolving door between water regulators and the businesses they oversee.
According to the party, 29 former Ofwat employees moved into water companies, industry organisations or water-sector consultancies during the five years covered by its request. It said a further 12 former Environment Agency employees moved to regulated water and sewerage companies over the past decade.
The employment figures come from Freedom of Information responses. The conclusion that they demonstrate regulatory failure is the Liberal Democrats' political interpretation of that information.
The party wants Ofwat abolished and replaced by a new Clean Water Authority. Its wider package includes stronger rules governing moves between regulators and the industry, a national social tariff for customers who struggle to afford their bills and live publication of the volume of sewage discharged into waterways.
PFAS restrictions also proposed
The conference motion calls for a four-nations agreement to restrict PFAS, a group of persistent substances commonly described as “forever chemicals”, and for the creation of a fund to support remediation.
It also seeks an environmental improvement objective for the proposed new water regulator and clearer Government rules setting out when ministers would apply to the High Court to place a failing company into special administration.
Farron calls for profits to be removed
Liberal Democrat environment spokesman Tim Farron said the public was tired of paying high bills while pollution continued and argued that mutual ownership would allow money to be reinvested in the system.
He accused successive Governments of failing to repair the regulatory framework and described the Thames Water situation as a chance to demonstrate an alternative ownership model.
The party has previously called for Thames Water to enter special administration. The latest announcement places that demand within a broader policy for customer ownership across failing water companies.
Proposals face conference vote
The policy motion is scheduled for debate and a vote at the Liberal Democrat conference on 22 September. Approval would establish the package as party policy but would not change the ownership of Thames Water or any other utility.
Implementing the proposals nationally would require Government support, legislation and decisions about the treatment of company debts, shareholders, creditors and existing regulatory responsibilities.
Sources
- Liberal Democrats: Take the profit out of water and end the regulator-industry revolving door — 21 September 2026
- Liberal Democrats: Autumn Conference 2026 agenda and policy motion F36
- Liberal Democrats: Earlier call for Thames Water special administration and mutualisation — 16 June 2026
- Hansard: House of Commons debate on Thames Water — 16 June 2026