Environment Secretary Emma Reynolds has written to regulator Ofwat to block a £10bn rescue deal for Thames Water, pushing Britain’s biggest water company closer to temporary nationalisation. The proposed plan, backed by the company’s main group of lenders, London & Valley Water, would write down about half of Thames Water’s £20bn debt pile in exchange for leniency on future pollution fines. But Reynolds said on Tuesday she was concerned the offer “does not do enough to protect consumers or the environment”. Without a deal, Thames Water – which serves 16 million people across London and southern England – is set to run out of cash within months and could face financial collapse.
Thames Water has been struggling for three years under billions of pounds of debts while failing to fix leaks, stop sewage spills, or modernise outdated infrastructure. The lenders’ rescue plan would involve injecting billions in fresh investment, but the government has objected, raising the odds of the firm falling into a special administration regime (SAR), a form of temporary nationalisation where government-appointed managers keep the company running. Proponents of public ownership say it would give Thames Water a fresh start, allowing it to write off debts and find a new long-term owner. In April, an investor wanting to buy Thames Water said it would prefer temporary nationalisation because it would make the purchase easier.
“Environment Secretary Emma Reynolds blocks £10bn Thames Water rescue plan, raising chances of temporary nationalisation.”
Thames Water has pushed back strongly, favouring a “market-led solution”. Lenders previously said a SAR would not solve problems and would only “restart the process of fixing Thames Water”. If the company collapses, they stand to lose much of what they are owed. The government had previously favoured a commercial deal, but Reynolds said it “stands ready for all eventualities”.
No matter who owns or runs Thames Water, customers will see no impact on services – taps will still run and toilets still flush. However, Thames has warned that bills must rise sharply until 2030 to fix ageing infrastructure. London & Valley Water claims its rescue deal would hold bills at that level, not push them higher. A spokesperson said the proposal was “the fastest route to improve outcomes for customers and the environment”. But Reynolds insisted she does not want a scenario where Thames Water customers end up paying more for worse service.