The government has raised formal objections to a proposed £10 billion (€13 billion) rescue package for Thames Water, pushing the troubled utility closer to potential temporary nationalisation.
Environment Secretary Emma Reynolds wrote to Ofwat, warning that the deal put forward by the company’s lenders fails to offer sufficient protection for consumers or the environment.
Thames Water, which supplies around 16 million people across London and the South East, has been under intense scrutiny for years over sewage spills, leakage rates and financial instability. Concerns about its viability first surfaced three years ago, prompting ministers to prepare contingency plans should the firm fail.
The latest proposal from a consortium of major lenders, London & Valley Water, includes writing off £9.4 billion (€10.8 billion) of Thames Water’s nearly £20 billion (€23 billion) debt and injecting £3.35 billion (€3.87 billion) in new funding, supported by a further £6.55 billion (€7.58 billion) debt facility. In return, lenders have sought greater leniency over future pollution penalties. They argue that a market led solution would deliver better outcomes for customers and the environment.
Reynolds rejected that view, stating she would not allow customers to “pick up the bill for the company’s failures”. She added that the government “stands ready for all eventualities”, including taking the company into temporary public ownership if required.
Ofwat is currently assessing the proposal, with a decision expected this summer. Without an agreed rescue plan, Thames Water is projected to run out of cash within months.
The company maintains that a private sector solution remains the best route to long term stability, saying its focus is on maintaining safe, resilient services while working closely with regulators and government.
Government blocks Thames Water rescue plan amid fears of collapse
