UK Government Objects to Thames Water Lenders’ £10bn Rescue Plan, Citing Consumer and Environmental Concerns

Environment Secretary Emma Reynolds wrote to Ofwat on Monday to raise concerns over a £10bn rescue package for Thames Water proposed by the firm's lenders. A government spokesman told the BBC that the current offer "does not do enough to protect consumers or the environment". The Times first reported that ministers intervened over fears the deal would place an "undue burden" on customers.

Thames Water serves about 16 million customers, mostly across London and parts of southern England. Without a rescue deal, the company is set to run out of cash within months and could collapse. Thames Water has £4bn of its near £20bn debt pile and a £5bn debt facility as part of a £10bn business plan running until 2030.

Ofwat has been reviewing the rescue proposal and a decision is expected this summer. Reynolds is due to address Parliament on Tuesday. The government has previously said it would prefer "a market-based solution", but would step in "if that were to become necessary".

The form of temporary nationalisation on the table is known as a special administration regime, which keeps vital services running under government-appointed managers. Thames Water received a £7m fine, the largest ever issued by the water industry regulator, for breaching rules on sewage spills and shareholder payouts. Fears the company could collapse first emerged three years ago.

A Thames Water spokesperson said a special administration regime "would delay urgently needed improvements, increase costs, transfer risk and potentially create operational disruption". London & Valley Water previously warned that "nationalisation is not the right answer".

In July last year, Thames Water boss Chris Weston said the company was "extremely stressed" and that it would take "at least a decade to turn around".