The UK environment secretary has objected to a £10bn rescue proposal for Thames Water, arguing it would place an 'undue burden' on consumers, pushing the troubled utility closer to public ownership. Emma Reynolds wrote to Ofwat chair Iain Coucher on Monday, raising concerns that the plan would leave customers worse off.
Ofwat was close to a deal under which Thames Water would avoid new fines over sewage leaks for four years in exchange for a cash injection from creditors, who would take over the company. Reynolds said customers had been 'let down for far too long' with 15 years of underperformance and rising pollution.
Speaking in the House of Commons, Reynolds highlighted three concerns: unfair costs to customers, delays to infrastructure investments, and delays to environmental improvements. The Conservative shadow Victoria Atkins warned against scaring off investors.
Over 100 MPs, including 42 from Labour, signed an open letter calling for the deal to be rejected and for Thames to be placed under special administration—a form of temporary nationalisation. Andy Burnham, Labour's candidate in the Makerfield by-election, also backed nationalisation.
Thames Water serves 16 million people and carries £17.6bn of debt. The rescue consortium, London + Valley Water, includes Elliott Investment Management, Silver Point Capital, BlackRock and M&G. A consortium spokesperson said their plan would improve outcomes without government funding or taxpayer cost.
The GMB union welcomed the government's stance, with activist Cliff Roney saying temporary nationalisation is not enough and renationalisation is the only solution. Thames Water said it would continue working with all parties to reach an agreement supporting long-term financial stability.
