Government reportedly preparing for collapse of Thames Water over UK’s biggest water company’s £14billion debt

There are growing fears for the future of Thames Water, the biggest water supplier in the UK, due to the company’s £14billion debt. According to Sky News, government ministers and Ofwat, the industry regulator, have started to hold discussions about the possibility of placing Thames Water into a special administration regime (SAR) that would effectively take the company into temporary public ownership.

This process was used by the government when the energy supplier Bulb collapsed in 2021, sparking concerns that it could cost taxpayers billions of pounds. The talks involve the Department for Environment, Food and Rural Affairs (DEFRA), Ofwat and the Treasury and remain at an early stage. It is understood they relate only to contingency plans which may not need to be activated.

Thames Water serves around 15million customers across London and the south-east of England. It has come under intense pressure in recent years because of its poor record on leaks, sewage contamination, executive pay and shareholder dividends.

On Tuesday (June 27), its chief executive Sarah Bentley, resigned with immediate effect, saying: "The foundations of the turnaround that we have laid position the company for future success to improve service for customers and environmental performance."

In March it was revealed that Thames Water was facing crunch talks over its finances and had hired an investment bank, and law firm to explore financing options for the company. The Daily Telegraph reports that Thames Water was still trying to raise £1bn from shareholders and that AlixPartners had been drafted in to advise on the company’s operational turnaround plans.

Thames Water employs about 7,000 people, and serves nearly a quarter of Britain’s population.