The Environment Secretary has raised formal objections to a £10bn creditors’ rescue plan for Thames Water, bringing the prospect of temporary nationalisation sharply into focus.
Thames Water moved closer to a form of temporary nationalisation on Monday after Environment Secretary Emma Reynolds formally objected to a £10bn rescue package proposed by the struggling utility’s creditors, warning the plan placed an undue burden on consumers and the environment.
Reynolds wrote to industry regulator Ofwat to express concerns that the proposal from creditor group London & Valley Water “doesn’t do enough to protect consumers and the environment.” Ofwat, which is expected to make a decision this summer, said its board had not yet reached a conclusion on the plan. Without a rescue agreement, Thames Water, which serves approximately 16 million customers and carries a debt pile of around £19bn to £20bn, could run out of cash within months.
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The form of temporary nationalisation under consideration is a Special Administration Regime (SAR), a legal mechanism designed to keep essential utilities running under government-appointed managers. Thames Water has been fighting to avoid this outcome. In May 2025, Ofwat fined the company £123m for systemic failures in managing wastewater assets; a month later, private equity firm KKR withdrew from separate investment talks, forcing creditors to take the lead in rescue negotiations. Thames Water reiterated on Monday that it believed “a market-led solution is the best way to support” long-term financial stability.
The government’s move has been welcomed by campaigners. A coalition of 107 MPs, including 42 Labour members, signed an open letter calling on Ofwat and Reynolds to reject the creditors’ proposal and bring the company into special administration. “By taking Thames Water into Special Administration, we can slash the debts and give billpayers and the environment a fair deal,” said Sophie Conquest of campaign group We Own It.
Ofwat’s decision is expected this summer. The regulator said it would consider Reynolds’s views on the current proposal carefully, and assess whether it delivers the operational turnaround and financial resilience the company needs. If no agreement is reached, temporary nationalisation becomes increasingly difficult to avoid, which would return Britain’s largest water supplier to some form of public control for the first time since privatisation in 1989.