The government has “stepped up” preparations for the potential temporary nationalisation of Thames Water, the environment secretary has said.
Speaking in Parliament on Thursday, Steve Reed said the government “stand ready for all eventualities” – including placing the embattled water company under its control “if that were to become necessary”.
Earlier this month, Thames Water faced a major blow in its attempt to secure its future after US private equity giant KKR pulled out of a £4bn rescue deal for the company.
Leonie Dubois, from the water company, said it was “working hard to get the company on a much firmer financial footing”.
Answering a question from the Labour MP for Monmouthshire, Catherine Fookes, Reed said Thames Water “remains financially stable” and that the government had “stepped up” its preparations for potential nationalisation.
“The government will always act in the national interest on these issues,” he added.
Thames Water serves about a quarter of the UK’s population, mostly across parts of southern England and London, and employs 8,000 people.
But it has huge debts and is struggling to fix leaks, stop sewage spills, and modernise outdated infrastructure.
In May, the water company’s chief told MPs that its survival depended on the industry regulator Ofwat being lenient over fines and penalties for its environmental failings.
The BBC understands that KKR pulled out of its deal to invest in the firm in part due to the political and regulatory risk surrounding the firm.
But speaking on Thursday, Mr Reed said: “Thames Water must meet its statutory and regulatory obligations to its customers and to the environment – it is only right that the company is subject to the same consequences as any other water company.”
When asked about the firm being placed into government-supervised administration, Ms Dubois said: “We’re getting on with the business of serving customers with water and treating their sewage, so it’s business as usual for us.”
“We’re working hard to get the company on a much firmer financial footing and we’re just getting on with the day job,” she said.
In a statement, Thames Water added: “Our focus remains on a holistic and fundamental recapitalisation, delivering a market-led solution which includes targeting investment grade credit ratings.”
Regardless of who owns Thames Water, its water services will continue as normal.
Thames Water is effectively owned by its lenders and a consortium of them has prepared a plan to raise equity which sources say is ready to go and fully funded.
The Thames Water Creditor Group have submitted to Ofwat a £17bn plan for the recapitalisation of the water company.
A spokesperson for the creditors said: “Broad regulatory support is needed to unlock a market-led solution for Thames Water that will secure billions of pounds in fresh investment for its ageing network, allowing a world class leadership team to start the intensive turnaround and deliver better outcomes for customers and the environment.”
They added the group was “committed to working with the government and regulators to agree a pragmatic plan that recognises what Thames Water can realistically deliver”.
