Thames Water must be temporarily nationalised and its debt rescue plan blocked, MPs say

A selection of MPs from across the political spectrum are pushing for Thames Water's debt rescue plan to be blocked. 

A report by the Environment, Food and Rural Affairs Committee (EFRA) said Thames Water had reached the 'end of the road' and should be temporarily placed into state ownership, with talks over a £10billion takeover halted. 

A Thames Water spokesman insisted the business needed to be 'recapitalised and put on a firm financial footing'. 

Thames Water has been in the hands of its senior creditors, operating under the name London & Valley Water (L&VW) consortium since its former shareholders walked away in 2024. 

The former shareholders said Thames Water, which has debts of £20billion, was 'uninvestable'. 

Today EFRA said it did not believe what it called the 'opaque consortium' of more than 100 hedge funds and other lenders had the interests of consumers or the environment at heart. 

Thames Water should be temporarily nationalised, the Environment, Food and Rural Affairs Committee said

It said: 'We have serious concerns about the suitability of the London & Valley Water (L&VW) consortium as owners of a critical resource and about the conduct of the negotiation process.' 

EFRA said the government should consider placing Thames Water into special administration, a form of temporary nationalisation. 

The committee said the temporary nationalisation would be 'cost neutral' for the Treasury and protect Thames Water's 16million customers. 

EFRA's findings will pile pressure on Andy Burnham to work out what to do about Thames Water. The decision and outcome will be a key test of his premiership. 

The committee said: 'The Government should use all powers at its disposal to ensure that, in the long run, water company pensions and taxpayers' money are protected. 

'If emergency legislation is required for Thames Water, it should be limited in scope so this does not become a precedent for widescale government intervention.' 

Thames Water's creditors, who collectively own around £17billion of its debt, were previously warned by former environment secretary Emma Reynolds, that their plan did not go far enough to protect customers or the environment.

EFRA's report said Thames Water, alongside other 'poor-performing' water firms, was in a 'doom loop' of fines for poor performance leaving it with less money to invest in improvements.   

EFRA said a future supervisory water regulator must have the powers to intervene sooner when companies are beginning to demonstrate a lack of financial resilience or persistent performance problems that are not improving quickly enough.  

Alistair Carmichael, chairman of EFRA, said: 'We believe Thames Water can be turned around, but not by giving the keys back to the people who have been joy riding in the family car.

'The Government should reject offers from the company's creditors in return for relief from fines for pollution and poor service.' 

Consortium and Thames Water reject EFRA's comments 

Both L&VW and Thames Water defended the state of play. 

A spokesman for the London & Valley Water consortium said: 'Our enhanced proposal will address all feedback from Ofwat and Ministers and is the fastest route to fix Thames Water's complex problems.

'The plan will write off billions of pounds of debt to achieve an investment grade rating and provide £10billion of new capital from experienced investors to improve and upgrade Thames Water's infrastructure and clean up local rivers.

'All fines Thames Water faces will be paid, all profits will be reinvested, and no dividends will be taken until the company is turned around and returned to the public markets. 

'There will be no cost to the Government or taxpayers, and customers will be protected from the costs of Thames Water's restructuring.

'A new board with specialist expertise will oversee Thames Water's transformation and work tirelessly to drive the turnaround and rebuild trust. 

'We are committed to ensuring Thames Water provides the service that customers and local communities deserve.

'This group of investors has never been in control of the company and has never received a dividend from Thames Water. 

'They have stepped in to fund a significant revenue shortfall to ensure Thames Water's record capital investment program can continue without disruption.' 

A Thames Water spokesman added: 'Turning Thames Water around will take a decade and require significant and sustained investment in our infrastructure, but we are already making progress and this is a different business from the one it was two years ago.

'We are delivering the biggest upgrade of our infrastructure in 150 years and we are seeing the benefits of that investment in our operational performance. 

'Last year alone we invested £2.7billion, equivalent to more than £7million every day, and we will continue to ramp that up to £4billion by 2030. 

'At the same time, we continue to supply 2.6billion litres of the highest quality drinking water and remove and treat 4.3billion litres of wastewater every day for millions of customers.

'To sustain that turnaround, Thames Water needs to be recapitalised and put on a firm financial footing, including returning to an investment-grade credit rating, so we can continue investing for our customers and the environment over the long term.

'Anything that delays the recapitalisation risks slowing the turnaround, disrupting investment and increasing the cost of delivering the improvements our customers and the environment need.'

Thames Water customers face monthly bills 

Thousands of Thames Water customers are being switched to monthly billing – and must actively opt out if they do not wish to change the way they pay, Money Mail revealed this week. 

The majority of the water company's household customers, who live in London and the Thames Valley area, are billed every six months.

But Thames Water is rolling out a monthly billing scheme following a six-month pilot of 5,000 customers that ended in November last year.

The expanded scheme will run until this December and is expected to affect between 110,000 and 120,000 customers.

Have you had issues with your water bills? moneymail@dailymail.co.uk

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