Thames Water customers assured they ‘won’t be impacted’ amid fears of ‘collapse’ over £14bn debt

The government has insisted Thames Water customers will “not be impacted” by reports the firm may “collapse” due to its £14 billion debt pile.

The struggling utility giant is seeking to raise cash from investors while the government is said to be drawing up emergency contingency plans to temporarily bring the firm back into public hands under a so-called special administration regime (SAR),

Business Secretary Kemi Badenoch said she was “very concerned” about the disclosures but that efforts must be made to make sure the company “survives”.

Speaking to Sky News, Ms Badenoch said: “We need to make sure that Thames Water as an entity survives.

“At the moment, or certainly up until now, the regulator has been focused on keeping consumer bills down, but there’s a lot of infrastructure work that needs to take place and we need that entity to survive and continue going.”

Environment minister Rebecca Pow reassured Thames Water’s 15 million customers that their water supplies will be protected.

She told the Commons: “Overall the water companies are considered resilient, but there is a lot of work going on behind the scenes with Thames Water to ensure that customers will not be impacted. And there is a process in place if necessary to move us to the next stage.”

She added: “Customers should rest assured that their supplies will be protected, both water and waste water.”

A government spokesman said it prepares for a “range of scenarios” in regulated sectors such as the water industry.

Thames Water said it needs “further equity funding” on top of the £500 millions it raised just three months ago and is keeping industry regulator Ofwat “fully informed”.

The business said in a statement that it is “continuing to work constructively with its shareholders in relation to the further equity funding expected to be required to support Thames Water’s turnaround and investment plans”.

The emergency plans come after the CEO of Thames Water, Sarah Bentley, quit after promising to forgo her bonus due to mounting public outrage over the lack of action on sewage spills.

In May she promised she would give up her bonus for the 2022-23 financial year but she still managed to double her pay, raking in £1.5 million.

At the time Gary Carter, a national officer at the GMB union, said that Ms Bentley’s plan to give up the bonus was “nothing more than a flimsy PR stunt” and the UK water industry is “in a complete mess”.

The firm has come under pressure in recent years over its poor performance in tackling sewage leaks while handing out big pay packages to top bosses and shareholders.

Sewage campaigners have warned the next CEO must “clean up their act”and “all eyes” are now on the firm to put it right.

Ofwat confirmed it is in talks with Thames Water about developing a “robust and credible plan to turn the business around and transform its performance for customers and the environment”.

A spokesman for the regulator said: “We have been clear that Thames Water has significant issues to address – their environmental record and leakage performance, for example, are poor. Alongside the turnaround of their operational performance, they need to improve their financial resilience too.

“But that is all in the context of a company that has strong liquidity – it recently received an additional £500 million from shareholders and has £4.4 billion of cash and committed funding.”

The regulator said it will “continue to keep companies’ financial resilience under close scrutiny and work with companies to ensure they take action to ensure that they have the financial backing to deliver for customers and the environment.”