Thames Water bidders 'want firm to be immune from prosecution over environmental crimes'

8 June 2025, 08:26

Potential buyers attempting to take over Thames Water have called on the troubled utility and its management be granted immunity from prosecution for environmental crimes as a condition of acquiring it, it has been revealed.

Creditors allegedly want Environment Secretary Steve Reed to shield the water company from a series of strict penalties for everything from sewage spills to failure to upgrade its treatment works.

It would leave the Environment Agency (EA) watchdog effectively unable to stop the UK's biggest water firm from committing some of the most serious environmental crimes.

Sources told The Guardian the creditors’ list of demands were akin to a “ransom note” that branded their negotiating position as the “last show in town”.

The company has previously been fined a record £122.7 million by Ofwat after it was found to have broken rules over sewage treatment and paying out dividends.

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Ofwat insisted that the money must be paid by Thames and its investors, not by customers.

Thames Water is about £19 billion in debt and MPs were previously told that at one point this year it had about five weeks' worth of cash left before going bust.

But it recently agreed a £3bn rescue loan amid those fears it would collapse.

It still needs substantial ongoing financial support to put its finances on a long-term stable footing.

Earlier this week, Environment Secretary Steve Reed told LBC Thames Water remains “stable” and there is “no disruption to water supply” after US private equity giant KKR pulled out of plans to invest in the troubled utility.

The heavily indebted supplier - which chose KKR as its preferred bidder at the end of March - said the investment firm indicated it would not be in a position to proceed with a bid and that its preferred partner status had lapsed.

Speaking to LBC's Nick Ferrari at Breakfast during a regular Call the Cabinet slot, Environment Secretary Steve Reed said the government is "keeping a very close eye on the situation."

When asked by Nick if there was a chance of the government stepping in and taking "emergency control" of Thames Water, Mr Reed said at the moment there was no chance of this and reiterated that the company and water supply were stable.

But, he also added the company was "clearly facing a difficult situation" Thames Water said it intends to take forward discussions with "certain senior creditors" on an alternative plan to recapitalise the business.

It will also hold talks with regulator Ofwat on the senior creditors' plan, alongside other stakeholders.

Sir Adrian Montague, chairman of Thames Water, said: "Whilst today's news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.

"The company will therefore progress discussions on the senior creditors' plan with Ofwat and other stakeholders.

"The board would like to thank the senior creditors for their continuing support."

A spokesperson for the creditors declined to comment on commercial discussions but told the Guardian their plan required “regulatory support”.

“The creditors’ proposal will fix the fundamentals, protect public health and prioritise improved customer and environmental outcomes,” they said.

“In addition to a detailed operational plan and billions in fresh investment proposed by the creditors, Thames Water requires a fundamental reset and regulatory support so that asset health and performance can be restored to the levels that customers and the environment deserve.

“The creditors are committed to working with the government and regulators to achieve that outcome as quickly as possible and expect Thames Water to be held to account to deliver a realistic but ambitious trajectory for the company’s return to compliance.”

An Ofwat spokesperson said: “Our focus is on ensuring that the company takes the right steps to deliver a turnaround in its operational performance and strengthen its financial resilience to the benefit of customers.

"We are assessing whether the [creditors’] plans are realistic, deliverable and will bring substantial benefits for customers and the environment.”

Thames Water said: “In order to be investable, we and prospective investors would need to engage in discussions with our regulators.”