Thames Water rescue deal should be rejected - MPs

Here is a story making headlines in the economy: Thames Water rescue deal should be rejected - MPsImage source, Getty ImagesImage caption, Thames Water serves 16 millions customers across London and the Thames ValleyByCharlotte ColesSouth of EnglandPublished18 September 2026A cross-party committee of MPs has urged the government to reject a £10bn takeover proposal from Thames Water's creditors. The UK's biggest water company owes roughly £20bn and has been working with creditors and government officials. A report by the Environment, Food and Rural Affairs (EFRA) Committee has now said the government should consider placing it into special administration, a form of temporary nationalisation.

A Thames Water spokesperson said it needed to be "recapitalised and put on a firm financial footing". Fears that the firm, which serves 16 million customers, could collapse first emerged three years ago. The committee said a takeover plan by a consortium of more than 100 of its creditors did not have "the interests of the public, the company or the environment at heart".

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The plan was seen as the final realistic option to avoid a special administration regime, after a previous deal with a US private equity giant collapsed. Creditors, who collectively own about £17bn of Thames Water's debt, were previously warned by former environment secretary Emma Reynolds their plan did not go far enough to protect customers or the environment. The new report said Thames Water, alongside other "poor-performing" water companies, was in a "doom loop" of fines for poor performance leaving it with less money to invest in improvements.

'Chaos'It warned the company would "likely accrue" more than £900m in penalties over the next five years. The committee said laws needed to change to allow the government to trigger a special administration on performance grounds alone. It also warned the top priority for the bidders, called London & Valley Water, was to "extract immediate value from Thames Water, not steer it to long-term success".

Alistair Carmichael, chairman of the committee, 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. "Carmichael said "liabilities that the government will face in the short-term" could be recouped by a future sale of Thames Water once its finances and performance are back on track.

He added: "The chaos of another Thames Water-style saga must not be repeated. "More stories from Oxfordshire Watch the latest episode of South Today Listen to the latest news from Oxfordshire A spokesman for London & Valley Water said: "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 programme can continue without disruption.

Economists are analysing what the news means for the markets.