UK Government Plans Thames Water Insolvency Contingency Amid £20bn Debt

The UK government is preparing contingency plans for the potential collapse of Thames Water, the country's largest water utility, which is burdened with nearly £20 billion in debt. Environment Secretary Steve Reed has approved the appointment of FTI Consulting as the preferred administrator to oversee a special administration regime (SAR) if the company fails to secure private sector funding, a move that would require court approval. Thames Water is currently seeking about £5 billion in new capital and aims to write off approximately £12 billion of its debt, while negotiating with creditors and regulators including Ofwat, which is expected to be abolished under new government plans. The company remains in 'crisis mode' following the withdrawal of a major investment by private equity firm KKR, and faces significant fines for environmental breaches, with potential costs reaching over £1 billion. The SAR would aim to ensure continued water services for 16 million customers across southern England, but may expose taxpayers to bailout risks, adding pressure to public finances already strained by previous government rescues such as British Steel. Thames Water must secure a rescue plan by an October deadline set by the Competition and Markets Authority to avoid insolvency.