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Thames Water’s principal creditors are offering the government a “golden share” along with increased influence for local authorities in an effort to prevent nationalisation of the financially troubled water provider. This move comes after the government declined a prior rescue plan. According to the BBC, lenders are preparing to launch a legal challenge should the newly installed Andy Burnham-led government decide to bring the company into public ownership.
The proposed golden share would grant the government the power to veto significant corporate decisions like mergers and acquisitions. Additionally, the lenders are advocating for enhanced roles for local authorities in line with the partnership arrangement between United Utilities and Greater Manchester established during Burnham’s tenure as mayor. In his inaugural speech as prime minister, Burnham emphasized his intention to increase public control over essential services.
Sources close to the lenders have indicated that, if Thames Water were fully nationalised, the creditors would seek full repayment of outstanding debts—a scenario that could result in costs running into billions for the government, as seen in similar past instances. The London & Valley Water (L&VW) consortium had earlier suggested a £10 billion deal designed to stave off administration, which included writing off nearly half the company’s debt and injecting new capital in exchange for leniency on potential future pollution penalties. This proposal, however, was rejected in June by then-environment secretary Emma Reynolds, who argued it failed to adequately protect consumers and the environment.
Those involved in the new negotiations say the creditors have improved the offer by adding hundreds of millions in additional funding. The golden share mechanism, often used to maintain government interest in key national industries like Royal Mail or Rolls Royce, would require approval from Ofwat, the sector regulator. Meanwhile, a government spokesperson stated that Thames Water “remains financially stable,” but affirmed readiness for any necessary actions, including applying a Special Administration Regime (SAR), a temporary nationalisation measure designed to safeguard public finances if the company were resold. Thames Water recently imposed a hosepipe ban due to an exceptionally warm and dry spring, and last year faced a record fine of £122.7 million from Ofwat for breaches related to sewage spills and shareholder payments
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