Thames Water’s creditors are negotiating a £16 billion rescue package that would allow the company to pollute rivers outside legal limits until 2040, with an in-principle agreement expected within days.
The deal, which could be finalised as soon as mid-February, has triggered a political battle across all parties and a campaign targeting MPs in the Thames Water region, including Putney’s Fleur Anderson, to oppose the pollution provisions.
Creditors holding £13 billion of Thames Water’s total £20 billion debt are proposing to write off £13 billion in value while taking a 30% haircut on Class A debt, up from the 25% disclosed in October. In exchange, they would receive a minimum 10% equity stake in the recapitalised company.
But the deal includes a controversial environmental concession. Instead of meeting current legal pollution standards, creditors want Thames Water to follow its own “improvement accountability framework” until 2035 to 2040. Campaign group We Own It says this would set a dangerous precedent, allowing water companies to write their own environmental rules.
“The name of every single MP in the Thames Water region should be on this open letter,” said Sophie Conquest, lead campaigner at We Own It. “Do they think water companies should be allowed to get away with polluting illegally for profit, or do they not?”
Putney MP among those contacted by campaigners
We Own It has been coordinating an open letter to Ofwat and Environment Secretary Steve Reed, asking them to reject the creditors’ proposal. The campaign contacted all 79 Thames Water MPs during the week of 27 January, with a deadline of 30 January for MPs to sign.
Three MPs have publicly signed the letter: Victoria Collins, Liberal Democrat MP for Harpenden and Berkhamsted; Zöe Franklin, Liberal Democrat MP for Guildford; and Bell Ribeiro-Addy, Labour MP for Clapham and Brixton Hill.
Fleur Anderson, MP for Putney, was among those contacted but has not publicly signed the letter. We Own It says numerous MPs have yet to add their names despite the urgency of the mid-February decision point.
The campaign comes as new polling by Survation shows 54% of Thames Water customers support placing the company into special administration, while just 19% want it to remain in private hands. The poll of 1,000 Thames Water customers found 68% believe the company should be nationalised and run in the public sector.
How we got here
The current crisis follows a High Court ruling on 18 February 2025 that approved a £3 billion emergency loan to Thames Water at 9.75% interest. Mr Justice Leech described the costs of finance and adviser fees as “very high” and said they might be “eye-watering”, but approved the plan to prevent the company running out of money.
Junior creditors and Liberal Democrat MP Charlie Maynard appealed the decision, arguing the interest rate was too costly for customers. The Court of Appeal heard the challenge from 11 to 13 March 2025 and dismissed it on 17 March, allowing the bailout to proceed.
That £3 billion loan bought time until around May 2026. The £16 billion deal currently being negotiated represents a more comprehensive rescue package, but the pollution provisions have proved the sticking point.
Thames Water was named the worst offender for serious pollution incidents in 2024. The company serves 16 million customers across London and the South East, including all of Wandsworth. Bills are already rising 35% by 2030, adding £152 to average annual costs, and the emergency loan could add a further £250.
Political battle intensifies
A Westminster Hall debate on 6 January showed the depth of political division over Thames Water’s future.
Liberal Democrat MP Layla Moran, who secured the debate, demanded the company be placed into special administration immediately.
“We now need to cut the rope and put the company into special administration,” Moran said.
Under her proposal, Thames Water would emerge from administration “mutually owned by 16 million customers, and run on behalf of them and the environment”.
Dame Angela Eagle, Minister for Food Security and Rural Affairs, defended the government’s approach. “We are working closely with Ofwat, which is in conversation with the London & Valley Water consortium, a group of Thames Water’s creditors,” she told MPs. “Ofwat will only agree to a plan that will ensure the best possible outcomes for customers and the environment.”
The minister said the government would not hesitate to use special administration if Thames Water became insolvent, but stressed it was supporting a “market-led solution” while the creditor negotiations continue.
Labour’s position has drawn criticism from within its own ranks. A cross-party group of 30 MPs, led by Labour’s Clive Lewis, wrote to Ofwat in February 2025 demanding special administration.
“Thames Water epitomises the systemic issues plaguing the private water sector,” Lewis said. “Approving a hedge fund bailout would reinforce a broken system where mismanagement and shareholder interests are rewarded at the expense of customers and the environment.”
The government has ruled out full nationalisation, citing a £100 billion cost. Critics argue special administration could write off 40% or more of Thames Water’s debt at minimal taxpayer cost, pointing to the government’s treatment of Railtrack as a precedent.
Reform UK MP Richard Tice called the company “effectively bust” during the January debate. “It is not able to meet its financial or regulatory obligations. It is time to say that enough is enough.”
What happens next
The creditors’ negotiations with Ofwat are targeting an in-principle agreement by mid-February. If approved, the deal would reshape Thames Water’s financial structure while granting extended timelines for environmental compliance.
We Own It says allowing creditors to set their own environmental rules would create a precedent across the water industry. The campaign argues that if Thames Water can negotiate away legal pollution limits, other struggling water companies will demand the same treatment.
Ofwat has not yet indicated whether it will approve the proposal. The regulator came under criticism during the Westminster Hall debate, with multiple MPs questioning whether it had the power or willingness to reject a deal backed by major creditors.
The government has promised a water reform White Paper “very shortly”, which will set out plans for a new single regulator, a water ombudsman, and stopping companies marking their own homework on pollution.
For Wandsworth residents served by Thames Water, the immediate impact is rising bills to service the company’s debt while pollution incidents continue. The £16 billion package would determine whether those costs fund genuine environmental improvement or simply keep a failing business model alive until the next crisis.
How to make your voice heard
Putney residents who want their MP to oppose the creditors’ pollution deal can contact Fleur Anderson at fleur.anderson.mp@parliament.uk.
Residents can also submit views directly to Ofwat through the We Own It campaign at weownit.org.uk or by contacting Ofwat’s customer service team.
The water reform White Paper, expected within weeks, will be open for public consultation once published.
