Thames Water rescue deal threatened by Labour leadership limbo
A potential change in prime ministers has put the rescue deal for the struggling water company under threat.
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Ministers are currently trying to negotiate a takeover deal for Thames Water with a group of creditors led by American investment firm Elliott Management.
However, government insiders have revealed that said that deal is now uncertain, in part because Keir Starmer's position in Downing Street could potentially change.
Starmer’s most likely successor, Greater Manchester mayor Andy Burnham, has talked about bringing utility companies into public ownership, with his supporters advocating for him to start with Thames Water if he becomes prime minister.
“Things are changing every day – it’s very uncertain,” a senior source in the environment department has said.
Read more: Thames Water creditors pledge £3.4bn of new equity in improved rescue bid
The government insider was mindful about the uncertainty surrounding who will be prime minister by the end of the year but said they were disappointed that details of the deal had appeared in the press.
“We aren’t very impressed that things keep getting leaked by the creditors,” they said.
They added that there was currently “little direction” from the top of government.
Meanwhile, a government spokesperson said in a statement: “The government will always act in the national interest on these issues. The company remains financially stable, but we stand ready for all eventualities, including applying for a special administration regime if that were to become necessary.”
Thames Water have been trying to avoid financial collapse for more than two years, after building up £17.6bn in debt in the decades after its privatisation in 1989 under Margaret Thatcher's government.
Bosses tried to sell the company last year but the preferred bidder, KKR, pulled out of the negotiation at the last minute.
If future deals collapse, Thames Water will then fall into special administration, which is essentially a form of temporary nationalisation. It would then be up to the government to either sell the company to the highest bidder or bring it under public control.