The nationalisation debate intensifies as the Treasury pressures Defra over Thames Water’s financial crisis. Britain’s largest water company faces collapse if private rescue bids fail.
Thames Water recently came close to running out of cash. US private equity firm KKR leads the race to save it. However, if the takeover fails, the company could fall into state hands under the special administration regime (SAR).
Sources reveal the Treasury warned Defra it would shoulder the £4bn cost of temporary nationalisation. Defra’s already stretched budget could face crippling strain.
The nationalisation debate intensifies as officials push hard for a private solution. Whitehall insiders say this pressure boosts KKR’s bid while sidelining longer-term concerns.
Temporary nationalisation costs could reach £4bn over 18 months, Treasury officials claim. Given Defra’s £4.6bn annual budget, such costs could force painful cuts.
Departments await Chancellor Rachel Reeves’s upcoming spending review, set for 11 June. Reeves has already announced sweeping Whitehall cuts in her spring statement.
Sources call the current situation a “binary choice” between recapitalising Thames Water or triggering catastrophic cuts. They argue the Treasury’s approach fuels “scare tactics” to close off other rescue options.
The nationalisation debate intensifies amid Thames Water’s crushing £20bn debt burden. Some bidders believe temporary nationalisation would allow steeper creditor losses, making the utility more viable.
Consultancy Teneo estimated nationalisation costs could hit £3.4bn to £4.1bn over 18 months. Teneo’s expert, Matthew Cowlishaw, worked on the Bulb energy nationalisation.
However, many economists question whether nationalisation would impose long-term government costs. They point to Bulb, which repaid £3bn after its nationalisation and later sale to Octopus Energy.
If Thames followed a similar path, the government could recover its funds, with creditors absorbing steep losses. Despite this, some Whitehall sources and regulators criticise the KKR bid’s lack of transparency.
A Defra spokesperson stated, “The company remains stable, and the government is closely monitoring the situation. We cannot comment further on private financial matters.”
Nationalisation debate intensifies as Britain faces hard choices over water infrastructure, public risk, and private rescue deals.
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