Ministers weigh contingency plan for collapse of Thames Water
The government has begun drawing up contingency plans for the collapse of Thames Water amid growing doubts in Whitehall about the ability of Britain’s biggest water company to service its £14bn debt-pile.
Sky News has learnt that ministers and Ofwat, the industry regulator, have started to hold discussions about the possibility of placing Thames Water into a special administration regime (SAR) that would effectively take the company into temporary public ownership.
Such an insolvency process was used by the government when the energy supplier Bulb collapsed in 2021, sparking concerns that it could cost taxpayers billions of pounds.
Ultimately, the Bulb administration is likely to have cost the public purse a far smaller sum, but water industry ownership restrictions which prevent consolidation mean this figure could be dwarfed if Thames Water was to fail.
The talks within Whitehall, which involve the Department for Environment, Food and Rural Affairs (DEFRA), Ofwat and the Treasury, remain at a preliminary stage and relate at the moment only to contingency plans which may not need to be activated.
Thames Water serves 15m customers across London and the south-east of England, and has come under intense pressure in recent years because of its poor record on leaks, sewage contamination, executive pay and shareholder dividends.
On Tuesday, Sarah Bentley, its chief executive for the last three years, resigned with immediate effect, saying: “The foundations of the turnaround that we have laid position the company for future success to improve service for customers and environmental performance.”
Sarah Bentley resigned as chief executive on Tuesday. Pic: John Alex Maguire/Shutterstock
In March, however, Sky News revealed that Thames Water was facing crunch talks over its finances and had hired Rothschild, the investment bank, and the law firm Slaughter & May, to explore financing options for the company.
The Daily Telegraph reported on Tuesday night that Thames Water was still trying to raise £1bn from shareholders and that AlixPartners had been drafted in to advise on the company’s operational turnaround plans.
One industry source said that regulators had also sought advice from restructuring experts in recent weeks, although their identity was unclear.
Taking Thames Water into temporary public ownership would inevitably fuel calls from critics of the privatised water industry to renationalise all of the country’s major water companies.
Thames Water is owned by a consortium of pension funds and sovereign wealth funds, many of which are understood to be sceptical about delivering additional funding.
Its largest shareholder is Ontario Municipal Employees Retirement System (Omers), a vast Canadian pension fund, which holds a stake of nearly 32%, according to Thames Water’s website.
Others include China Investment Corporation, the country’s sovereign wealth fund; the Universities Superannuation Scheme, the UK’s biggest private pension fund; and Infinity Investments, a subsidiary of the Abu Dhabi Investment Authority.
Hermes, which manages the BT Group pension scheme, is also a shareholder.
Thames Water employs about 7,000 people, and serves nearly a quarter of Britain’s population.
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Ms Bentley’s exit, which came soon after a row about her declaration that she had surrendered a controversial annual bonus, also reflects deeper divisions about how to address the mounting crisis at the company.
Earlier this year, she said she was “heartbroken” about the company’s historical failings, blaming “decades of underinvestment”.
Alastair Cochran and Cathryn Ross have been named joint interim chief executives as a search for Ms Bentley’s replacement is conducted.
Thames Water has been fined numerous times, and is facing a deluge of regulatory probes.
In 2021, it was hit with a £4m penalty for allowing untreated sewage to escape into a river and park, while in August 2021, it was ordered to pay £11m for overcharging thousands of customers.
The range of financing options available to Thames Water’s board – whose chairman, the former SSE chief Ian Marchant, is also due to step down imminently – appears to be limited.
Nearly £1.4bn of the company’s bonds mature by the end of next year, with Ofwat price controls meaning water companies have little scope to generate additional income.
In an investor update published last September, Ms Bentley said that “the difficult external environment has increased the challenge of our turnaround”.
A year ago, the company said it had agreed with shareholders the injection of £500m of new equity funding, with a further £1bn expected to be delivered by the end of next year.
The additional shareholder funding formed part of a £2bn expenditure increase, taking its total spending during the current five-year regulatory period to £11.6bn.
In its September announcement, Thames Water said shareholders had “further evidenced their support for [Thames Water] and its business plan through an Equity Support Letter where the shareholders have committed to hold investment committee meetings (for their respective institutions) as a path to obtaining approval (in the discretion of the investment committee) for funding their pro rata share of conditional commitments in respect of the further £1bn of additional equity which is assumed in TWUL’s business plan”.
“Whilst this is not a legal commitment to fund…the [Thames Water] board believes it is reasonable to incorporate this additional £1bn of equity funding in its assessment.”
The company has not paid a dividend to its owners for the last six years.
Thames Water is not the only major water company to face questions about its financial resilience and operational track record.
Ofwat has also been in talks with others, including Southern Water and Yorkshire Water, in recent years about strengthening balance sheets amid performance issues.
The financial collapse of Britain’s biggest water company, and its implications for the model of water ownership, would inevitably become a major political debating point in the run-up to the next general election.
Some critics of privatisation have demanded that the government consider mutual ownership structures, which would prohibit returns to shareholders and guarantee that profits would be reinvested in improving the sector’s dire performance, while upgrading water infrastructure assets.
In total, tens of billions of pounds have been handed to shareholders in water utilities across Britain since privatisation, stoking public and political anger given the industry’s frequent mishaps.
DEFRA, Ofwat and Thames Water were all contacted for comment on Tuesday evening.
World
‘Have the meeting now!’: Trump says Ukraine should ‘immediately’ agree to direct talks with Russia
US President Donald Trump has demanded that Ukraine should “immediately” agree to direct talks with Russia in a bid to end the war.
It comes after Ukraine’s President Volodymyr Zelenskyy said his team were “ready to meet” Russian representatives following Vladimir Putin suggestion of peace talks, subject to an unconditional ceasefire starting on Monday.
Russia‘s president put forward the proposal for talks in Istanbul on Thursday after European leaders including Sir Keir Starmer threatened him with fresh sanctions if Russia failed to comply with an unconditional 30-day ceasefire starting on Monday.
Analysis:
Why calls for Ukraine talks are likely a delaying tactic from Putin
However, in a post on his Truth Social platform on Sunday, Mr Trump said he was “starting to doubt that Ukraine will make a deal with Putin”.
He urged them to accept the meeting invitation “immediately”, adding “have the meeting now”.
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Putin’s call for peace talks genuine?
Mr Trump wrote: “President Putin of Russia doesn’t want to have a ceasefire agreement with Ukraine, but rather wants to meet on Thursday, in Turkey, to negotiate a possible end to the bloodbath.
“Ukraine should agree to this, immediately. At least they will be able to determine whether or not a deal is possible, and if it is not, European leaders, and the US will know where everything stands, and can proceed accordingly.
“I’m starting to doubt that Ukraine will make a deal with Putin, who’s too busy celebrating the Victory of World War ll, which could not have been won (not even close!) without the United States of America.
“Have the meeting now!”
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Kremlin: ‘We don’t share Starmer’s view’
Shortly after Mr Trump’s post, Mr Zelenskyy posted on X saying: “We await a full and lasting ceasefire, starting from tomorrow, to provide the necessary basis for diplomacy.
“There is no point in prolonging the killings. And I will be waiting for Putin in Türkiye on Thursday. Personally. I hope that this time the Russians will not look for excuses.”
When Mr Putin first suggested the talks, Mr Trump hailed it “a potentially great day for Russia and Ukraine” and said he would “work with both sides to make sure it happens”.
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Turkish president Recep Tayyip Erdogan also said he “fully supported” Mr Putin’s proposal and was ready to host the talks, after the two leaders spoke over the phone on Sunday.
But security and defence analyst Michael Clarke told Sky News presenter Matt Barbet there is a “long way between now and Thursday” and a “fair bit of brinkmanship” going on.
He said even if the talks do go ahead, “the chances are they’ll extend over a long period and there won’t be a ceasefire as a result of them, and the Russians will keep playing this out”.
European leaders hold call with Mr Trump. Pic: Number 10
Mr Putin’s counteroffer of talks came after Sir Keir, Mr Zelenskyy, French President Emmanuel Macron, recently elected German Chancellor Friedrich Merz and Polish Prime Minister Donald Tusk met in Kyiv.
The leaders said they had secured Mr Trump’s backing after briefing him on the progress made on the so-called “coalition of the willing” plans in a 20-minute phone call.
World
Terror group supporters posted on TikTok, YouTube and Google from site targeted in Indian airstrikes
Social media accounts expressing support for a Pakistan-based terror group linked to al Qaeda appear to have posted recent videos from a Pakistan mosque targeted by Indian airstrikes.
Sky News has found videos posted on TikTok, YouTube and Google that appear to be filmed at the Markaz Taiba Mosque in Muridke. The captions and usernames contain expressions of support for the Lashkar-e-Taiba (LeT) and a group called ‘313’.
Sky News has found and geolocated multiple videos that appear to be filmed in the area where the captions include either or both ‘313’ and LeT.
Some of the videos show men in the streets with guns. Another post captioned a video of children doing martial arts training inside the targeted mosque, “we are little soldiers, and we fight the non-believers”.
The caption of the video reads ‘we are little soldiers, and we fight the non-believers’. It uses the hashtag ‘313’.
The caption uses the hashtag #جہاد313, which translates to ‘313’ jihad.
‘313’ appears to refer to the 313 Brigade, a proscribed terror organisation in Pakistan.
In a TikTok video posted to the Google page for Markaz Taiba Mosque in Muridke, a man can be seen walking along the street with a gun.
The account that posted that video wrote in their description, “Lashkar Taiba, Mujahid Force, ‘313’ and Markaz Taiba Muridke”, self-proclaiming their support for the groups.
This screenshot from the Google user labels Lashkar-e-Taiba and ‘313’ and includes the location name Muridke
India’s retaliatory strikes on Pakistani-adminstered Kashmir and Pakistan on 7 May came after a deadly attack in Indian-administered Kashmir last month.
Gunmen opened fire on tourists, killing 26 people and injuring dozens in a popular holiday spot near Pahalgam, Kashmir, on 22 April.
LeT were accused by India of involvement in the Pahalgam attack through their proxy the Resistance Front, which claimed responsibility for the attack.
LeT, which is designated as a terrorist organisation by the UN Security Council and the UK, focuses on fighting Indian control in Kashmir and is based in the Punjab region of Pakistan.
Pakistan denies allegations of terror camps operating in the country. This region has been in the control of the Punjabi government since 2010. The Punjab government condemned the Indian strikes, and declared a state of emergency across Punjab.
Muskan Sangwan, senior intelligence analyst at TRAC, a terrorism research and analysis consortium, told Sky News: “Brigade 313 is al Qaeda in Pakistan. It’s an umbrella organisation for members of several groups like Taliban, Lashkar-e-Jhangvi, Haqqat ul-Jihad-al-Islami, Jaish-e Muhammad, Lashkar-e-Taiba, and Jundullah.”
Ms Sangwan explained that ‘313’ refers to the number of companions said to have fought with the Prophet Mohammed in the Battle of Badr.
TRAC have seen a recent uptick in TikTok videos and other social media posts that refer to ‘313’.
Many of the accounts are linked to each other.
Ms Sangwan said: “They [the TikTok users] mostly use ‘313’ as a hashtag… trying to push that hashtag to as many people it can reach on social media.”
Sky News sought to verify the location by comparing before and after videos from the strike location, and using the video released by the Indian army conducting the strike.
One video showing damage at the strike location was posted by a user with 313 in their TikTok username.
The TikTok account that posted video footage of the destruction in Muridke has 313 in the username
Below is satellite imagery that shows the destruction of the site.
Satellite imagery shows Markaz Taiba Mosque after the strike on 7 May. Credit: Maxar
In one TikTok, the video is captioned “bring your arms and ammunition and go to war”. The text on the screen of the TikTok is ‘313’ and he is carrying a gun.
The group are comfortable with having an online presence. On the Google tag for Markaz Taiba Mosque in Muridke, men pose for a group photo. Almost all the people in the photo have used ‘313’ on TikTok.
Ms Sangwan explained: “With these people from Muridke, pushing this propaganda on social media would generate a lot of significance in terms of recruitment and in terms of gaining support from local people and from other people.”
Sky News’ Asia correspondent Cordelia Lynch has reported on the ground in Muridke.
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Anger in Pakistan after India strikes
India says it struck Markaz Taiba, a site in Muridke about 15 miles (25km) from the border, which has long been claimed to be a terrorist training site associated with LeT.
MEMRI, a US-based research group that monitors terrorist threats, told Sky News: “It has been known for decades that Lashkar-e-Taiba has its headquarters in Muridke.”
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Sky News contacted the Pakistan Ministry of Defence for comment. Khawaja Asif, Pakistan’s defence minister, told Sky News: “This appears to be a random video with background music added later – consistent with how TikTok trends often function. If this is to be considered credible evidence, we could produce millions of similar clips ourselves.”
Mr Asif also said that any suggestion that the mosque was used as a base by terrorists was a “completely false, social media made up hoax”.
On 7 May, after the strikes in Pakistan, the Indian subcontinent branch of al Qaeda issued a statement condemning India’s actions and encouraging its supporters to wage jihad against India.
The Data and Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.
Volodymyr Zelenskyy has said his country is “ready to meet” Russian representatives after Vladimir Putin suggested peace talks in Istanbul from Thursday.
Russia‘s president put forward the proposal as European leaders including Sir Keir Starmer threatened him with fresh sanctions if Russia failed to comply with an unconditional 30-day ceasefire starting on Monday.
Reacting to Mr Putin’s suggestion, US President Donald Trump said it was “a potentially great day for Russia and Ukraine” and he would “work with both sides to make sure it happens”.
Mr Zelenskyy has also welcomed the proposal, but reiterated his call for a ceasefire.
He said: “It is a positive sign that the Russians have finally begun to consider ending the war. The entire world has been waiting for this for a very long time. And the very first step in truly ending any war is a ceasefire.
“There is no point in continuing the killing even for a single day. We expect Russia to confirm a ceasefire – full, lasting, and reliable – starting tomorrow, May 12th, and Ukraine is ready to meet.”
On Saturday, the prime minister met the Ukrainian president alongside French President Emmanuel Macron, recently elected German Chancellor Friedrich Merz and Polish Prime Minister Donald Tusk in Kyiv.
Announcing the 30-day ceasefire proposal, the leaders said they had secured the backing of Mr Trump after briefing him on the progress made on the so-called “coalition of the willing” plans in a 20-minute phone call.
What Trump does next is crucial
Russian President Vladimir Putin is playing for time and may have been caught on the hop by European leaders, backed by US President Donald Trump, demanding a 30-day ceasefire during their visit to Kyiv yesterday.
Russia’s proposal of talks in Istanbul on Thursday appears hurriedly conceived, announced as it was in the early hours of the morning by Putin.
There is an added symbolism to his suggestion of Istanbul as a venue. Russia has long blamed Ukraine for walking away from peace talks in the same city in 2022.
The key thing is that diplomatic movement of sorts is happening.
Ukraine and its European colleagues want to capitalise on Trump’s renewed enthusiasm for a ceasefire and his potential scepticism of how ready Putin actually is to make peace.
The Europeans will hope this isn’t drawn into a protracted period of negotiations, or simply talking about the idea of negotiations.
What President Trump does next will be crucial.
Speaking at the Kremlin in the early hours of Sunday, Mr Putin did not directly address the proposal but instead offered to restart peace talks Russia and Ukraine held in 2022.
“We propose the Kyiv authorities resume the negotiations they interrupted at the end of 2022… to resume direct negotiations… without any preconditions… to begin without delay next Thursday 15 May in Istanbul,” he said.
Speaking to Sky News Russia correspondent Ivor Bennett after the statement, Kremlin spokesperson Dmitry Peskov said Moscow does not “share the view of Starmer”.
“We think that the seriousness is to propose negotiations,” he said, denying the move was a delaying tactic.
Mr Peskov said there had to be negotiations to find a way for a ceasefire, adding: “A simplistic approach to a ceasefire is inappropriate.”
European leaders including Volodymyr Zelenskyy hold call with Donald Trump. Pic: Number 10
Russia’s own unilateral three-day ceasefire, declared for the 80th anniversary of victory over Nazi Germany, expired on Saturday, and Ukraine said Russian forces have repeatedly violated it.
After the summit in Kyiv, Sir Keir said: “All of us here, together with the US, are calling Putin out.
“So we are clear, all five leaders here – all the leaders of the meeting we just had with the coalition of the willing – an unconditional ceasefire, rejecting Putin’s conditions, and clear that if he turns his back on peace, we will respond.
“Working with President Trump, with all our partners, we will ramp up sanctions and increase our military aid for Ukraine’s defence to pressure Russia back to the table.”
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During Mr Putin’s statement on Sunday, he insisted he would support peace talks, adding: “We are committed to serious negotiations with Ukraine.”
He told reporters: “Their purpose is to eliminate the root causes of the conflict, to establish a long-term, lasting peace.
“We do not rule out that during these negotiations it will be possible to agree on some new truces, a new ceasefire.”
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Responding to Mr Putin’s proposal, Mr Macron said the Russian leader was “looking for a way forward, but he still has a desire to buy time”.
Mr Putin’s proposed negotiations are “a first step, but they are not sufficient,” he told French broadcaster BFM.
“An unconditional ceasefire is not preceded by negotiations, by definition.”
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