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The board of Thames Water was locked in crunch talks on Wednesday as shareholders prepare to dilute a pledge to inject funds into the company that would secure its survival.

Sky News has learnt that the directors of Britain’s biggest water company met to discuss its financial future after months of talks involving debt and equity investors, lenders, regulators and government officials.

One industry source said that Thames Water‘s shareholders, who include the Universities Superannuation Scheme (USS) and China’s sovereign wealth fund, were poised to conclude that they were unable to contribute hundreds of millions of pounds of promised funding after Ofwat, the industry watchdog, indicated that it would not bow to the company’s demands for a package of regulatory concessions.

Talks were continuing into Wednesday evening, and it remained possible that the picture could change ahead of an announcement expected to be made by the company on Thursday morning.

Thames Water’s shareholders had indicated that they were prepared to commit £3.25bn to the company in the coming years, with the first £750m due to be injected this year.

The investors’ likely decision to water down that commitment is not irreversible and could still be changed if the financial profile of a future investment improved, said a source close to one of them.

The company employs about 7,000 people, and serves nearly a quarter of Britain’s population.

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December: Thames Water can’t pay £190m

It is, however, drowning in well over £15bn of debt, with huge interest payments required to service it.

Thames Water’s shareholders also include the Canadian pension fund Omers, Infinity Investments, a subsidiary of the Abu Dhabi Investment Authority, and the BT Pension Scheme.

The utility has been seeking concessions including a 40% rise in consumers’ water bills, an easing of capital spending requirements and leniency on forthcoming regulatory penalties.

If the shareholders ultimately confirm their decision to pull the plug on additional financial support that was announced last year, it would appear to leave the heavily indebted company with few viable options to secure its future.

Last summer, Sky News revealed that Whitehall officials had started drawing up contingency plans for Thames Water’s collapse amid fears that it might not survive.

However, in an investment plan unveiled in October, the company said its shareholders were “stepping up to support… much-needed investment, underscoring their commitment to delivering Thames’ turnaround and life’s essential service for the benefit of our customers, communities and the environment”.

“Shareholders have already invested £500m of new funds in 2023,” it said at the time.

“In addition, they have agreed to provide a further £750m in new equity funding… subject to satisfaction of certain conditions, including the preparation of a business plan that underpins a more focused turnaround that delivers targeted performance improvements for customers, the environment and other stakeholders over the next three years and is supported by appropriate regulatory arrangements.

“Our shareholders have also acknowledged the need for additional equity investments indicatively in the region of £2.5bn in [the next regulatory period].

“In aggregate, this would equate to total equity investment of £3.7bn, the largest equity support package ever proposed in the UK water sector.”

The £750m referred to in that announcement is now unlikely to proceed without profound regulatory changes, the company is expected to say on Thursday.

If Thames Water did eventually collapse, a temporary nationalisation would involve placing the company’s operating business into a special administration regime (SAR) akin to that used when the energy supplier Bulb collapsed in 2021.

That would ignite concerns in government that the triggering of a SAR could ultimately cost taxpayers billions of pounds.

Ultimately, the Bulb administration 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.

Thames Water serves 15 million 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.

It is facing multiple fines and regulatory investigations, including into the payment of dividends to Kemble Water, its parent company.

The company has been beset by management turmoil, with Sarah Bentley, its chief executive for the last three years, resigning last summer.

She was replaced by Chris Weston, the former Aggreko chief.

The financial peril in which Thames Water finds itself has sparked calls from critics of the privatised industry to renationalise all of the UK’s major water companies.

A number of the companies have been forced to seek extra funding from their shareholders, with the state of the water industry likely to feature prominently during the general election campaign.

Nearly £1.4bn of the company’s bonds mature by the end of this year, with Ofwat price controls meaning water companies have little scope to generate additional income.

Read more:
Thames Water lenders hire EY as debt deadline looms
Thames Water bosses admit it can’t meet April debt repayment
Water firms face backlash over record sewage spills in England

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 mismanagement.

Earlier this month, Sky News revealed that a group of lenders to Thames Water’s parent company had engaged advisers weeks before a £190m debt held by Britain’s biggest water utility falls due.

Thames Water and a spokesman for its shareholders declined to comment on Wednesday evening.

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Sir Keir Starmer could be ousted as PM within months, two senior Labour MPs tell Sky News

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Sir Keir Starmer could be ousted as PM within months, two senior Labour MPs tell Sky News

Two senior Labour MPs have suggested the prime minister may have to go within months if the government continues to perform poorly.

Sky News’ deputy political editor Sam Coates said his sources – a member of the government and a prominent politician – have “put Sir Keir Starmer on notice”.

Both warned that, if Labour performs badly in next May’s elections across Wales, Scotland and London, it could mark the end of his time in Downing Street.

Coates added: “The level of unhappiness and despair in parts of the Labour Party is so striking that right now, on the first anniversary, I am hearing from ministers in government that Starmer might have to go in months.”

Reform UK is surging in the polls in Wales, while Labour faces a threat from left-wing parties such as the Greens in London.

It comes as the prime minister made it clear that Rachel Reeves has his “complete support” as chancellor and remains integral to his project, Sky News’s political editor Beth Rigby understands.

She looked visibly upset during Prime Minister’s Questions, with a spokesperson claiming she had been affected by a “personal matter”.

A day earlier, Sir Keir’s controversial welfare bill was passed despite a sizeable rebellion from Labour MPs, with major U-turns meaning a new £5bn black hole has appeared in the country’s finances.

One senior figure told Rigby that the pair were as “as close politically” as any chancellor and prime minister have ever been.

“She is going absolutely nowhere,” they added.

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Welfare vote ‘a blow to the prime minister’

Ms Reeves’s tears sent markets spiralling, with the value of the pound and long-term government bonds falling sharply.

Later in the day Sir Keir, said Ms Reeves will be chancellor for a “very long time to come”.

The prime minister said it was “absolutely wrong” to suggest her tearful appearance in the Commons related to the welfare U-turn.

“It’s got nothing to do with politics, nothing to do with what’s happened this week. It was a personal matter for her,” he said while speaking to the BBC’s podcast Political Thinking with Nick Robinson.

“I’m not going to intrude on her privacy by talking to you about that. It is a personal matter.”

Read more from Sky News:
Just 25% of public think Starmer will win next election
Analysis: Emotional Reeves a reminder of tough decisions ahead

Asked if she will remain in post, he said: “She will be chancellor by the time this is broadcast, she will be chancellor for a very long time to come, because this project that we’ve been working on to change the Labour party, to win the election, change the country, that is a project which the chancellor and I’ve been working on together.”

He said Ms Reeves has done a “fantastic job” and added: “She and I work together, we think together. In the past, there have been examples – I won’t give any specific – of chancellors and prime ministers who weren’t in lockstep. We’re in lockstep.”

Wes Streeting, the health secretary, also offered a strong defence for the prime minister and chancellor.

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Health Secretary: Reeves is ‘resilient’

He told Sky News this morning that Sir Keir has been “consistently underestimated” and was “of course” safe as prime minister.

And he said Ms Reeves was a “tough character” who was ” resilient” and “here to stay”.

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Greater Manchester Police investigating grooming cases with more than 700 victims

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Greater Manchester Police investigating grooming cases with more than 700 victims

Despite making “significant improvements”, Greater Manchester Police (GMP) has lost the “trust and confidence” of some victims of grooming gangs, according to a report by the police watchdog.

Michelle Skeer, His Majesty’s Inspector of Constabulary, said that since 2019, when GMP started to review its non-recent child sexual exploitation investigations, “the force has improved its understanding and approach to investigating allegations of child criminal and sexual exploitation”.

The document, published today, said police have live investigations into “multi-victim, multi-offender” child sexual exploitation inquiries, involving 714 victims and survivors, and 1,099 suspects.

Grooming gangs scandal timeline

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‘Our chance for justice’

But despite recording improvements, a report by His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS) also identified:

• Various training gaps within the investigation team
• Lack of consistency in evaluating case files between social care, health and police
• Failures to initially support victims meant they had “lost trust and confidence” in police

The report was commissioned by the Mayor of Greater Manchester Andy Burnham in 2024 to evaluate whether police, councils and health services can protect children from sexual exploitation in the future.

More on Andy Burnham

Its release comes days after Sir Keir Starmer announced he was launching a new national inquiry into grooming gangs after previously arguing one was not necessary,

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Starmer to launch new grooming gang inquiry

The findings were issued as the final part of the CSE (child sexual exploitation) Assurance Review process which started in 2017. The first three reports examined non-recent child sexual exploitation in Manchester, Oldham and Rochdale.

Mr Skeer said that the force has been trying to improve its service to those who have experienced sexual exploitation, but previous failings have badly affected trust in GMP.

He said: “For some, trust and confidence in the police had been lost, and the force would not be able to rectify their experiences.

“It is vital that improvements are led by victims’ experiences, and if they do come forward, they are supported, protected and taken seriously.”

A recent report by Baroness Casey found a significant over-representation of Asian men who are suspects in grooming gangs in Greater Manchester, adding though authorities are in “denial” more needs to be done to understand why this is the case.

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Teen caught in child sex exploitation

Inspectors also said there were “training gaps” in some investigation teams and issues with data sharing, with local councils sometimes not willing to provide detectives with information, leading to “significant delays in investigations” into grooming gangs.

It cites problems with intelligence provided by Manchester City Council, which took months to arrive and “was so heavily redacted that some pages contained only a few words”, the report said.

Read more from Sky News:
Analysis: Badenoch’s grooming gangs outrage
Grooming survivor wants apology from Starmer

GMP is the only force in the country to set up a dedicated team to investigate grooming gangs. Called the Child Sexual Exploitation Major Investigation Team (CSE MIT) it has about 100 staff and a ringfenced budget.

In October 2024, the force told inspectors there were 59 live multi-victim, multi-offender child sexual exploitation investigations, of which 13 were being managed by the CSE MIT.

The report adds: “The force fully accepts that it made mistakes in the past.

“It has taken positive and effective steps to learn from these mistakes and improve how it investigates recent and non-recent child sexual exploitation.”

Separately, the Baird Inquiry published in July 2024 found officers at GMP were abusing their power – making unlawful arrests, unlawful and demeaning strip searches, sometimes treating victims as perpetrators, and traumatising those who have suffered sexual abuse or domestic violence.

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Wes Streeting defends chancellor and PM ahead of ‘seismic’ 10-year plan for NHS

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Wes Streeting defends chancellor and PM ahead of 'seismic' 10-year plan for NHS

The health secretary has offered a strong defence of the prime minister and chancellor – ahead of Sir Keir Starmer setting out his 10-year vision for the NHS.

PM ‘might have to go in months’ – politics latest

Wes Streeting dismissed suggestions the prime minister could be forced out in months following the toughest week of his premiership yet, and described Rachel Reeves as “resilient” and would “bounce back” following her tearful appearance in the Commons on Wednesday.

Overnight, two senior sources – a member of the government and a prominent politician – told Sky News’ deputy political editor Sam Coates that they had “put Sir Keir Starmer on notice”.

The health secretary, who was speaking as Sir Keir prepares to set out his 10-year vision for the NHS, said the prime minister had been “consistently underestimated”.

Asked by Kamali Melbourne on Sky News Breakfast whether Sir Keir was “safe”, Mr Streeting said: “Of course.

“Keir Starmer has been consistently underestimated. I wonder when people will learn.

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Reeves has ‘complete support’

“They said he couldn’t win the Labour leadership, but he did. They said he couldn’t change the Labour Party, but he did.

“They said he couldn’t take the Labour Party from its worst defeat since the 1930s to election victory last year. And he did and now the cynics say he can’t change the country, but he will.”

As for Ms Reeves – whose tearful appearance in the Commons spooked markets after the prime minister initially failed to back her, Mr Streeting said the chancellor was a “tough character” who was “resilient and she will bounce back”.

The health secretary declined to expand on why Ms Reeves was in the chamber at all yesterday, repeating that it was a personal matter.

“Rachel Reeves as chancellor is here to stay,” he continued.

“We need her to get the economy from strength to strength, to make sure that family finances are in better health than we were when we came into office.”

Speculation about the futures of the two most senior members of the government threaten to overshadow the announcement today, which the government says is “one of the most seismic shifts” in the health service’s history.

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Why has Starmer axed NHS England?

Sir Keir will pledge three main facets of the plan: moving care into the community, digitising the NHS, and a focus on sickness prevention.

The prime minister will announce neighbourhood health services will be rolled out across England to improve access to the NHS and to shift care out of overstrained hospitals.

Sir Keir has already promised thousands more GPs will be trained, and to end the 8am “scramble” for an appointment.

He also previously said his government will bring the NHS into the digital age, with “groundbreaking” new tools to support GPs rolled out over the next two years – including AI to take notes, draft letters and enter data.

And he will promise new contracts that will encourage and allow GP practices to cover a wider geographical area, so small practices will get more support.

Unite, one of the UK’s largest healthcare unions, welcomed the plan cautiously but said staff need to be the focus to ensure people are better looked after.

Read more:
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‘Reform or die’

Sir Keir said: “The NHS should be there for everyone, whenever they need it.

“But we inherited a health system in crisis, addicted to a sticking plaster approach, and unable to face up to the challenges we face now, let alone in the future.

“That ends now. Because it’s reform or die.”

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Do you want AI listening in on chats with your doctor?

Neighbourhood health services

The newly announced neighbourhood health services will provide “pioneering teams” in local communities, so patients can more conveniently access a full range of healthcare services close to home.

Local areas will be encouraged to trial innovative schemes like community outreach door-to-door to detect early signs of illness and reduce pressure on GPs and A&E.

The aim is to eventually have new health centres open 12 hours a day, six days a week to offer GP services as well as diagnostics, post-operative care and rehab.

They will also offer services like debt advice, employment support, stop smoking help or weight management.

More NHS dentists

Dentists will also be part of the plan, with dental care professionals part of the neighbourhood teams.

Dental “therapists” will carry out check-ups, treatments and referrals, while dental nurses could give education and advice to parents or work with schools and community groups.

Newly qualified dentists will be required to practice in the NHS for a minimum period, which they have said will be three years.

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