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The private equity firm that had been the frontrunner to lead a rescue of the UK’s largest water provider – Thames Water – has pulled out.

Thames Water Utilities, which is staring down the prospect of a special administration process without fresh investment, said an alternative plan was now under discussion after KKR’s exit from the process.

It is understood that the company hopes a new transaction could be agreed by July.

KKR was handed preferred bidder status back in March as Thames, which serves 15 million customers but has a £22.8bn debt pile, moved to secure fresh equity.

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Thames said that KKR had indicated it was not in a position to proceed. No reasons are understood to have been given.

But its withdrawal was announced a week after Thames was handed a record fine by the industry regulator for failures related to its wastewater operations and dividend payouts.

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Thames Water hit with huge fine

The move was also divulged shortly after an interim report for the government raised the prospect of a super regulator being created to bolster and streamline oversight of the water industry.

Thames said it was now progressing talks with senior creditors for an alternative to stabilise its finances, and was also planning discussions with the regulator Ofwat on that plan.

The watchdog is understood to be studying a 400-page document which includes proposals for new equity and debt facilities.

It is hoped that a transaction could be completed by next month.

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Thames boss defends bonus

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The company’s chairman, Sir Adrian Montague, said: “Whilst today’s news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.

“The company will therefore progress discussions on the senior creditors’ plan with Ofwat and other stakeholders.

“The board would like to thank the senior creditors for their continuing support.”

Cash-strapped Thames secured a £3bn lifeline to tide it over back in March as the company moved to secure fresh investment to guarantee its long-term survival.

It had kept open the prospect of an alternative solution, given there was no certainty over a KKR deal being agreed.

A failure to find new investment again raises the prospect of Thames falling into a special administration process.

That would effectively see the company come under temporary government ownership to maintain vital services until a new owner, or ownership solution, is found.

A spokesperson for the industry lobby group Water UK responded: “Everyone agrees that the water industry is not working. We hope this report will be a starting point for the fundamental reforms the sector needs. We need a less complicated system which allows investment to get quickly to where it needs to go.

“In the meantime, companies are focused on investing a record £104bn over the next 5-years to secure our water supplies, end sewage entering our rivers and seas and support economic growth.”

Chair of the environment committee of MPs, Alistair Carmichael, said: “In our evidence session with Thames Water bosses in May we raised serious concerns that Thames had only pursued one bidder at an early stage for its takeover bid, against the wishes of Ofwat, and highlighted the risks this could pose if KKR chose not to proceed. Unfortunately, our concerns have been realised, putting Thames in a perilous position.

“The Government has shied away from acknowledging the potential impact of this scenario on the public finances and must ensure that any takeover is in the public interest and does not line the pockets of financial institutions further to the detriment of customers and operational performance.”

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Father of teenage girl sexually assaulted by asylum seeker reacts to his accidental release

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Father of teenage girl sexually assaulted by asylum seeker reacts to his accidental release

The mistaken release of an asylum seeker who was jailed for sexual offences has prompted widespread condemnation – and an extensive police operation.

Hadush Gerberslasie Kebatu, 38, had assaulted a 14-year-old girl and a woman in Epping, about a week after he had crossed the Channel and arrived in the UK by boat.

Last night, the teenager’s father was visibly upset as he turned up at HMP Chelmsford – asking for answers on how Kebatu was freed just one month into a 12-month sentence.

He did not want to speak on camera – but told Sky correspondent Mollie Malone that he was “frustrated” at the thought of the Ethiopian national being back on the streets.

“The justice system has let us down,” he said.

Footage has emerged that appears to show Kebatu in Chelmsford town centre following his release – dressed in prison clothes and clutching his belongings in a see-through bag.

He then headed to the railway station and boarded a train bound for London’s Liverpool Street, which departed at 12.41pm yesterday.

Follow latest developments on manhunt

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Accidental release ‘damaging’ for government

‘You couldn’t make it up’

Kebatu’s case had a high profile and led to weeks of protests outside the Bell Hotel in Epping, where he was staying alongside other asylum seekers.

When he was sentenced last month, Judge Christopher Williams warned he posed a “significant risk of reoffending”.

The Liberal Democrat MP for Chelmsford, Marie Goldman, told Sky presenter Barbara Serra she was “appalled, frustrated and angry about how this could possibly happen in the first place”.

She said it is clear something went “fundamentally wrong” at HMP Chelmsford – and her constituents are “fed up” with systems not working and underinvestment.

“It just destroys trust at a time when emotions are riding high. We’ve seen protests over the past few weeks and months, and there’s a lot of fear out there,” Ms Goldman added.

“It is so easy to lose trust and really hard to gain it – we need the government to get a grip on this.”

Protests were held at The Bell Hotel for several weeks
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Protests were held at The Bell Hotel for several weeks

Shadow home secretary Chris Philp described Kebatu as a “dangerous illegal immigrant” – and said his premature release shows “staggering incompetence”.

He told Sky News: “We also need an urgent apology from Home Secretary Shabana Mahmood and Justice Secretary David Lammy who have presided over this fiasco.”

Mr Lammy, who also serves as deputy prime minister, has said he is “appalled” and “livid on behalf of the public that Kebatu is at large”.

He confirmed a full investigation is being launched, adding: “He should be deported back to Ethiopia after the sexual assaults that he’s committed.”

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Manhunt continues for Kebatu

Extensive policing operation under way

Multiple forces are now involved in the manhunt for Kebatu – including Essex Police, the British Transport Police and the Metropolitan Police in London.

Policing commentator Graham Wettone told Sky presenter Gillian Joseph that detectives will be carefully piecing together his movements after walking free from HMP Chelmsford.

“All these forces will now be looking at the CCTV from the train itself – trying to locate him on the train and trying to identify at which stop he went off at, and where he went from that station,” he explained.

Mr Wettone said information from Essex Police’s initial investigation – including the contacts, friends and associates he had at the Bell Hotel – will also be a factor.

Questions will also be asked of the prison authorities: “Has he had any visits or phone calls? Has he got any friends or family in the country?”

He added that additional officers will have been allocated to the manhunt: “The Met will have some significant resources looking for him – maybe the Territorial Support Group or additional borough-based officers in and around Liverpool Street first of all.”

The British Transport Police could also be involved in further inquiries if Kebatu ended up travelling on the Underground.

“It really depends on where that thread goes – if they can locate where he got off, and then where he went to,” Mr Wettone said.

“This work is very, very fast-paced – there are detectives and intelligence officers working in the background, chasing up on leads and updating the teams on the ground.”

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Could the UK run out of drinking water? Experts say ‘fast changes’ needed

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Could the UK run out of drinking water? Experts say 'fast changes' needed

Experts are warning that without “fast changes” the UK could run out of drinking water in the future.

The first seven months of 2025 were the driest since 1976, with reservoirs across England only 56.1% full on average, according to the Environment Agency.

“I think that we do need to worry about the fact that there is this possibility we could run out,” Hannah Cloke, professor of hydrology from Reading University, told Sky News.

“It’s only if we start thinking like that, that we’re going to start conserving our water, otherwise we just take it completely for granted.

“It is all of our fault, we have not been paying attention to what’s going on… we need some very fast changes to the way that we are using water and the way that we’re storing water in order to stop this being a problem in the future, because our summers are only going to get hotter.”

By 2050, the government says that England could face a shortfall of five billion litres of water every day.

‘Growing pressure’ on water system

A Department for Environment, Food and Rural Affairs spokesperson said: “This government recognises the growing pressure on our water system and is taking decisive action.

“We’re delivering over £104bn of private investment to fix leaking pipes, build nine new reservoirs and secure our water supply for the future.”

Latest figures suggest that around 2,690 megalitres of water is lost every day in England through leaks – the equivalent of 1,076 Olympic-sized swimming pools.

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There is far less water in Rutland Reservoir this year
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There is far less water in Rutland Reservoir this year

‘We have invested an extra £10m’

“Leaks are a really important issue for us. We have invested an extra £10m just to deal with the weather that we’ve seen this summer,” said Dr Geoff Darch, head of strategic asset planning for Anglian Water.

Anglian Water is also hoping to build two new reservoirs in the East of England.

“We don’t want to stop people using water, it is absolutely essential for everything that we need it to do,” Dr Darch said.

“But I think we’ve got to a point now where we have to realise that water is a precious resource, it’s something that we all have to look after so that we have it for future generations and for the environment and with climate change and drought, we will need more reservoirs.”

The government claims it is fast-tracking new reservoirs to address the problem
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The government claims it is fast-tracking new reservoirs to address the problem

Concerns about ‘whole system starting to collapse’

In August, the UK received just 62% of its average rainfall, according to the Met Office, which is leading a group of residents to monitor their water stocks closely.

“We collect all our own water from the rain, and so if we don’t have the rain that’s a significant issue,” explained Simon Tilly, director of the Hockerton eco housing project in Nottinghamshire.

He told Sky News they were working together to use less water.

“I suppose I’m most concerned about the whole system starting to collapse. There’s potential for longer droughts and us having a lot of water stress, there’s potential for a lot of floods when the drought finishes… and just generally that system going into random patterns where we’re getting more droughts and more floods,” he added.

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Woman, 49, in serious condition in hospital after girl, 9, found dead

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Woman, 49, in serious condition in hospital after girl, 9, found dead

A woman in a “life-threatening” condition is “under police watch” in hospital after a nine-year-old girl was found dead in an Oxfordshire village.

Police were called to a property in Middle Street in Islip at 11.15am on Tuesday following reports that three children had been assaulted.

The nine-year-old girl was pronounced dead at the scene. Her family is being supported by specially trained officers.

A girl, a boy and the 49-year-old woman were found injured, with police taking them to hospital for treatment.

The two children have since been discharged.

Detective Inspector Amy Fox said: “First and foremost, our deepest sympathies are with the child’s family, friends and all who knew and loved her. This is an unimaginable tragedy and we are doing everything we can to support those affected.

“A 49-year-old woman from Oxfordshire was taken to hospital in a life-threatening condition and is currently under police bed watch.

“We are not currently seeking anyone else in connection with this incident.”

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A post-mortem examination has been carried out, but the cause of death remains unascertained pending further investigation, Thames Valley Police said.

“This remains a highly sensitive and complex investigation,” DI Fox said.

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