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Ministers have lined up insolvency practitioners to prepare for the potential collapse of Thames Water, Britain’s biggest water utility.

Sky News can exclusively reveal that Steve Reed, the environment secretary, has signed off the appointment of FTI Consulting to advise on contingency plans for Thames Water to be placed into a Special Administration regime (SAR).

Sources said on Tuesday that the advisory role established FTI Consulting as the frontrunner to act as the company’s administrator if it fails to secure a private sector bailout – although approval of such an appointment would be decided in court.

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Thames Water, its largest group of creditors and Ofwat, the industry regulator, have been locked in talks for months about a deal that would see its lenders injecting about £5bn of new capital and writing off roughly £12bn of value across its capital structure.

The discussions are said to be progressing constructively, although they appear to rely in part on the prospect of the company being granted forbearance on hundreds of millions of pounds of regulatory fines.

Responding to an enquiry from Sky News on Tuesday, a government spokesperson said: “The government will always act in the national interest on these issues.

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“The company remains financially stable, but we have stepped up our preparations and stand ready for all eventualities, including applying for a Special Administration Regime if that were to become necessary.”

Insiders stressed that FTI Consulting’s engagement by the Department for the Environment, Food and Rural Affairs (DEFRA) did not signal that Thames Water was about to collapse into insolvency proceedings.

A SAR would ensure that customers would continue to receive water and sewage services if Thames Water collapsed, while putting taxpayers on the hook for billions of pounds in bailout costs – a scenario the chancellor, Rachel Reeves, is keen to avoid at a time when the public finances are already severely constrained.

The SAR process can only be instigated in the event that a company becomes insolvent, can no longer fulfil its statutory duties or breaches an enforcement order, according to insiders.

Mr Reed has repeatedly stressed the government’s desire to avoid taking Thames Water into temporary public ownership, but that it was ready to deal with “all eventualities”.

“Thames Water must meet its statutory and regulatory obligations to its customers and to the environment–it is only right that the company is subject to the same consequences as any other water company.

The company remains financially stable, but we have stepped up our preparations and stand ready for all eventualities,” he told the House of Commons in June.

Thames Water, which has about 16m customers, serves about a quarter of the UK’s population.

It is drowning under close to £20bn of debt, and was previously owned by Macquarie, the Australian infrastructure and banking behemoth.

Its most recent consortium of shareholders, which included the Universities Superannuation Scheme and an Abu Dhabi sovereign wealth fund, have written off the value of their investments in the company.

The government’s SAR process has only been tested once before, when the energy retailer Bulb failed in 2021.

Bulb was ultimately sold to Octopus Energy with the taxpayer funding used to save and run the company since having been repaid.

Thames Water is racing to secure a rescue plan involving funds such as Elliott Management and Silver Point Capital, with a deadline of late October to appeal to the Competition and Markets Authority against Ofwat’s final determination on its next five-year spending plan.

Ofwat has ruled that Thames Water can spend £20.5bn during the period from 2026, with the company arguing that it requires a further sum of approximately £4bn.

Mike McTighe, a veteran corporate troubleshooter who chairs BT Group’s Openreach division, has been parachuted in to work with the funds.

The company said in its accounts last month that there was “material uncertainty” over whether it could be solvently recapitalised.

Earlier this year, Thames Water was fined a record £123m over sewage leaks and the payment of dividends, with Ofwat lambasting the company over its performance and governance.

In recent weeks, Thames Water has been engulfed in a row over the legitimacy of bonuses paid to chief executive Chris Weston and other bosses, even as it attempts to secure its survival.

Under new laws, Thames Water is among half a dozen water companies which have been barred from paying bonuses this year because of their poor environmental records.

The creditor group was effectively left as the sole bidder for Thames Water after the private equity firm KKR withdrew from the process, citing political and reputational risks.

The Hong Kong-based investor CK Infrastructure Holdings (CKI), which already owns Northumbrian Water, has sought to re-engage in talks about a rescue deal but has gained little traction in doing so.

News of FTI Consulting’s appointment also comes on the same day as a “nationally significant” water shortfall was declared across swathes of the country.

Last week, Sky News revealed that David Black, the Ofwat chief executive, was to step down following the publication of a government-commissioned review which recommended the regulator’s abolition.

He has been replaced by Chris Walters, another Ofwat executive, on an interim basis.

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Girl, 12, who died after being found unresponsive at psychiatric unit failed on multiple levels, inquest finds

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Girl, 12, who died after being found unresponsive at psychiatric unit failed on multiple levels, inquest finds

A 12-year-old girl who died after an incident of self-harm was failed on multiple levels, an inquest jury has found.

Warning: This story contains references to self-harm and suicide

Mia Lucas, who died in January 2024, was found unresponsive at an NHS children’s psychiatric unit after developing a rare neurological disorder that had been left undiagnosed.

The jury at Sheffield Coroner’s Court heard the girl was found at the Becton Centre, part of Sheffield Children’s NHS Foundation Trust.

She had been placed there after being sectioned while suffering an “acute psychotic episode” during an assessment at the Queen’s Medical Centre (QMC) in Nottingham.

On Thursday, the jury found that the failure to undertake a lumbar puncture at QMC before her transfer to the Becton Centre “possibly contributed to Mia’s death”.

A lumbar puncture involves a needle being inserted into your lower back to find out if symptoms are caused by a brain or spine condition.

Mia Lucas.
Pic: Family handout/PA
Image:
Mia Lucas.
Pic: Family handout/PA

The jury also said there was a failure at the Becton Centre to respond adequately to Mia’s risk of self-harm.

Professor Marta Cohen told the jury Mia’s cause of death was “compression of the neck” but she had now added that this was caused by “acute psychosis”, which was caused by “autoimmune encephalitis”, an inflammation of the brain that can cause extreme psychiatric symptoms and is treatable.

The autoimmune encephalitis diagnosis emerged during the nine-day inquest after a pathologist revealed she had received new post-mortem results.

The revelation prompted shock in the courtroom and tears from Mia’s family members in the public gallery.

The condition was described as “complex and rare”, according to consultant paediatric neurologist Mike Taylor.

He added that there was a low level of suspicion Mia had it, while being assessed at QMC, and told the court that experts had to consider the very severe treatment side effects, which included death.

Mia’s mother, Chloe Hayes, told Sky News she was unhappy at how the Becton Centre had supervised her daughter.

Mia Lucas (right), with her mother Chloe. Pic: Family handout/PA
Image:
Mia Lucas (right), with her mother Chloe. Pic: Family handout/PA

“All they had to do was watch her. I actually never got told the truth about the attempts that Mia made [to self-harm] until after she died,” she said.

“If I’d have known the truth I wouldn’t have left Mia there. And I think she had so much to live for. I don’t think she knew what she was doing.”

In a statement, Mrs Hayes added that she wanted people to know her daughter’s extreme behaviour was only evident in the final few weeks of her life.

“For the other 12 years, she was a beautiful soul who loved life and loved her family, and that’s how we want her to be remembered,” she said, describing Mia as a “happy, fun, friendly girl who had so much to live for.”

NHS Trusts apologise for Mia’s death

In a statement, Dr Manjeet Shehmar, medical director at Nottingham University Hospitals NHS Trust, offered “heartfelt condolences to Mia’s family for the loss of their daughter”.

She continued: “We accept the coroner’s outcome in court today and apologise to Mia’s family for not identifying autoimmune encephalitis while she was in our care. While this is an incredibly rare condition and initial tests were negative, we recognise that further testing may have had an impact on her future, for which we are truly sorry.”

Dr Shehmar said that in future cases of suspected possible autoimmune encephalitis, a lumbar puncture will be performed.

The trust will also “strengthen training and guidance for staff internally and review current published evidence of acute psychotic episodes in children and young people”.

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Pic: Family handout/PA
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Pic: Family handout/PA

Dr Jeff Perring, executive medical director at Sheffield Children’s NHS Foundation Trust, said: “Our thoughts are with Mia’s family and everyone who is grieving her loss in such tragic circumstances.

“We are deeply sorry for Mia’s death and recognise the profound impact this has had on those who loved her.”

The trust has carried out a thorough review of Mia’s care and made “significant changes” at the Becton Centre, he added.

“We will continue to work with children, young people, their families and carers to listen to, learn and take action from their experiences.

“The inquest has been important to understand fully the circumstances surrounding Mia’s death. We will now carefully reflect on the evidence heard and the coroner’s conclusions to ensure we continue to provide safe and compassionate care.”

Anyone feeling emotionally distressed or suicidal can call Samaritans for help on 116 123 or email jo@samaritans.org in the UK. Alternatively, you can call Mind’s support line on 0300 102 1234, or NHS on 111.

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Budget 2025 is a big risk for Labour’s election plans

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Budget 2025 is a big risk for Labour's election plans

Day two after a budget is always an important moment.

This is when the nerds and boffins of Britain’s fiscal thinktanks assemble to deliver their snap verdict on the chancellor’s decisions.

The moment is more important than ever when, as was certainly the case this time, the budget is a big one.

So what did the Institute for Fiscal Studies (IFS) and the Resolution Foundation make of this year’s budget?

Well, as you’d probably expect, they both fell short of distilling it into a single soundbite, but in broad terms, they both sounded somewhat positive.

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Yes, there were plenty of big provisos. The head of the IFS, Helen Miller, said Labour have broken their manifesto pledge not to raise National Insurance.

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The Resolution Foundation argued that if only the chancellor had raised the basic rate of income tax instead of freezing personal allowances, it would have made the tax rise considerably fairer and more progressive.

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And that’s before one gets into the criticism of some of the other bits and pieces from the red book – the structure of the EV tax, for instance (why doesn’t it try to penalise congestion?), or of the mansion tax (why not just overhaul council tax altogether?).

But for the most part, these closely-followed institutions seemed pretty supportive of this year’s budget – more so, certainly, than they were last year.

Primarily, that’s because while the last budget left only a very thin bit of headroom against Rachel Reeves’s fiscal rules, this one was far more cautious, doubling that fiscal insurance policy to just over £21bn.

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Yet that headroom is dependent on a couple of important factors. First, that the government will hold to its promises to keep spending growth constrained towards the end of the decade. Second, that it will be able to raise all the tax revenues it’s promising in that year.

That, in turn, gets to a deeper issue with the budget. Most of the tough stuff has been put off to the final year of the forecast – namely 2029.

That year, the government will face a squeeze at the very same moment that Britons are all asked to pay more in taxes.

And, critically, that’s the very year Labour is due to face a general election. Does it really plan to fight an election off the back of a contracting economy?

Consider, too, that for all the government’s promises to get living standards growing this parliament, they are currently only forecast to rise at the slowest rate since the 1950s – save for the pandemic and energy price shock period. The economic backdrop, in other words, is hardly rosy.

Still, for the time being, the chancellor has managed to put together a budget that has bolstered her position both in her party and in her job.

Markets remain relatively sanguine – much more so than after Rachel Reeves’s first budget last year – with bond yields lower today than before the event (albeit a little higher than yesterday).

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However, this was a complex budget. And, as with all bits of complex engineering, there remains a distinct possibility of large chunks of the budget failing to work.

But since so much of it isn’t due to kick in for a few years, it may take quite a while before we find out which bits work and which, if any, don’t.

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Man arrested at Manchester airport in connection with attack at Heaton Park synagogue

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Man arrested at Manchester airport in connection with attack at Heaton Park synagogue

A man has been arrested at an airport as part of the investigation into the terrorist attack at a Manchester synagogue.

The 31-year-old was detained at Manchester Airport on suspicion of the commission, preparation and instigation of acts of terrorism after arriving on an inbound flight, police said.

It brings the total number of people arrested in connection with the incident at Heaton Park Hebrew Congregation Synagogue to seven.

Jihad al Shamie launched the attack at the synagogue in Crumpsall on 2 October, driving his car at worshippers gathering on the Jewish holy day of Yom Kippur, before attacking others with a knife and trying to storm inside.

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Armed police shot al Shamie after he ran towards officers “aggressively” while carrying a knife and what police feared was an explosive device – later identified as a fake.

Worshippers Melvin Cravitz, 66, and Adrian Daulby, 53, were killed, with Mr Daulby being described as a “quiet hero” who leapt from his seat to block the doors of the synagogue as it came under attack.

Adrian Daulby, left, and Melvin Cravitz. Pics: Family handout/Greater Manchester Police
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Adrian Daulby, left, and Melvin Cravitz. Pics: Family handout/Greater Manchester Police

He died from a single gunshot wound to the chest fired by an armed police officer, while father-of-three Mr Cravitz died from multiple knife wounds inflicted by al Shamie, an inquest at Manchester Coroner’s Court heard in October.

The inquests into the deaths of both men have been adjourned until February next year.

Three other men were treated in hospital for serious injuries. Two have since been released, police said on Thursday.

The deadly attack rocked the local community. Pic: PA
Image:
The deadly attack rocked the local community. Pic: PA

An inquest into the death of al Shamie, a Syrian-born UK citizen, heard he was identified by his fingerprints and evidence, including his car, phone and inquiries with his immediate family in the aftermath of the attack.

At the hearing in October, Judge Alexia Durran, the chief coroner of England and Wales, said her provisional findings were that al Shamie died of gunshot wounds.

The Independent Office for Police Conduct found no misconduct in the police response.

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Synagogue attacker died of gunshot wounds

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In a statement on Thursday, Assistant Chief Constable Rob Potts, from Counter Terrorism Policing North West, said: “The loved ones of Mr Daulby and Mr Cravitz have been updated on this development, as have those who were seriously injured in the attack.

“Our investigation is continuing, and I would once again appeal for anyone with information that they think could assist our enquiries to please come forward.”

Police also said a 30-year-old man arrested on 9 October on suspicion of failing to disclose information contrary to S38B of the Terrorism Act 2000 remains on bail.

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