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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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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.

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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.”

Read more from Sky News:
Manhunt for mistakenly released asylum seeker
Gang behind Wagner Group arson attack jailed

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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