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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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Sir Keir Starmer says he will take ‘no more lectures’ from Nigel Farage – and warns of ‘fight for the soul of our country’

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Sir Keir Starmer says he will take 'no more lectures' from Nigel Farage - and warns of 'fight for the soul of our country'

Sir Keir Starmer has said he will take “no more lectures” from Nigel Farage, as he warned that the next four years will be “a fight for the soul of our country” against Reform UK.

In a speech setting out his vision of “national renewal” for Britain, the prime minister hit out at “snake oil merchants on the right, on the left”, and questioned whether Mr Farage and his party “genuinely love our country”.

Sir Keir also asked for “patience” as he implements the “change” he has promised, which comes after a challenging first 14 months in power, with Reform UK continuing to top the opinion polls, and dissent within his own party in the form of a series of interviews by Greater Manchester mayor Andy Burnham criticising the direction of the government.

In an hour-long speech at the Labour Party conference, the prime minister declared that the UK is at “a fork in the road”, saying: “We can choose decency, or we can choose division; renewal or decline; a country proud of its values, in control of its future, or one that succumbs against the grain of our history to the politics of grievance. It is a test, a fight for the soul of our country.”

Sir Keir argued the “path of renewal” he wants to set the country on is “long”, and “requires decisions that are not cost-free or easy, decisions that will not always be comfortable for our party”. But the reward, he said, is “a new country, a fairer country, a land of dignity and respect”.

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How did the PM perform at conference?

He hit out at politicians who “tell you there’s a quick fix, a miracle cure, tax cuts that magically pay for themselves, a wealth tax that somehow solves every problem”.

“We can all see these snake oil merchants on the right, on the left, but be in no doubt, none of them have any interest in national renewal because decline is good for their business,” the prime minister said.

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‘That’s not pride, that’s racism’

Starmer calls on party to ‘fight Reform’

In a lengthy attack directly on Reform UK, Sir Keir said: “Think about it, when was the last time that you heard Nigel Farage say anything positive about Britain’s future? He can’t. He doesn’t like Britain, doesn’t believe in Britain, wants you to doubt it just as much as he does. So he resorts to grievance.”

He continued: “The question I ask seriously of Nigel Farage and Reform is, do they love our country? Do they want to serve our country? All of it – our beautiful, tolerant, diverse country, every region, nation and city? Or do they just want to stir the pot of division?”

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He issued a rallying cry to the Labour Party to “fight Reform with everything that this movement has”.

He went on: “If you are a patriot, whether you vote Labour or not, if you want to stand against grievance and renew Britain, then this is your fight too. Because even in a world this dangerous, I do think the politics of grievance is the biggest threat we face because it attacks who we are.”

The prime minister added that he will “fight with every breath I have, fight for working people, fight for the tolerant, decent, respectful Britain that I know”.

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Cabinet reacts to Starmer speech

Starmer is ‘unfit to be PM’

In response, Mr Farage said in a video message online: “I used to think the prime minister was a decent man, somebody that I could talk to and chat to. We might disagree on worldview, but I thought he was a profoundly decent human being.

“I am completely shocked at his behaviour. I hope when he wakes up tomorrow morning, he feels ashamed of what he has done.

“This is a desperate last throw of the dice for the prime minister, who’s in deep trouble. A prime minister who can’t even command the support of half of his own party. But I’m sorry to say, I now believe he is unfit to be the prime minister of our country.”

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Farage hits back at Starmer

The Conservative Party barely got a mention in the hour-long speech, underscoring where Sir Keir believes the battle lines will be drawn at the next general election, expected in 2029.

But speaking to broadcasters afterwards, party leader Kemi Badenoch said: “I just thought it was really extraordinary that Keir Starmer could not explain how he was going to improve the economy.”

She described the fight between Sir Keir and Mr Farage as “two boys squabbling in the playground”, and said she wants to focus on how “the people in government can make life better”.

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As he declared Reform UK “the enemy of national renewal”, Sir Keir set out his vision of the future of the country, saying: “At the end of this hard road, there will be a new country, a fairer country, a land of dignity and respect. Everyone seen. Everyone valued.

“Wealth creation in every single community. Working people in control of their public services. The mindless bureaucracy that chokes enterprise removed, so we can build and keep building. Clean British energy powering our homes. Technology harnessed to drive us forward. Our flags flying proudly as we celebrate difference and oppose racism.”

He acknowledged that the public is “losing faith”, and people are feeling “ground down”, saying: “Politics has made them question Britain. And could you blame them? They’ve been nothing but patient.”

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Was that a campaign speech?

The prime minister said Britain is not “broken” – something he has previously argued himself – but said that his solution to the problems Britain faces is an economy working “from the grassroots”, secure borders and controlled migration, and public and private investment in everything from education to infrastructure.

“Every decision” the government has made in the past 14 months has been about “changing the way we create wealth, reforming public services, giving people more control over our future”, he argued.

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The prime minister announced “NHS Online”, which will allow patients to access prescriptions, book scans and tests, receive clinical advice, and manage appointments through the NHS app.

And he also announced he is scrapping the Blair-era target of 50% of all young people going to university, in favour of two-thirds going to either universities or “gold-standard apprenticeships”.

Concluding his speech, the prime minister said: “People say that a nation like ours can’t be a community – that it is too diverse, too divided. I reject that. That goes against everything I stand for, everything I’ve served, everything I understand about this great country that I love.

“So no matter how many times people tell me it can’t be done, I believe Britain can come together, that we can pursue a shared destination, that we can unite around the common good. That is my ambition.

“The purpose of this government – end decline, reform our public services, grow our economy from the grassroots and with resolve, with respect, with a flag in our hands, we will renew this country until we can say with total conviction that Britain is built for all.”

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Lucy Powell calls for MPs to vote on single sex space guidance

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Lucy Powell calls for MPs to vote on single sex space guidance

Lucy Powell has called for MPs to vote on guidance governing single sex spaces following this year’s landmark Supreme Court ruling on biological sex.

Ms Powell, who is standing against Bridget Phillipson in the contest to replace Angela Rayner as Labour deputy leader, told members the party had got some of its language around Equality and Human Rights Commission (EHRC) guidance “not right”.

Sky News understands this means Ms Powell would like to see MPs vote on the guidance.

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How did the PM perform at conference?

The Manchester Central MP, who was sacked as Commons leader in Sir Keir Starmer’s reshuffle, said she felt “really strongly” that there needed to be a “robust and transparent parliamentary conversation” about the guidance issued by the commission following the Supreme Court ruling that the legal definition of a woman is based on biological sex.

Addressing members on the Monday evening of Labour’s conference in Liverpool, Ms Powell said she would be continuing to “support the trans community which I represent in my constituency very well and have done for a long time”.

“I’m a woman, I’m a feminist and I see absolutely no contradiction in being a woman and also supporting the trans community to feel included and to have their rights as well,” she said.

“That is something I will strongly support as deputy leader in all the ways that I can and I’m happy to work with you on that.”

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Her comments suggest the debate around transgender rights could play a more prominent role in the deputy leadership race, given Ms Phillipson serves as the women and equalities minister, as well as education secretary.

The debate has proved fractious and controversial within Labour, with prominent MP Rosie Duffield quitting the party to sit as an independent in part over Sir Keir’s stance on the issue.

The EHRC, the body responsible for equality and non-discrimination laws, is understood to have sent its guidance to Ms Phillipson, who is currently reviewing it and will decide whether to approve it.

The guidance is expected to say that venues offering single-sex facilities will have to exclude transgender people, including if they have a gender recognition certificate or have undergone gender reassignment surgery.

It has been welcomed by some women’s rights groups and campaigners, but others, including Stonewall and some businesses, have criticised the guidance as “confusing” and “unworkable”.

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Speaking on Monday, Ms Powell said: “I think we have got some of the language not right on this and particularly around some of the guidance that is coming forward.

“I really strongly feel that we need a robust and transparent parliamentary conversation about that because when we are looking at applying the law as parliamentarians, we should have a say in that and that is something I will be pushing for as well.”

Sir Keir welcomed the “real clarity” of the Supreme Court ruling when it was delivered in April, and said it allowed “those that have got to draw up guidance to be really clear about what that guidance should say”.

Ms Phillipson also told the Commons the judgment brought “clarity and confidence for women”, but added that the government would “support the rights of women and trans people, now and always”.

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Bridget Phillipson: ‘I act to make change happen’

Elsewhere at an event with members, Ms Powell argued there needed to be a “cultural reset” in Downing Street following a series of political and policy mishaps.

“We need a cultural reset here, and that’s one of the things that members have been asking me about. We seem to be relying on a smaller and smaller group of people who have a similar view of the world, and I don’t think that’s healthy or strong. Having me as deputy leader can help with that cultural reset we need.”

Ms Powell also argued her status as a backbencher gave her an advantage in the contest.

She said she “profoundly disagreed” with Ms Phillipson’s claim that it was a “risk” to have someone outside the cabinet as deputy leader.

“The deputy leader is elected by members. I don’t think the first hurdle is that you have to be anointed by the leader. The deputy leader is a party role not a government role.

“I think it’s a value added proposition that I’m putting on the table right now.”

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Starmer’s speech was one of his most successful moments – but biggest issue in UK politics was ignored

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Starmer's speech was one of his most successful moments - but biggest issue in UK politics was ignored

On its own terms, this was one of Sir Keir Starmer’s most successful moments since becoming Labour leader in 2020. 

Just in the nick of time, the prime minister delivered a speech that will steady his position in the party and arm Labour activists with new, clearer dividing lines with Reform UK. There’s nothing like finding and cauterising an enemy to get the crowd back on side.

He attacked “snake oil merchants” on the left and right – allowing some to question whether that is a category which includes Andy Burnham.

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Sir Keir Starmer on stage with his wife Lady Victoria. Pic: PA
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Sir Keir Starmer on stage with his wife Lady Victoria. Pic: PA

And he worked out his principle policy attack on Reform UK: the plan to rip up the settled status of people who have lived in Britain for decades.

In a move that one senior Labour figure described as a “One Nation Labour” credo, he gave a more credible account of his credentials as a champion of working people than he has managed in the past by invoking his family.

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Rather than pretend that the Oxford-educated barrister could play the role of a working-class hero, he pointed to the struggles of his father, brother and sister to emphasise he understands the lives of those outside the north London seat he represents.

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Cabinet reacts to Starmer speech

The politics are striking. Sir Keir’s team tell me that the speech was aimed at those in Middle England who are tempted by Reform UK.

But in an apparent change, it was also a speech that went down well with the soft left, who have been disappointed by Sir Keir for much of the year.

Rather than moving into Reform UK territory, he spelt out why they were wrong in a set piece that might succeed in its aim of stopping the drift away of voters from Labour to the Lib Dems, Greens and others on the left.

Yet for all of its success, the biggest issue in British politics was ignored. There continues to be a £20-30 billion black hole, which will define this year in British politics, yet this was not mentioned at all.

There was a brief sort of acknowledgement of the need for fiscal rules – a lack of financial responsibility would hit working people, he argued.

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Beth Rigby: Inside the room at Starmer’s speech

He also noted that businesses paid a lot in tax, though it was not clear that this amounted to a promise not to tax them further. But there was none of the pitch rolling for what continues to look like a massive moment at the budget on 26 November.

Cabinet ministers say that there was a more urgent task of shoring him up and setting a direction to be done, that trumped the need to dwell on this impending problem.

The issue is whether it marks a wider change in his premiership. The challenge for Sir Keir has always been whether he can execute policy that will change people’s lives.

His approach – the high-level chairman rather than interventionist chief executive – does not always yield the real change of his rhetoric. This will need to change for this government to truly be a success.

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