GREATER MANCHESTER — A group of Thames Water creditors told the Labour government that placing the utility under temporary nationalisation would slow its turnaround and urged ministers to back a creditor-led rescue deal. The London & Valley Water consortium said a special administration regime would make it harder to fix the company, which will run out of money by November without new investment.

Thames Water said it is on the brink of agreeing a rescue deal led by creditors with the water regulator, Ofwat. Without a deal, the company could be placed in a special administration regime, under which a government-appointed administrator takes charge, a process regarded as a form of temporary nationalisation.

"Thames Water urgently needs £10bn to stabilise the company, fund improvements for customers, clean up local rivers and achieve full compliance as quickly as possible," the consortium said.

The consortium also warned against the alternative path. "With a highly credible market solution ready to implement, creating further delay with special administration is not the right answer. It will only restart the process of fixing Thames Water after two years of hard work, increase uncertainty for employees, destabilise the supply chain, delay the turnaround and make it harder to deliver the improvements customers deserve," it said.

The proposed rescue deal, first put to the regulator in June 2025, requires six weeks of consultation over the summer and about a month to consider responses before it can go ahead. Ofwat is poised to accept undertakings from the company that would lead to it committing to fix the issues that caused its original problems rather than paying a penalty to the government.

Under Keir Starmer's leadership, the government, including the chancellor Rachel Reeves, has expressed support for an industry solution to Thames Water's financial problems. The company has been trying to stave off financial collapse for more than two years, having built up £17.6bn in debt in the decades since its privatisation. Last year, Thames Water bosses attempted to sell the company, but their preferred bidder, KKR, pulled out of the deal at the last minute.

Greater Manchester mayor Andy Burnham has suggested that renationalisation of water and energy would form part of his policy agenda should he become prime minister. "What is that path? Put more things back under stronger public control: energy, housing, water, transport," Burnham said.

Investor concerns about his attempt to return to parliament in a by-election and to challenge Starmer coincided with a fall in the share prices of listed water companies on Friday. Severn Trent and Pennon each fell by more than 8%, while United Utilities dropped by more than 6%.