London & Valley Water (L&VW) - a representative subset of the creditor group holding more than £17bn of Thames Water’s Class A and super senior debt – has issued a statement “in response to press speculation surrounding Thames Water’s restructuring efforts”.

It said it “continues to be in active discussions with regulators about a comprehensive recapitalisation and transformation of the company” and that “experienced investors are ready to provide the £10bn of new capital that Thames Water needs urgently to deliver the turnaround”.

Thames Water is the UK’s largest water and wastewater services provider, serving approximately 16M customers across London, the Thames Valley and surrounding areas.

It faces a financial crisis, characterised by a debt pile of approximately £19bn to £20bn, and warned it could run out of cash without a rescue deal, leading to intensified discussions about government intervention.

This has prompted calls from MPs and campaigners to place the utility into a Special Administration Regime (SAR), a legal framework for insolvent water companies. The process would effectively bring the company back into public ownership.

In May 2025, Ofwat issued an unprecedented £123M fine for “systemic failure” in managing wastewater assets. This included a £104.5M penalty for wastewater breaches and £18.2M for unauthorised dividend payments.

L&VW, which is a consortium of lenders, proposed the £10bn restructuring package in June, but Emma Reynolds, the former secretary of state for the Department for Environment, Food & Rural Affairs (Defra) expressed concerns the deal did not do enough to protect consumers or the environment.

Yesterday, new Prime Minister Andy Burnham moved Reynolds to chief secretary to the Treasury and appointed Angela Eagle as environment minister.

In a statement issued today (21 July), L&VW said following preliminary feedback from Reynolds last month, it has been “working on material improvements to the proposal”.

“The consortium is confident it can address all the issues raised by Defra and Ofwat,” it said.

“Investors will fund all additional improvements, without any requirement for taxpayer funding or increases in customer bills. No environmental leniency has been requested.

“The consortium is eager to engage with new ministers to discuss their priorities and present a revised proposal, which will deliver environmental compliance, cleaner rivers faster, and safeguard resilient supply and clean drinking water.”

The statement added: “The consortium recognises that the new government, led by Prime Minister Andy Burnham, would like to see water companies create greater local public control and involvement to strengthen accountability for protecting investment and delivering improvements.

“L&VW agrees that there is an opportunity to enhance the way local government, regulators, and Thames Water work together, granting greater public controls on critical business issues to improve delivery of complex, essential infrastructure projects and demonstrate shared accountability.”

“To achieve this outcome, L&VW has evaluated potential new local public control supervisory structures which can be beneficial to customers through the company’s operations, designed in the public interest, which we intend to share with the new secretary of state.”

It concluded: “In addition to a new public interest supervisory structure with enhanced local representation for local authorities and regional leaders, the consortium is willing to make significant new commitments to grant greater controls and oversight to ministers, implemented through a ‘Golden Share’”.

L&VW says the benefits of the plan include:

A spokesman for London & Valley Water said: “Thames Water is a company of national importance, and we look forward to working with the new government to secure a long-term solution which delivers greater public control and the best outcome for customers.

“We continue to believe that the L&VW plan is by far the fastest and most reliable route to solving Thames Water’s complex problems and improving outcomes for customers and the environment, and achieves this without any government funding or cost to taxpayers.”

He added: “Under our plan, customers will have strong protections, regulators and government will have enhanced oversight, and there will be greater controls to ensure Thames Water delivers the record investment needed to improve environmental and operational performance.”

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