Eagle holds first talks with Thames Water chiefs amid bailout crisis

Angela Eagle, the new environment secretary, held her first face-to-face talks with Thames Water bosses this week as Britain's biggest water utility and the creditors trying to rescue it seek clarity over Andy Burnham's desire for "greater public control" of the industry.

Sky News has learnt that Ms Eagle met Sir Adrian Montague, Thames Water's chairman, and Chris Weston, chief executive, on Wednesday even as the company continues to teeter on the brink of collapse.

A Whitehall source said the meeting between the minister and the company was principally focused on its recent leakage performance, and that no substantive discussion took place about Thames Water's solvency or a possible move to temporarily nationalise it.

Ms Eagle, who has raised the prospect of changing Britain's insolvency laws to make it easier to seize control of failing water companies, is also understood to have met executives from South East Water this week - part of an initial programme of engagement between the new secretary of state and sector chiefs.

Sources said she would hold bilateral meetings with other water companies over the next fortnight.

Sky News revealed on Thursday that South East Water had been forced to shelve a £200m debt-raising in the last few days after investors cited an unacceptable level of political and regulatory risk associated with the industry.

The future of Thames Water, which serves approximately 16 million customers in London and the Thames Valley, has been hanging in the balance for more than three years.

Ms Eagle is not thought to have provided further details during her talks with Sir Adrian and Mr Weston of the prime minister's definition of "public control", although sources say the Treasury is vehemently opposed to the deployment of taxpayers' money into the sector.

People close to the situation say that a resolution of the Thames Water crisis is now unlikely to be determined until after the Budget, which John Healey, the chancellor, will deliver in late October.

Ms Eagle has been asked by 10 Downing Street to come up with options for Thames Water and the wider industry, although a reform package promised by Sir Keir Starmer's administration last year has failed to materialise.

A consortium of creditors, including Apollo Global Management, Elliott Management, Farallon Capital Management and Silver Point Capital - which collectively hold £17bn of Thames Water's £21bn debt pile - have proposed a radical reshaping of the company's balance sheet.

They have outlined a £10bn deal to take control of Thames Water, which includes injecting £3.35bn of fresh equity into the company.

The funds would also provide a total of £6.25bn of new debt, while writing off £9.6bn of Thames Water's existing borrowings.

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Under their plans, the creditors would not pay any dividends to shareholders until the 2030s, with a plan to return the company to the public markets in about five years' time.

Ofwat is required to hold a three-month public consultation on a private sector deal, meaning that time is running out for such a process to be launched.

Thames Water has repeatedly warned that it would run out of money by the end of the year, although creditors have stated their intention to continue financing the company into 2027.

Ms Eagle's predecessor, Emma Reynolds, warned in June that she had serious concerns about the rescue package, leaving the creditor group - which has formed a new entity called London & Valley Water - scrambling to revise its bid.

"I am not yet convinced that the proposal demonstrates sufficient protection for consumers' interests," she told Ofwat.

The consortium is now expected to offer the government some form of golden share as well as new governance and oversight mechanisms to strengthen Thames Water's accountability to stakeholders as it continues its long turnaround programme.

A Defra spokesperson said: "This government is holding water companies to account.

"Our generational reforms will create a water system that works for customers, the environment and investors for decades to come, with tougher regulation, stronger enforcement and greater accountability."

Sky News revealed during the summer that London & Valley Water had hired litigation specialists to prepare for a legal battle with the government if it forces the company into a special administration regime (SAR).

A spokesman for Water UK, the trade association, said: "Water companies are investing a record £104bn by 2030 to secure our water supplies, support economic growth and end sewage entering our rivers and seas."

Thames Water and South East Water both declined to comment on this week's meetings.

(c) Sky News 2026: Eagle holds first talks with Thames Water chiefs amid bailout crisis