What does the crisis mean for me?

What will happen if the company goes bust – and what happens if it is nationalised?

Thames Water is at risk of renationalisation after it failed to secure hundreds of millions of pounds in survival funding.

The water giant is in a race to find extra cash after shareholders refused to pay £500m by the end of the month, saying regulatory requirements make its business plan “uninvestable”.

The announcement has raised new fears the Government could step in to rescue the heavily indebted firm from collapse.

Here, the Telegraph explains how customers would be affected if Thames Water is forced into special administration.

What is happening at Thames Water?

Thames Water is in crisis after its shareholders said they would no longer provide the struggling utility giant with a £500m lifeline.

Britain’s biggest water company had been expecting the half a billion pound payment by March 31 but shareholders withheld it saying the company’s business plan was “uninvestable”.

The investors were unwilling to pump more money into the business after regulator Oftwat rejected Thames Water’s plans to increase bills substantially for its customers over the next five years.

Unless new funding is secured, the water company could be placed into special administration by the Government.

Why is it seeking funding?

Thames Water is looking for emergency funding as it battles to service its £18bn debt pile. It has come under increasing financial strain as interest rates have soared.

As part of a turnaround plan, the utility company had been lobbying Ofwat to let it increase bills by 40pc over a decade, pay dividends and receive lower fines to avoid temporary nationalisation by the

Government. Water companies have faced widespread criticism for sewage dumping and leaks, with the regulator putting them under increasing pressure to increase investment and fix their ageing infrastructure.

Who owns the company?

Thames Water’s shareholders include the Universities Superannuation Scheme, China’s Sovereign Wealth Fund and Canadian pension fund Omers.

Thames Water announced last year that investors would inject £3.25bn into the business, with £750m expected this year.

What could a collapse mean for customers?

Thames Water provides water and sewage services to 16m households – about a quarter of the UK population.

The Government has previously said it is ready to take over Thames Water in the event of a failure. A bailout would cost an estimated £5bn, much of which would likely be borne by the taxpayer. Jeremy Hunt, the Chancellor, said the Treasury is monitoring the situation “very closely”.

If this happened, the company would likely be placed into a special administration regime. This scheme was previously used to rescue energy supplier Bulb in 2021 before it was later sold to Octopus Energy.

However, some believe that Thames Water could be renationalised permanently. It was privatised in 1989 when Margaret Thatcher sold off the publicly-owned water and sewage industry.

Speaking last week, the Labour leader Sir Keir Starmer appeared to rule out nationalisation if he becomes prime minister. Asked about the future of water companies in general following a series of scandals, he told the

Reading Chronicle: “I don’t think nationalisation is the answer but getting a grip of it is.” Under government regulations, water companies must provide service to customers even if in special administration

Households’ water supplies will not be cut off, and they will be kept updated if there are any changes to their supplier.

Chris Weston, the chief executive of Thames Water, said: “I’d like to reassure our customers that, despite this announcement, it is business as usual for Thames Water.

“Our 8,000 staff remain committed to working with our partners in the supply chain to provide our services for the benefit of our customers, communities and the environment.” Mr

Weston told the BBC Radio 4 Today programme that even if there is no new funding, the company has enough money to cover its operating costs into the next year.

Could water bills increase? Thames Water said yesterday that discussions with Ofwat “are ongoing”.

The regulator could decide to allow the utility firm to increase customers’ bills in order to avert a taxpayer bailout.

Bills are already poised to rise next month by an average 12.4pc, taking the typical annual payment to £471, piling further pressure on cash-strapped customers.