Sky News is reporting that the Government is lining up administrators in the event of the possible collapse of Thames Water.

City Editor Mark Kleinman first reported the breaking news 3 hours ago that the “Government is stepping up contingency planning for the collapse of Thames Water” in case a private sector rescue deal fails to materialise.

According to Kleinman, the Government has drafted in insolvency practitioners from business consultancy firm FTI Consulting to advise on the Special Administration Regime for the company. A statement provided to Sky by the Department for Food, Environment and Rural Affairs said:

“The Government will always act in the national interest on these issues. The company remains financially stable but we have stepped up our preparations and stand ready for all eventualities, including applying for a Special Administration Regime if that were to become necessary.”

The Sky News report took pains to emphasise that “even if the company were to collapse into insovency proceedings, customers would continue to receive their water and wastewater services as normal.”

With around 16 million customers – around a quarter of the UK population - Thames Water is the UK’s biggest water company.

Tideway "we have considered the scenario of TWUL or the Special Administrator choosing not to pay Tideway’s revenue"

In its latest annual report published on 17 June 2025, Tideway (Bazalgette Tunnel Ltd)  the company responsible for financing, building, maintaining and operating the £4.6 billionThames Tideway Tunnel, said it is continuing to monitor the impact of Thames Water’s corporate position.

The cost of the project is being paid for by Thames Water’s 15 million wastewater customers through their bills, which will rise by no more than £25 per year.

Tideway Tunnel is expecting to receive allowed revenues of c £134.17 million from Thames Water for the Charging Year of 2025/26 - revenues are billed and collected by Thames Water from its wastewater customers and passed to Tideway.

According to Tideway the company has received received confirmation from Ofwat that the existing statutory and regulatory protections would continue to apply should Thames Water’s status change.

The Long-Term Viability Statement contained in the report also refers to the potential impacts of Thames Water or a Special Administrator not paying Tideway revenue for a period of time before enforcement action is taken by Ofwat to address the situation or the issue being addressed by the revenue reconciliation mechanism.

Commenting on Thames Water's increased risk exposure the report states:

“We continue to note Thames Water’s evolving financial position and this has led to concern that

their situation might change. We remain confident that the company’s revenues are well protected given water industry legislation and the licence obligations that apply to both Thames Water and Tideway.”

However, the report says that there is a possible risk that Thames Water, given its current financial position, or a Special Administrator may choose not to pay an element of Tideway’s revenue.

“This would not be consistent with TWUL’s licence and would be expected to lead to a breach and enforcement action….

Furthermore, we have considered the scenario of TWUL or the Special Administrator choosing not to pay Tideway’s revenue. While the risk is reasonably low we have sought and received clarification with Ofwat and Government on the statutory and regulatory protections and actions that both parties (Ofwat and Government) would take in those circumstances.” the report states.