Thames Water moves step closer to nationalisation after government objects to rescue deal

The government has objected to a proposed rescue deal for Thames Water, in a move which takes the UK's largest water company a step closer to a form of nationalisation.

Environment Secretary Emma Reynolds wrote to the industry regulator on Monday to raise concerns over the package put forward by the firm's lenders.

Fears the company could collapse first emerged three years ago, and the government has been on standby to take control if required ever since.

A government spokesman told the BBC that the current offer "does not do enough to protect consumers or the environment".

Thames Water - which serves about 16 million customers, mostly across London and parts of southern England - has faced heavy criticism in recent years over its performance, sewage discharges, and pipe leaks.

In May last year, it was handed a £122.7m fine , the biggest ever issued by the water industry regulator, for breaching rules on sewage spills and shareholder payouts.

A group of its existing lenders has offered to write off 30% of its near £20bn debt pile and inject billions in new money, but want leniency from future pollution fines in return.

The Financial Times previously reported creditors would inject some £3.35bn into company as part of a turnaround plan.