THAMES WATER’S potential collapse shows the Tory privatisation experiment to have been a “devastating failure,” unions said today amid reports that ministers are preparing an emergency nationalisation of the troubled firm.

GMB argued that the “chickens are coming home to roost” after the debt-laden utility giant confirmed that it is working with shareholders to secure the finance needed to stay afloat.

Thames Water chief executive Sarah Bentley resigned with immediate effect on Tuesday after being forced to raise £500 million in March to fend off the company’s collapse.

The firm, which is Britain’s biggest water supplier and serves 15 million people across London and south-east England, said in a statement today: “Thames Water is continuing to work constructively with its shareholders in relation to the further equity funding expected to be required.

“[Regulator] Ofwat is being kept fully informed on progress of the company’s turnaround and engagement with shareholders.”

The announcement reportely prompted a meeting between the regulator, the Department for Environment, Food and Rural Affairs and the Treasury to discuss the future of the company, which has also faced criticism for failing to tackle leaks and raw sewage discharges while handing out big rewards to its top bosses. 

One of the options apparently being consideration is placing Thames Water under a so-called “special administration regime,” which is only used in extreme circumstances when a business in a vital sector such as water or energy is too big to be allowed to fail.

Such a measure has only ever been used once before — when Bulb Energy collapsed in November 2021.

GMB national officer Gary Carter blasted the situation as “indicative of the failure of the water industry’s ownership model.”

He said: “Employees and contractors now need a categorical assurance that their pay, pensions and conditions will be protected.

“Forty years since privatisation and we’ve seen almost no investment in infrastructure and the workforce, while shareholders and fat cats drain fortunes from the industry.”

He accused the government and regulators of being “asleep at the wheel while executive pay at Thames ballooned and the company's debt-to-asset ratio rose to a totally unsustainable 10:1.

“This vital public resource has been bled dry by private equity parasites,” Mr Carter added.

“With interest rates skyrocketing,the whole thing is a house of cards waiting to collapse.

“It’s crystal clear the privatisation experiment has been a devastating failure — we need to get our water industry back into public hands now.” 

TUC general secretary Paul Nowak said: “UK families have been ripped off by greedy water companies for too long. These firms have taken billions in profits while destroying our rivers with raw sewage.

“Privatisation is the problem, and regulation won’t fix it. Thames Water should be taken into public ownership permanently. Billions in debt - taken out for the benefit of profiteers - should not be dumped on the public.

“The best way to keep water bills affordable, and to clean up our rivers, is to end the profiteering for good. Every penny from every bill should be invested back into our water supply. And every water firm should be taken back into public hands.”

Labour argued that the public should not be forced to “clean up the mess or pay the price for Tory failure.”

But despite previous pledges by Sir Keir Starmer to bring key utilities back into public ownership, a spokesman for the increasingly right-wing party leader rejected the call, instead demanding a “a plan that delivers change and drives standards.”

Work and Pensions Secretary Mel Stride claimed to be confident that “whatever the situation at Thames Water, the water will continue to flow.”