Thames Water, the UK's biggest water supplier which provides services for 15 million people in London and the South East, including Buckinghamshire, is reportedly at risk of collapse due to its "mammoth" £14 billion debt.

The government is said to be drawing up contingency plans for the emergency nationalisation of Thames Water, which could see the utility company transferred back into public ownership under a special administration regime (SAR).

According to PA, discussions are underway between water regular Ofwat, the Department for Environment, Food and Rural Affairs (Defra) and the Treasury, but the plans are in early stages and may not need to be put in place.

It comes after chief executive of Thames Water Sarah Bentley stepped down with immediate effect on Tuesday, triggering concern about the financial stability of the company.

Thames Water, which is currently owned by a consortium of pension funds and sovereign wealth funds, is reportedly aiming to raise £1 billion from investors to shore up its finances.

The company has come under scrutiny in recent years due to its poor performance in tackling leaks and sewage contamination, while also facing criticism for handing out big rewards to top bosses and shareholders.

Ms Bentley, who was appointed in 2020, said in May that she would give up her bonus after the company’s environmental and customer performance suffered.

But even after giving up the bonus, the chief executive managed to double her pay, raking in £1.5 million.

On announcing her departure, she said: “The foundations of the turnaround that we have laid position the company for future success to improve service for customers and environmental performance.”

Speaking to Sky News, children’s minister Claire Coutinho declined to comment directly on the reported plans to prepare for the possible collapse of Thames Water.

She said: “I certainly think there are water companies like Thames Water which are in difficult positions, but I think our position as Government is to make sure that we have the right policies in place to see consumers protected but also that we’re dealing with things which are really important to the country, like dealing with the sewage leaks.”