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Thames Water’s lenders are considering offering Sir Sadiq Khan a role overseeing the beleaguered firm in an attempt to stave off nationalisation.
Creditors have proposed introducing a new “public interest supervisory structure” for Thames that would feature “enhanced local representation for local authorities and regional leaders”.
It is understood that Thames’s lenders have been looking at a 2021 agreement struck between Andy Burnham and United Utilities, the water provider in the North West.
Under the deal, the then mayor of Greater Manchester sat on a partnership board as part of his role heading the Greater Manchester Combined Authority, which brings together 10 boroughs across the North West region.
Representatives from the Environment Agency and United Utilities executives leading operations also sat on the board.
The purpose was to give local leaders greater input into tackling sewage spills and ensuring flood management was adequate. It had powers to direct infrastructure spending, among other things.
A source said Thames creditors would be open to a similar arrangement involving Sir Sadiq, the Mayor of London, and other local leaders in areas the utility serves. The Telegraph previously reported that Thames’s creditors were looking at offering the Mayor a greater role overseeing the company.
The proposal forms part of a raft of offers that Thames Water’s creditors will make to Mr Burnham’s Government, including handing over a “golden share” for the taxpayer”, as previously revealed by The Telegraph, in the hope of retaining control.
The lenders said they recognised that Mr Burnham’s new Labour Government wanted to see “greater public control and involvement to strengthen water companies’ accountability”.
The creditors, made up of major hedge funds and global investors, have said they will write off £9.6bn of debt, which they called “an unprecedented loss on a UK infrastructure investment”.
The group said that its proposal meant there would be no “requirement for taxpayer funding or increases in customer bills” or changes to its environmental targets.
Among the measures is a commitment to evaluating “new local public control supervisory structures”.
This would potentially appeal to Mr Burnham’s push towards greater devolution and could see the board include representation from local authority leaders, mayors, and municipal representatives from across London and the Thames Valley.
A source close to the creditors, known as London & Valley Water consortium, told The Telegraph that they had continually sought meetings with Burnham’s people in the the run-up to the unveiling of the new Government, but were rebuffed.
A spokesman for London & Valley Water consortium said: “We continue to believe that the L&VW plan is by far the fastest and most reliable route to solving Thames Water’s complex problems and improving outcomes for customers and the environment.
“We will achieve this without any government funding or cost to taxpayers. Under our plan, customers will have strong protections, regulators and government will have enhanced oversight, and there will be greater controls to ensure Thames Water delivers the record investment.”
Emma Reynolds, the former environment secretary, rejected an earlier rescue proposal for Thames Water as “weak” and called for significant changes.
Thames Water’s current debt pile stands at just below £20bn. The offer of more public control of the utility is seen as an attempt to get ahead before Mr Burnham forces the firm into special administration, a state-backed insolvency measure to ensure that the utility keeps operating.
In the company’s results, which came out last week, Thames Water confirmed it only had enough cash to keep running until the end of the year.
The utility also outraged ministers after Chris Weston, its chief executive, told The Telegraph that his 14pc pay rise to almost £1m a year was “deserved”, despite the water giant’s woes.
