THAMES WATER will only have to pay a fifth of its record £122.7 million in fines under a “sweetheart deal,” with industry regulator Ofwat branded “outrageous” by water campaigners today.

The heavily indebted utility firm was handed the penalties in May for failures over sewage treatment and paying out dividends.

It has already passed a deadline for paying them by August 20 but has now agreed to pay only a fifth by the end of next month, with the remainder subject to securing a private rescue deal and cash injection.

Ofwat said that it had set a final “backstop date” of March 31 2030 for payment of the remaining penalties whether or not Britain’s biggest water company avoids insolvency.

It would have 30 calendar days to pay up after securing such a deal or at the end of an insolvency process that would see it placed into a government special administration scheme.

River Action chief executive James Wallace said: “It is outrageous that Thames Water has been allowed to kick its fine down the road.

“This fine must be paid by those responsible, not future owners and investors.

“Ordinary people do not get to walk into court and say, ‘I’ll pay the rest of my penalty if I get a better paying job.’ Yet that is exactly the sweetheart deal Thames Water has secured.

“This is not accountability. The investors who drained the company and pocketed £170 million in dividends in October 2023 and March 2024 may never feel the consequences.

“It is time the company was put under temporary government control called Special Administration Regime to be straightened out financially and managed for the public good.”

We Own It director Cat Hobbs said: “The water sector in England is fundamentally broken and the government is doing nothing to change this.

“By stubbornly refusing to bring Thames Water into public ownership, they are giving the green light for higher bills and even more environmental vandalism.”

Ofwat senior director of enforcement Lynn Parker said: “This payment plan continues to hold Thames Water to account for their failures but also recognises the ongoing equity raise and recapitalisation process.”

The government has appointed insolvency specialists FTI Consulting for contingency planning should the supplier collapse.