Thames Water lenders offer'golden share' to head off nationalisation Image caption, Thames Water's lenders want to let local authorities have more involvement Thames Water's main lenders are offering the government a golden share and more control for local authorities in a bid to stop the troubled supplier from being nationalised. The government recently rejected a previous rescue proposal, and the BBC understands the lenders are preparing a legal challenge in case the new Andy Burnham-led government takes the firm into public hands. In his first speech as prime minister on Monday, Burnham said he wanted to see greater public control of life's essentials. The new proposal offers local authorities greater involvement in the firm, similar to the relationship between United Utilities and Greater Manchester agreed when Burnham was the city's mayor. The London & Valley Water (L&VW) consortium of lenders had already proposed a £10bn deal to prevent Thames Water from entering administration.

The lenders to Thames Water are preparing a legal challenge in case a Burnham-led government attempts to nationalise the UK's biggest water company. Burnham - who takes over as PM on Monday - has previously said he wants to see greater public control of the water and energy sectors and has called for Thames Water to be nationalised. Thames Water is about £20bn in debt. Its lenders had proposed a deal to write off nearly half of that and inject new cash in return for some leniency from future pollution fines, but this deal has previously been rejected by the government as being weak and bad for consumers and the environment. Sources close to the creditors have told the BBC that in the event of full nationalisation, they would pursue payment in full of the outstanding debts as has happened in previous cases, which could leave the government with a multi-billion-pound bill. Fears first emerged three years ago that Thames Water could collapse and on Thursday, the firm warned it has enough cash to last until the end of this year .