The Guardian can reveal that ministers plan to use new powers to stop bosses from snatching bonuses from the Thames waters as the company fights to survive, worth hundreds of thousands of pounds.

The UK's largest water company admitted this week that senior executives will receive "substantial" bonuses related to an emergency £300 million loan.

Thames claims that spending is crucial to retaining employees and preventing competitors from “receiving” their best employees. But, as the company said its financial situation was "raising its hair" and last year was "very close to currency".

The Thames is in a desperate battle to raise funds and convince water conditioners to give up hundreds of millions of pounds of fines that could otherwise be re-located.

Government sources said the bonuses could be banned immediately next month and any bonuses for the previous fiscal year between April 2024 and April 2025 can be withdrawn. "The profit day of failure is over," said Environment Secretary Steve Reed.

What emerged this week is Thames is planning to use part of a £3 billion emergency loan designed to stabilize its financial situation and avoid bankruptcy to pay bonuses for senior management.

Thames President Sir Adrian Montague told MPs on Tuesday on the Environmental, Food and Rural Affairs Commission (EFRA) committee that the first of these bonuses is at most 50% of their salary, deeming senior management as "the most valuable resource."

The bonus could be the first to be blocked under Reed’s Water (Special Measures) Act, which puts regulators’ powers to prohibit executive rewards from supervising a failed company. The Thames River water can be classified as a classification because it presides over record sewage spills, heavy debt and the brink of financial collapse.

"The water company escaped dumping tides into our rivers while emitting millions of pounds of bonuses," Reed said.

"It's over now. The government will ban unfair bonuses to polluted water bosses. The failed profit day is over."

Thames CEO Chris Weston received a bonus of £195,000 for three months of work after joining the company in January 2024, totaling £2.3 million. However, this bonus is unlikely to be affected by Reed's Clampdown.

Weston defended his salary to MPs, claiming: "I joined the Thames because it's important to society. I did make a difference in the first three months."

Weston's bonus could account for 156% of salary, he said, while frontline workers have a bonus of 3% to 6%.

Montague told MPs that some senior executives would receive a “50% of their salary, a very considerable bonus” from a loan of £300 million, which was proposed by lenders including Aberdeen and Insight Investments, as well as hedge funds and other investors in victimized companies such as Elliott and Silver Point.

"We have a bonus program to protect our most valuable resource, the senior management team," Montagu said. These bonuses will be paid in three phases: "At the completion of the first restructuring plan, another bonus is made at the end of the second restructuring plan, and then a large amount of funding is allocated at the end of the process."

The £3 billion debt loan was challenged in court by rival bondholders, with an interest rate of 9.75 per cent and a fee charged. Montague claims that the lender "stands" on the bonus. "We need this team to stay until the deal is completed," he said, adding that the bonuses associated with the £3 billion loan "will be funded by lenders" rather than customers.

Executives have sparked anger when they chaired record sewage overflows, lack of investment in critical infrastructure and a surge in debt levels. Last year, a record £9.1 million bonus was paid to water executives.

Helena Dollimore, a member of the EFRA committee and Labour MP for Hastings, Rye and The Villages, said: “The evidence of Thames Water in the selection committee is abominable, another reminder of the horrible state of the water industry. Important infrastructure work was delayed, the remaining pipelines collapsed, and Water Boss received a huge reward.

"We've already dragged a breath on the water boat and the story of failure is always the same. The water boss shouldn't continue to be rewarded for failure, so I'm glad to hear that the decisive action was finally taken."

Last year, Thames water was responsible for a 40% increase in pollution incidents, but still paid a performance bonus of £770,000. Customer bills rose this year after the company allowed it to increase it by 35%. The Thames hopes to increase it further to 59% and attract the appeal of competition and market authority, although this has been delayed while trying to make the financial order.

The Thames is in a desperate battle to find a buyer willing to inject cash as it dabbles the brink of temporary nationalization. The company has 16 million customers and 8,000 employees and has recently appeared under £20 billion in debt within a few days of its currency running out.

U.S. private equity firm KKR hopes to acquire a £4 billion stake, the Thames’ last choice as it strives to find buyers by the end of June. Thames and KKR tried to convince industry regulators of Watt tolerate fines and fines.

Ofwat has said that before choosing a bid, the two companies would rather be in the final stage of the check. However, if the takeover fails, the large amount of utility of debt debt can collapse through the special administration system.

Thames Water customers, as well as customers of other companies, will face a hose ban this summer unless there is a lot of rain soon. The average reservoir level in the UK is less than 85%, usually full at this time of year. There is no reservoir built in England for more than 30 years, which makes the country particularly vulnerable to drought. Water companies, including the Thames, have been criticized for lack of investment in critical infrastructure to ensure water supply in the UK.

A Thames Water spokesman said: “Thames Water is developing a complex turnover and restructuring process so we can provide better results for our customers and the environment and seek long-term solutions for our financial resilience. It is crucial that businesses retain the people best suited to improve outcomes to correctly look forward to our stakeholders.”