After several years of headline-grabbing crises, it appears a solution may be at hand for Thames Water, with private equity giant KKR selected as the ‘preferred partner’ to buy the troubled utility firm. But what does this mean for the industry’s largest employer, and how could the investment help tackle long-term skills shortages in the water sector?

Major investment

If successful in its bid, the private equity giant plans to pump in £4 billion of equity to support Thames Water. KKR is valued at over $100 billion and has $195 billion of assets, so certainly has the resources to help turn around the ailing company, however, it will also be no easy task. Thames’ previous shareholders were eroded without claiming a dividend since 2017, and the company faces a £1 billion bill for its pollution record in recent years. As the Times suggested, the company cannot afford to be selective about its future owners and ultimately needs solutions and investment, quickly.

However, KKR also has a head start on many other competitor private equity firms because it already has a dedicated infrastructure arm that has, to date, invested over £20 billion in the UK. That includes ownership of John Laing, Smart Metering Systems and Viridor, as well as a 25% stake in Northumbrian Water, alongside Li Ka-shing’s CK Group. KKR also has a track record of delivering successful projects, and the resources to stand up to Thames’ creditors and secure a deal, meaning it’s best placed to support the organisation to emerge from its current position.

People issues

However, as we found in last year’s Water Industry Labour Report, it is people – rather than pollution, sewage, infrastructure, funding and the myriad other topics that grab public attention – that act as the real blocker preventing progression and growth in the sector, and that underline all of the other elements causing strife in UK water.

Put simply, without skilled engineers none of the grand plans for the industry, particularly those mapped out for AMP8, can be delivered. At a time when seven in ten professionals are considering roles in other markets, and one in five are set to retire by 2030, this is the critical issue that needs rectifying ahead of all others.

Ultimately, we hope that any significant private investment feeds into the talent market, and helps support the delivery of both long and short-term solutions. For the here and now, and to help tackle the workload facing organisations in AMP8, employers must invest in contingent workers, and drop their aim of increasing the size of permanent workforces.

Contingent focus

The world of work has changed dramatically over the past decade, particularly post-pandemic, and engineering professionals are now far more motivated by the chance to work on multiple projects, in different and varying environments, than by staying with an organisation on a permanent basis. This trend has been recognised across multiple markets, except water. Here, many firms are still overly focused on the white elephant issue of retention, when a collaborative, joined-up approach to onboarding, developing and then releasing contract specialists, would mean all firms have the resources to deliver projects on time and under budget, without a major expansion in the size of the workforce.

Longer term solutions

In the longer term, we hope that significant investment is directed into promoting water as a viable career choice for early-career engineers, or those in higher and further education. As well as our data-backed studies, a round table hosted by Utility Week and Marsh McLennan recently found that graduates see a career in our industry as ‘too risky’, which is preventing many from choosing to work in this area. This simply has to change; the number of people entering UK water is too low to cover the shortfall created by departures. In fact, according to a separate study, published last September, utility employers will need to recruit 312,000 new people into the sector by the end of the decade. This figure is made up of replacing 107,000 people expected to retire before then and 205,000 new roles. Even if just a portion of those skills are needed in water, it is still a huge task.

Growing skills shortages in the water sector

At the current rate, filling the resourcing gaps won’t be achievable. This means that at least a portion of the investment by private equity into the industry needs to feed into the talent market, and contribute to promoting the likes of Thames Water and other major firms as more attractive choices for budding engineers. We are sure that KKR has this issue on their radar, but our early data analysis for the upcoming 2025 Water Industry Labour Report suggests that engineers feel the topic of skills and recruitment has become even more of an issue for the sector over the past 12 months.

Those at the coal face recognise that additional support is needed, as can specialist agencies like Water by Murray that work with organisations across the industry and throughout the supply chain. Naturally, the proposed investment only covers Thames Water, but if KKR does enable the organisation to invest in sourcing more engineers and building out long-term talent pipelines, it should encourage other major employers to follow suit.

The water engineering talent crisis isn’t related to the quality of the workforce; standards are undeniable, and there’s a reason so many specialists are sought after by employers in other industries. The problem is volume and availability, and this is where we hope the likes of KKR will help to open the floodgates and encourage more investment into skills and talent development.

Speak to our team if you are looking for your next engineering position, or if your workforce requires additional resources for AMP8

Get in touch to receive your copy of the 2025 Water Industry Labour Report when it’s launched on April 28 2025.

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