One of the largest investors in Thames Water has given its support for the utility as other industry figures sought to stave off any possible nationalisation of the sector.

The £90bn Universities Superannuation Scheme (USS), which has a near 20 per cent stake in Thames Water, said on Friday: “We have given our backing to Thames Water’s turnround plan,” adding this required “an appropriate regulatory environment”.

The comments set the stage for crunch negotiations between Thames Water, its investors and the government over injecting more capital at a time when the sector’s future is the subject of intense political debate.

In an indication of the pressure building on the industry, the boss of Severn Trent, another big British utility group, called on rivals to join together to avert any threat of nationalisation by a potential incoming Labour government.

Liv Garfield has invited other utility bosses to an “off-the-record roundtable” to discuss options for the future of the industry, including their reinvention as “social purpose companies”.

Garfield said that although Labour did not at present want to nationalise the industry “politically, there is significant pressure to ‘do something’ about utilities”.

The concerns over Thames Water’s financial health have intensified questions about the industry’s ownership.

Thames Water’s chief executive, Sarah Bentley, abruptly stepped down this week and Adrian Montague, an experienced City troubleshooter, has been appointed as chair to help drive an overhaul of the business.

Shareholders say they are concerned over the scale of the investment needed to address mounting public anger over flows of sewage into rivers and leaking pipes by the end of the year.

The extent to which Ofwat, the sector’s regulator, will allow water companies to pass on added costs to customer bills remains unclear.

Thames Water — which provides water and sewage services for 15mn people in London and the south east — announced a year ago that it wanted to raise £1.5bn from its existing shareholders but has raised only £500mn, leaving a £1bn gap.

The UK government is on standby for a potential taxpayer rescue of the group, which is struggling with rising interest payments on some of its £14bn debt, although people close to the company insist there is “no immediate cash crunch”. The company said it had £4.4bn of liquidity at the end of March.

Thames Water declined to comment on Friday. However, water bosses are concerned that the collapse of one water utility could have a “domino effect” as confidence drains from the sector.

Public pressure for renationalisation of water has been mounting after unknown quantities of sewage poured into rivers and coastal waters, risking public health and closing beaches this summer.

A YouGov poll last year found 58 per cent of Conservative voters thought water should be brought back under public control.

The Labour party under Sir Keir Starmer — which is leading in opinion polls ahead of a general election expected next year — has dropped plans by former leader Jeremy Corbyn to return water and energy companies to public ownership.

Instead, the Financial Times reported in May that a Labour government would carry out more modest reforms including the creation of a new regulator.

But, according to the leaked email by the Severn Trent boss, first reported by the Evening Standard, Garfield wrote: “Whilst it is clear Labour will not include nationalisation in its next manifesto, they are also not keen on entering into the election race championing the status quo.”

She added: “One idea we believe might be attractive to the Labour leadership is repurposing utilities and utility networks into a new breed of declared social purpose companies — companies that remain privately owned, who absolutely can (and should) make a profit, but ones that also have a special duty to take a long-term view.”

Severn Trent declined to comment.