A corporate intelligence company part-owned and formerly run by the prime minister’s business adviser has been paid more than £1m by Thames Water as the utilities firm tries to avoid renationalisation, the Guardian can reveal,Hakluyt, which was run by Varun Chandra until his appointment as Keir Starmer’s business adviser last July, has worked with Thames since 2023, providing political and strategic advice,That commercial relationship between Thames and Hakluyt has continued since Chandra joined No 10,He is now tasked with finding a private sector solution for Thames and preventing Britain’s biggest and most troubled water company from collapsing into state ownership,That presents a potential conflict of interest, as the 40-year-old still owns a multimillion-pound stake in Hakluyt and is entitled to receive dividends from the Mayfair company.

A No 10 source said Chandra had no personal involvement with Thames when at Hakluyt and made all the relevant declarations as part of his appointment.In the spring Chandra intervened in last-ditch talks to persuade the US private equity group KKR to buy Thames Water, including speaking to KKR’s co-founder Henry Kravis.Several politically connected Hakluyt employees have also been advising Thames, including a former speechwriter to the chancellor, Rachel Reeves, and Rishi Sunak’s former deputy chief of staff.The revelation underlines Hakluyt’s reach, as well as the revolving door between business and politics.The company, which was founded by former MI6 officers, claims to have advised almost half of the FTSE 100 and more than three-quarters of the top 20 private equity groups.

It is understood that Hakluyt has been working closely with Thames’s strategy director, Cathryn Ross, a former chief executive of the water regulator Ofwat, since 2023.Sources said Hakluyt had been paid more than £1m by Thames in that time.It was hired to work on Project Samuel, Thames’s attempt to secure private sector capital to recapitalise and restructure, as well as contingency planning for the possibility that the utilities company has to enter the government’s special administration regime (SAR) – a form of temporary nationalisation.Hakluyt employees including Sunak’s former deputy chief of staff Will Tanner and Josh Platt, a former private secretary and speechwriter to chancellors Rachel Reeves and Jeremy Hunt, have worked on Thames in recent months, Westminster sources said.Sir Oliver Robbins, the Foreign Office permanent undersecretary and former Brexit negotiator, also worked on Thames in 2023 while he was employed at Hakluyt as head of corporate coverage for Europe, the Middle East and Africa.

Hakluyt is among a string of advisers that have been paid handsomely to advise Thames in recent years.The Guardian revealed that the water company spent at least £136m on the effort to secure emergency funding during the financial year to March 2025, including with the law firms Linklaters and Akin Gump.The Treasury is desperate to avoid Thames collapsing into state hands, and Reeves wrote to creditors of the company in July to say a “market-based solution” was her preference.Thames has argued that allowing it to enter SAR and imposing heavy losses on its lenders would have a chilling effect on the appetite for UK infrastructure, and drive up wider funding costs.Chandra’s efforts to convince KKR to buy Thames were futile as the private equity group walked away in June, blaming excessive risk and politicisation.

That left only a rescue attempt by its lenders standing between Thames being renationalised.A disparate band of more than 100 creditors are trying to convince the government and Ofwat that they should be allowed to take over the company, which serves more than 16 million customers in London and the Thames valley and has debts of more than £20bn.In return they want leniency from fines and penalties.They have also proposed delivering fewer improvements to Thames’s tired water and sewerage network over the next five years than had been agreed with Ofwat – but charging customers the same.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionChandra is one of Starmer’s most influential advisers, and has spearheaded its attempts to ingratiate Labour with business and attract foreign capital to the UK.

He accompanied Reeves on her visit to the World Economic Forum in January, and was in the Oval Office when Starmer met Donald Trump in February.Chandra has also been central to Labour’s more muscular attempts to burnish its business credentials.It is understood he was behind the government’s decision to oust the chair of the Competition and Markets Authority, Marcus Bokkerink, amid concerns the watchdog was holding back growth.The son of Indian immigrants who grew up in South Shields, Chandra helped Tony Blair set up his first advisory firm, before becoming Hakluyt’s managing partner in 2019.As of May he held Hakluyt shares worth about £7m.

The company, which was founded in 1995, was named after the Elizabethan writer, priest and diplomat Richard Hakluyt.Hakluyt has reportedly said it plans to buy back Chandra’s shares over time and that he no longer has any voting rights or decision-making roles within the company.A spokesperson for the company said: “Hakluyt is a global strategic advisory firm providing insight and advice to commercial clients on a range of issues.We are not a lobbying organisation and do not lobby governments on behalf of clients.”A Thames spokesperson said: “We remain focused on a market-led solution which we believe is in the best interest of customers, UK taxpayers and the wider economy.

”A No 10 spokesperson said: “The Cabinet Office has a thorough process on declarations of interest for special advisers to ensure any conflicts of interest are properly managed and mitigated, including through recusals where appropriate.”The best public interest journalism relies on first-hand accounts from people in the know.If you have something to share on this subject you can contact the Business team confidentially using the following methods.Secure Messaging in the Guardian appThe Guardian app has a tool to send tips about stories.Messages are end to end encrypted and concealed within the routine activity that every Guardian mobile app performs.

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