Campaigners angry at Thames Water bailout

CAMPAIGNERS have criticised a £3 billion bailout of Thames Water.

The company won a High Court application to secure a loan deal that will prevent the Government from having to step in to save it.

But opponents are angry that £443 million of the loan will be immediately spent on interest payments and unspecified costs to the new creditors.

A further £245 million will go towards existing interest payments while professional fees will amount to another £210 million.

The company, which has been beset mismanagement and a lack of adequate investment, was already seeking to charge customers more to fund its future investments.

It wants bills to rise by 53 per cent from this year to 2030, equivalent to an extra £224 a year, compared with the 35 per cent allowed by the regulator Ofwat.

The court’s decision on Tuesday gives the UK’s biggest water provider time to sort out its finances.

But an appeal has been launched by Charlie Maynard, Liberal Democrat MP for Witney, who said restructuring was “simply throwing good money after bad” and called for Thames Water to be nationalised.

The business is attempting to borrow its way out of its financial problems as it struggles with a £19 billion debt.

It had said it would run out of money by March 24.

Mr Justice Leech approved the loan, saying: “After taking into account the public interest in ensuring the uninterrupted provision of vital public services, I nevertheless exercise my discretion to sanction the plan.”

He added that neither Ofwat nor the Environment Secretary had opposed the restructure. The company’s creditors in favour of the plan said the judgement was a positive step towards delivering a “highly complex operational turnaround”, adding that it would avoid billions in additional taxpayer costs.

Freddie van Mierlo, Lib-Dem MP for Henley and Thame, said: “Thames Water should not be allowed to pour good money after bad. That will ultimately land on the heads of ordinary billpayers.

“It is right that the deal is being challenged and I was pleased to provide a letter of support for the case being made by my party colleague.

“It is important that it is put on record that ordinary people oppose this disastrous deal.”

Dave Wallace, a citizen scientist from Henley, said: “The public interest has not been served.

“Thames Water is not taking the pain of thinking about re-nationalisation or temporary nationalisation.

“They are kicking the can down the road and are going to end up in the same place in 12 months.

“We have all had letters about increases to our bills. Most of that money is going into servicing debt rather than improving infrastructure. The opportunity to change the dynamic has not been taken, which is desperately sad.

“We are at the stage where privatisation has been proven to not work. It has not worked for customers or the environment.

“Thames Water needs to invest heavily in infrastructure but it can’t because it’s servicing debt.”

Laura Reineke, chief executive of Friends of the Thames and an open water swimmer, said: “This is state-sanctioned robbery in my opinion.

“Since privatisation, Thames Water has paid £15.4 billion to creditors. Considering it wasn’t in debt when it went into private ownership, that is quite outstanding.

“Today, 33p in every pound that we pay Thames Water is going to creditors. It is a misallocation of funds and all we are doing is servicing debt and shareholder dividends, prioritising that over urgent infrastructure investment.

“They have been defaulting on their legal commitment — they are supposed to be investing in the environment but 105 of those environmental projects were never delivered and instead that money was diverted to bosses’ bonuses.

“They are going to have half of the money now because they have got a debt deadline coming up on March 24, which if they didn’t pay they would go bankrupt.

“They are also claiming that they are going to be able to use the money for infrastructure upgrades, which is nonsense.

“The infrastructure upgrade at the Henley treatment works, for instance, is not enough to stop any of the current spills that are happening because they are not increasing its capacity by enough.

“We need the company to go into special administration because it would allow us to reset how the company operates and address the failures of governance.”

Jo Robb, a Green member of South Oxfordshire District Council and an open water swimmer, said: “I remain hopeful that that appeal will be successful. The judge made it very clear that this process has not taken adequate account of the public interest.

“He very much put the onus back on to the Government and Ofwat to really step up and to put the public interest at the centre of this process because thus far the public has been almost entirely ignored.

“This is no ordinary restructuring and Thames Water is no ordinary company in financial distress.

“This is a monopoly on which 16 million people in London and the South-East rely for their very survival, for our fresh drinking water and our sewage treatment.

“This is very different to an ordinary company restructuring and it is only due to the dedication and dogged determination of Windrush Against Sewage Pollution that the public was even heard in that court hearing, which would otherwise have been conducted largely behind closed doors.

“It is extremely disappointing and frustrating that the Government continues to sit on its hands and put the interests of private capital, of hedge funds and of venture capitalists ahead of the interests of 16 million people.

“The judge used the term ‘eye-watering’ to describe the costs of this deal. The cost of keeping Thames Water in private ownership is eye-watering and it would be far cheaper to put it into special administration and we would have the public interest properly represented.”

Clive Jones, Liberal Democrat MP for Wokingham, said the court’s ruling “brings into sharp focus that Thames Water, with its huge debts, cannot be trusted to deliver for billpayers”.

He added: “Thames Water gaining £3billion more in debt will mean that customers will being paying off the company’s debts through increased bills.

“The Government must put Thames Water into special administration now rather than delaying the company’s inevitable collapse and increasing the burden placed upon customers.”

Chris Weston, chief executive of Thames Water, said: “We are pleased that the court sanctioned the company’s plan.

“This is good news for our customers, puts our business on a firmer financial footing and enables us to continue to invest in our network and deliver critical infrastructure upgrades for our customers and the environment.

“Importantly, this decision will support the delivery of our turnaround, which is underway.”

Sir Adrian Montague, chairman of the company, said: “The court’s approval of the company plan marks a significant milestone for Thames Water, enabling us to proceed with the implementation of the liquidity extension transaction.

“Its implementation is a key step in strengthening our long-term financial resilience and will allow us to continue progressing the equity raise process and a holistic recapitalisation transaction as well as complete the Competition and Markets Authority appeal process in respect of Ofwat’s 24 price review.

“Critically, it enables the management team to continue progressing the turnaround.”

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