Government may bail out water company

THE Government is said to be preparing to step in following reports that Thames Water could be on the brink of collapse.

The Reading company is under pressure over its performance and is said to be struggling with £14 billion of debt.

It comes in the wake of the resignation of chief executive Sarah Bentley, who stepped down with immediate effect on Tuesday.

No reason was given for her departure but it follows questions over the company’s financial stability.

Ms Bentley, who had been in the job for two years, had previously agreed to give up her bonus over the company’s environmental performance.

It has been reported that Thames Water could be placed into temporary public ownership, similar to when energy supplier Bulb collapsed in 2021.

Talks believed to involve the Department for Environment, Food and Rural Affairs, industry regulator Ofwat and the Treasury are said to be at a preliminary stage.

Business Secretary Kemi Badenoch said she was “very concerned” about the firm.

She said: “We need to make sure that Thames Water as an entity survives.

“I know that my colleagues across government are looking at what we can do. I don’t know too much about what the plans are going to be.”

Environment minister Rebecca Pow told MPs that there was “a lot going on behind the scenes with Thames Water to ensure customers will not be impacted and there is a process in place if necessary to move us to the next stage”.

Thames Water has been under pressure to improve its performance after criticism of its handling of sewage contamination and leaks.

The company leaks more water than any other water company in UK, losing the equivalent of 250 Olympic size swimming pools every day from its pipes.

Ofwat has said there were “ongoing discussions” with the company about the need for a “robust and credible plan” to turn around the business.

Water companies have taken on large amounts of debt, collectively about £60billion, since they were privatised in 1989.

Thames Water is the UK’s biggest water firm, providing water for 15 million people. Ofwat has long had concern over the company’s ability to service its debt and raise the amount of cash needed to modernise infrastructure amid rising inflation and higher interest rates.

For the last five years, its owners have backed the decision not to pay any dividends to external shareholders.

Thames Water has said it is working to raise the funds it needs to improve.

In a statement, it said: “Ofwat is being kept fully informed on progress of the company’s turnaround [plan] and engagement with shareholders.

“Thames Water continues to maintain a strong liquidity position, including
£4.4 billion of cash and committed funding.”

The Henley Mermaids, an open water swimming group, which campaigns against sewage pollution and for cleaner rivers criticised Ms Bentley’s record.

They said: “Sarah Bentley received a £3.1million golden hello when she joined Thames Water and this year, after making a big song and dance about not taking a bonus, was paid £1.5million.

“She has been telling us that sewage dumping is unacceptable but she failed to make any real inroads into addressing the issue.

“We’ve been campaigning on this issue for years and while we’ve seen much greater transparency from Thames Water over sewage discharges, what we’ve not seen is any meaningful action to address it.

“We are seeing raw sewage being dumped into the Thames up and down the length of the river including at Henley, the home of the royal regatta.

“Every week we get reports of children being sick from paddling in the river. This is Britain, a G7 economy in 2023, and children can’t paddle in our rivers in a heatwave without being sick from sewage. It’s a total disgrace.”

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