Government moves to reassure Thames Water customers as collapse fears mount
Ministers are said to be working on contingency plans for the utility giant’s emergency nationalisation as concerns grow over its £14bn debt pile.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The Government has insisted work is going on “behind the scenes” to ensure that customers of debt-laden Thames Water “will not be impacted” following reports that the company is on the verge of going bust.
The utility giant is seeking to raise cash from investors as it struggles under a £14 billion debt pile, with the Government said to be drawing up contingency plans for the firm’s emergency nationalisation.
Business Secretary Kemi Badenoch said she was “very concerned” about the disclosures but that efforts must be made to make sure the company “survives”.
Environment minister Rebecca Pow moved to reassure Thames Water’s 15 million customers that their water supplies will be protected.
She told the Commons: “Overall the water companies are considered resilient, but there is a lot of work going on behind the scenes with Thames Water to ensure that customers will not be impacted.
“And there is a process in place if necessary to move us to the next stage.”
She added: “Customers should rest assured that their supplies will be protected, both water and waste water.”
Speaking to Sky News later, Ms Badenoch said: “I’m very concerned. Obviously this is a commercially sensitive situation.
Customers should rest assured that their supplies will be protected, both water and waste water
“We need to make sure that Thames Water as an entity survives.
“At the moment, or certainly up until now, the regulator has been focused on keeping consumer bills down, but there’s a lot of infrastructure work that needs to take place and we need that entity to survive and continue going.”
A spokesman for the Government earlier said it prepares for a “range of scenarios” in regulated sectors, such as the water industry.
Thames Water is the UK’s biggest water supplier, serving people across London and the South East.
Ministers are said to be in talks about the possibility of temporarily bringing the utility company back into public hands under a so-called special administration regime (SAR), which was the insolvency process used when energy supplier Bulb collapsed in 2021.
An SAR is used only in extreme circumstances when a company in a vital sector such as water or energy is too big to fail.
Thames Water has confirmed it is working with shareholders to secure the cash it needs.
The company said it needs “further equity funding” on top of the £500 millions it raised just three months ago, and is keeping industry regulator Ofwat “fully informed”.
The business said in a statement that it is “continuing to work constructively with its shareholders in relation to the further equity funding expected to be required to support Thames Water’s turnaround and investment plans”.
Ofwat, the Department for Environment, Food and Rural Affairs (Defra) and the Treasury are understood to be working on the contingency plans for Thames Water.
Ofwat confirmed it is in talks with Thames Water about developing a “robust and credible plan to turn the business around and transform its performance for customers and the environment”.
We have been clear that Thames Water has significant issues to address – their environmental record and leakage performance, for example, are poor
A spokesman for the regulator said: “Over the last day or so, there has been a lot of commentary about financial resilience in the water sector, with considerable focus on Thames Water in particular.
“We have been clear that Thames Water has significant issues to address – their environmental record and leakage performance, for example, are poor. Alongside the turnaround of their operational performance, they need to improve their financial resilience too.
“But that is all in the context of a company that has strong liquidity – it recently received an additional £500 million from shareholders and has £4.4 billion of cash and committed funding.
“Overall, the sector is continuing to attract international capital and is especially attractive to long-term investors such as pension funds. Indeed, there has been an additional equity injection of around £2 billion since 2020, with companies acting to strengthen their financial position.
“Ofwat will continue to keep companies’ financial resilience under close scrutiny and work with companies to ensure they take action to ensure that they have the financial backing to deliver for customers and the environment.”
On Tuesday, Thames Water chief executive Sarah Bentley stepped down with immediate effect amid mounting worries over the financial stability of the company.
The firm is now reportedly racing to raise £1 billion from investors to shore up its finances, with AlixPartners said to be advising the firm on turnaround plans.
Thames Water – owned by a consortium of pension funds and sovereign wealth funds – has come under pressure in recent years over its poor performance in tackling leaks and sewage contamination, while facing criticism for handing out big rewards to top bosses and shareholders.
Ms Bentley, who was appointed in 2020, said in May that she would give up her bonus after the company’s environmental and customer performance suffered, but still managed to double her pay, raking in £1.5 million.
The group’s shareholders include Chinese sovereign wealth fund China Investment Corporation, UK private pension fund the Universities Superannuation Scheme, and Abu Dhabi Investment Authority subsidiary Infinity Investments.