Emma Reynolds writes to industry regulator Ofwat to oppose proposed bailout, with experts saying nationalisation now closer than ever.
Problems continue for the UK’s largest water company, Thames Water, which serves 16m customers across London and the south of England. It has racked up £20bn in debts and last year was fined a record £122.7m fine for breaching rules on sewage spills and payouts to shareholders.
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For more than two years, the company had been struggling to avoid special administration, with the government effectively taking over its operations.
The investment consortium London & Valley Water (L&VW) proposed to invest £10bn in the company until 2030, comprising £3.25bn of new cash equity, and a debt facility worth £3.25bn that could be extended by a further £3.3bn.
In return, L&VW cited various conditions such as regulator Ofwat being more lenient about further fines.
In a letter shared in the Times yesterday, Emma Reynolds MP, the Secretary of State for Environment, Food and Rural Affairs, told Ofwat that she did not want to see Thames Water customers ‘pick up the bill for the company’s failures.’
Reynolds said: ‘Thames Water customers have been let down for far too long, with 15 years of underperformance, increasing serious pollution and customers left to pick up the bill. I have written to Ofwat to outline my earlier views that I am not convinced the current proposal is good enough for consumers or the environment. We standby for any outcome.’
In response, the Financial Times reported that, ‘Her objection increases the prospect of the nationalisation of Britain’s biggest water company.’
Speaking in the House of Commons about the matter, Reynolds added that she had three main concerns about the proposed investment: ‘The unfair cost to customers, delays to vital infrastructure investments and delays to environmental improvements.’
She added: ‘There is an expectation in the proposal for customers to fund and therefore bear an undue cost for investment in the company. In addition, I’m not convinced about the proposal’s request to reduce performance standards and about the significant delay to vital infrastructure investments needed.’
A spokesperson for L&VW said they were: ‘confident that our plan is by far the fastest route to improve outcomes for customers and the environment, without any government funding or any cost to taxpayers. All other routes offer significantly worse outcomes for customers and the environment. Our proposals do not anticipate any increase in customer bills beyond those set out by Ofwat.
‘Creating further delay and transferring risk to the taxpayer with special administration is not the right answer. It will only delay the process of fixing Thames Water.’
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