Thames Water must be held to account
SOMETIMES a corporate scandal is too complicated to capture public attention.
The Post Office is an obvious example.
Few would have even known that Thames Water was owned by Australia’s Macquarrie Bank between 2006 and 2017, let alone understood the complex debt structure that saw it pay out £2.7bn to shareholders whilst simultaneously tripling its debt to almost £11bn over this period.
Today, its failures to invest in vital infrastructure for years on end are coming home to roost.
Certainly the warning signs were there.
Ever since I was first elected, local frustration with
Thames Water has been palpable.
After flooding in early 2020, I placed huge pressure on them to make improvements in Lambourn.
We got a dedicated specialist and an extensive programme of ‘sewer relining’ which residents were promised would provide a durable solution.
Four years on, and the inadequacy of that work is plain to see.
Villages have endured weeks of sewage spilling out of manholes and its near impossible to find any employee still working for Thames Water who has recollection of the work. Today Ofwat, the water regulator, has refused to permit the company to increase water bills or offer leniency on fines and shareholders are refusing to inject cash.
Last week, Kemble Water Finance, Thames Water’s holding company, issued a formal notice of default to bondholders having failed to make an interest payment on its debt (which sits at more than £15bn).
So, what next?
When we passed the Environment Act in 2021, we gave Ofwat significant new powers to impose fines and set licence conditions to ensure environmental performance.
Thames Water must be held to account for its poor environmental record (especially in Lambourn) and the Environment Secretary has confirmed that there will not be any relaxation of the regulatory regime that would allow polluting our rivers without consequence.
In accordance with their obligations under the Environment Act 2021, Thames Water has committed to an 80 per cent reduction in storm overflows in “sensitive catchments” by 2030, which includes the Kennet, the Pang and the Lambourn.
This will require a major overhaul of the old sewer system and upgrades to existing treatment works. To achieve this will require a step change in investment and I would argue a splitting out of the jobs of water provision from sewage management.
Last month I again wrote to Thames Water to ask what assurances can be provided that each storm overflow will meet the requisite level of performance.
At present Thames Water says it is not facing bankruptcy and it has £2.4bn of cash to provide emergency funding over the next 15 months.
Ofwat has emphasised that safeguards are in place to protect customers.
I do not currently favour nationalisation, which just leaves taxpayers to pick up the bill.
But it is imperative that there is a complete overhaul of its governance structures and sharply improved environmental performance and in the short-term that means pain for shareholders.