Come clean on secret taxpayer rescue plans for Thames Water, MP demands
Ministers must come clean on the secret details of an emergency plan for a taxpayer bailout in the event of Thames Water collapsing, a Liberal Democrat MP has said.
Sarah Olney will press in parliament this week for details of a behind-thescenes rescue operation being drawn up for the biggest privatised water company in England. Olney said keeping the details of the contingency plan secret amounted to a cover-up.
The MP has secured a parliamentary debate this Friday, as intensive discussions are under way between ministers and the regulator Ofwat on the emergency rescue plan in case of the collapse of the ailing privatised water company, which provides water and waste services to 15 million people.
Olney wants details of the contingency plans, which are codenamed Operation Timber and being run by Tamara Finkelstein, the permanent secretary at the Department for Environment, Food and Rural Affairs, to be made public.
“This Conservative government’s refusal to make their contingency plan in the event of Thames Water’s collapse, public, is nothing short of a cover-up,” Olney said. “It is very clear they could easily slip into special administration.
The public has a right to know what ministers plan to do.”
Thames Water, which has debts of £14.7bn, is trying to stay solvent and avoid a takeover by seeking an additional £2.5bn bailout from its shareholders for the second half of the decade.
But the company wants concessions from Ofwat to encourage shareholders to commit to the bailout. These include being allowed to pay higher dividends, while increasing bills by 40%, and limitations on fines for serious pollution of rivers.
In a sign its collapse could be looming, ministers recently updated 30-yearold water insolvency legislation, which can be triggered if a water company cannot pay its debts.
Emma Hardy, the Labour MP for Kingston upon Hull and Hessle, said the move reflected “the desperate and perilous situation that the sector had reached, with many companies on the precipice”.
The upgraded insolvency legislation is aimed at ensuring that drinking water and wastewater services for 15 million people are maintained if Thames became insolvent.
Special administrators can be appointed to a water company by the secretary of state or the regulator.
The company, along with five other water firms, is at the centre of an Ofwat investigation into the potentially illegal discharging of sewage from its treatment plants.
Water companies on Tuesday announced details of plans to remove 150,000 annual sewage spills by 2030, making nearly 9,000 storm overflow improvements in a £10bn investment over five years. They are seeking Ofwat approval to raise customer bills to pay for this.
Olney said: “For too long water companies have been allowed to get away with pumping raw sewage into our waterways while Conservative ministers have turned a blind eye. It is time they cracked down on these polluting giants and put an end to this disgusting practice.”
The MP said it was important for the government to be open about any discussions of a taxpayer bailout for Thames at a time when the water industry was under scrutiny. Companies including South East water, Southern Water and SES water are, like Thames Water, listed in Ofwat’s most recent highest category regarding concerns over their financial resilience and ability to operate.
The industry is opposed to putting Thames into special administration, fearing it will affect other struggling water companies by reducing investor confidence.
Olney said it was vital to exert public scrutiny over the emergency plans for Thames and taxpayer liabilities because of the potential for other companies to go under.
A government spokesperson said: “Water companies are commercial entities and we do not comment on the financial situation of specific companies as it would not be appropriate. We prepare for a range of scenarios across our regulated industries – including water – as any responsible government would.”
Thames Water declined to comment.