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This blog post was published under the 2015-2024 Conservative Administration

https://deframedia.blog.gov.uk/2024/03/28/defras-response-to-coverage-on-thames-water/

Defra’s response to coverage on Thames Water

Posted by: , Posted on: - Categories: water

There has been widespread reporting in recent days on Thames Water and its financial position.

This is a matter for the company, which has said it continues to work with its shareholders and has liquidity position of £2.4 billion.

Ofwat monitors the financial position of all water companies, ensuring they take action when long term financial resilience needs to be strengthened

Within government we always prepare for a range of scenarios across our regulated industries, including water, and remain in close contact with Ofwat.

A Government spokesperson said: 

Like any company needing to secure new investment there are a wide range of options available to water companies, including the injection of new equity from any prospective investors.

Ofwat, as the financial regulator of the water sector, continues to engage with Thames Water to improve its financial resilience.

We prepare for a range of scenarios across our regulated industries - including water - as any responsible government would.

A Ofwat spokesperson said: 

Safeguards are in place to ensure that services to customers are protected regardless of issues faced by shareholders of Thames Water.

Today's update from Thames Water means the company must now pursue all options to seek further equity for the business to turn around the performance of the company for customers. Thames Water is a business with a regulatory capital value of £19 billion, with £2.4 billion of liquidity available, and an annual regulated revenue of £2billon and new leadership team.

Ofwat’s PR24 price control will put customer and environmental priorities at the heart of the water sector. In order to drive this change, we need to ensure that the sector attracts investment and is fair to bill payers. Since 2020 nearly £4.6 billion new equity has been injected into the sector. We will set out our draft determinations in June this year.

We also need to see companies deliver the performance that customers expect and that they are run in a way that meets customers' expectations.

Factsheet

What action is being taken to secure Thames Water’s future?

Ofwat, as the economic regulator of the water sector, has been engaging with Thames Water to improve its financial resilience.

There are a wide range of options available to any water company, such as the injection of new equity, when they are required to strengthen their financial resilience.

Given water companies are commercial entities, it would be inappropriate for government to comment specifically on Thames Water.

What is your view on the water sector being privatised?

Privatisation has unlocked £215 billion of capital investment which has delivered a significant range of benefits to customers and the environment.

This is equivalent to around £5 billion annually in investment, almost double the pre-privatisation level.

What contingency plans does the government have if Thames Water becomes insolvent?

We have set out to the House of Commons more information about how a special administration would work. Should a special administration order ever be needed for any water company, the statutory purpose of the order would be to ensure that the company continues to operate and that customers continue to receive their water and wastewater services.

Will there be any impact on water supplies?

No. Customers will not experience any change or disruption to their water supply as a consequence of the financial position of their water company.

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5 comments

  1. Comment by Johnpaul Glover posted on

    Your blog is a beacon of light in the often murky waters of online content. Your thoughtful analysis and insightful commentary never fail to leave a lasting impression. Keep up the amazing work!

  2. Comment by alan wightman posted on

    Polluted water everywhere and Government on the brink of drowning with a stink.

    Thames water pull plug on 500 million pounds of funding and increases prospect of nationalisation.

    Thames Water has been lobbying Ofwat to raise bills by 40%, pay lower fines for breaches and keep paying out dividends.

    "Day after day, day after day, as idle as our government is national destruction".

  3. Comment by alan wightman posted on

    "Reports of Thames Water financial position...this is a matter for the company as it would be inappropriate for government to comment i.e.wash their hands.
    I commented on the bonuses paid to themselves quite recently on this page but it wasn´t published so this is another try including references to Northumbria Water as a customer having to pay increased charges.
    Refer to their Annual Financial Statement, (elongated test of patience),
    2022-23. Investors include KKR, (USA) and CK (Hong Kong) etc.etc.etc.
    That is to say we of the North-east are paying foreigners to drink our water.
    Nevertheless the Directors have concern over rate of return long-term i.e. preparing for government (taxpayers´) to contribute funds or face demise.
    template as per e´g´bailing out banks when they `fail, as per Lloyds Bank.

    However, UK Water Company dividends jumped to 1.4 billion pounds despite criticism over sewage. Northumbria Water (2023) declared
    272.6 million pounds in dividends and in total England´s privatised water firms paid 57 billion pounds since 1991.

    Climate change beyond their control will be pleaded to exact more money whilst we can expect to pay ever more for our water from the tap.
    p.s. Anyone fancy a `dip´in the River Thames? Not!

  4. Comment by John W. Baxter posted on

    Looks to me like the customer,the person who stumps up the money that keeps Thames Water afloat, has been neglected by successive Ofwat regimes who supposedly protect the paying public s interest in wanting water at a reasonable price, and waste water treated to a standard that DEFRA, EA find acceptable when returned to our watercourses and seas.
    It is time that the negligent and slovenly actions of the past by our authorities have resulted in customers rightly saying to the shareholders it is time to put up or shut up and tell their poodles(wateruk) to stop howling for more cash from the duped British public, and take some of the dividends paid and reinvest in the infrastructure needed to catch up to the rest of the world, instead of continually plundering the coffers under the noses of regulators and the public recipients of shoddy water services.
    More effort has been made in the past prosecuting farmers for e.coli being found in watercourses, but excuses found to cover under capacity at waste water treatment plants, instead of stipulating increased treatment capacity, enforcing same, and making sure that runoff and waste water are separated before being used as an excuse for under capacity at pump stations and waste water treatment works.
    We know that satellite technology available to DEFRA can monitor water quality, and I cannot understand why hawkeyes were put on storm overflow conduits when more could have been spent on actual waste treatment capacity instead……but then, I am not the one dreaming up things to quieten down the upset public, knowing that the solution to pollution is not this dilution, but actually treating waste thoroughly at plants fully capable of doing so, and adequately staffed!.

  5. Comment by mike highley posted on

    Oh dear, I think you are being absolutely disingenuous. An investment of £5 billion today, based on a calculation since privatisation in 1989 does not even keep pace with inflation.
    £2.50 in 1989 is worth £7.80 today, so more than treble just to stand still. Do you really think we are that innumerate that you can pedal half truths and expect us to swallow it, your announcement is intended to mislead and is a disgrace.

    You also overlook the £65 Billion dividend payments made by English water firms, its a scam on the taxpayer.

    In a time of climate crisis and ever worsening pollution you need to get your priorities right, critical infrastructure is a national responsibility and a national resource and ALL of it should be brought back under national control, professionally managed for the common good.