Thames Water 'on the brink of collapse' as it faces £14bn of debt

The Government is considering plans to place Thames Water into a special administration regime, as concerns grow over its mounting debt pile said to be worth £14bn.

Sky News reported that the company would effectively be placed into temporary public ownership, in a similar process used when energy supplier, Bulb, collapsed in 2021.

The talks, which are said to involve DEFRA, Ofwat and the treasury, remain at a preliminary stage and may never need to be used.

Customers have been reassured by the government they will not lose supply if the company fails, while the government said it is preparing for a "range of scenarios".

Speaking in the House of Commons on Wednesday, water minister Rebecca Pow insisted the water sector as a whole is "financially resilient" and refused to comment on the speculation around Thames Water's future.

It comes as the boss of Thames Water has stepped down with immediate effect weeks after being forced to give up her bonus over the company’s environmental performance.

The Reading-based company said that Sarah Bentley would leave the board on Tuesday, but will continue to support her interim replacement until a new full-time boss can be found.

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 even after giving up the bonus, the chief executive managed to double her pay, raking in £1.5 million.

Thames Water is the UK’s biggest water supplier and provides water services for 15 million people in London and the South East.

The Daily Telegraph reported overnight that Thames Water is trying to raise £1bn from shareholders, which could be used to service its debt pile and improve services. AlixPartners is said to be advising the firm on turnaround plans.

The discussions in Government follow calls from Oxford City Council that the company should be brought into public ownership.

The authority called for it to be re-nationalised in January of this year, at the time criticising its performance in the Thames Valley.

Campaigners claimed that leaks in the system had a significant impact in Oxford, with the flooding of the Littlemore underpass given as an example.

At the time Thames Water told ITV Meridian that: "We're committed to protecting the environment and keeping taps flowing for our customers across the South East and Oxfordshire.

"We have written to Cllr Susan Brown at Oxford City Council and welcome ongoing discussions with the Council."

“Our aim will always be to try and do the right thing for our rivers and for the communities who love and value them.

"We regard all discharges of untreated sewage as unacceptable and will work with the government, Ofwat and the Environment Agency to accelerate work to stop them being necessary and are determined to be transparent.”

A Surrey councillor today hit out at Thames Water saying residents are fed up and angry over the service they receive from the company.

Cranleigh's Lib Dem county councillor, Liz Townsend, said the area has suffered from numerous leaks, some of which have been running for more than four years.

She said one leak in Ewhurst was supposed to be fixed by Thames Water by May 18th, 2023.

Cllr Townsend attended the leak today and said engineers from Thames Water were nowhere to be seen.

• Surrey County Councillor Liz Townsend

Thames Water has said it is working with shareholders to secure funds to turn the business around.

The utility giant said on Wednesday (28 June) that it needs "further equity funding" ontop of the half a billion pounds it raised from shareholders in March.

It said in a statement to shareholders: "Thames Water received the expected £500 million of new funding from its shareholders in March 2023 and 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 is being kept fully informed on progress of the company's turnaround and engagement with shareholders."