Water privatisation has failed, but there’s no political appetite to fix the mess. Alex Rankine reports
“This is the beginning of the end for Thames Water in its current form,” says Lex in the Financial Times. Shareholders in Britain’s biggest water company have baulked at injecting new equity into the heavily-indebted utility. This week, the group hired restructuring advisers amid fears that its parent company, Kemble Water Holdings, may collapse by the end of April, when a £190m loan is due for repayment.
When Thames Water was privatised in 1989 it had no debt, but private owners have since saddled it with £14.7bn in loans, amounting to about 80% of the value of the whole business, say Dearbail Jordan and Ben King for the BBC. To make matters worse, interest payments on more than half of the group’s debt are linked to inflation.
While Thames Water is Britain’s most indebted water utility, it is far from the only one facing difficulties. The sector’s total debt reached £60.6bn by March last year, according to the regulator, Ofwat. In December 2022, Ofwat also “raised concerns about the financial resilience of… Southern Water, Yorkshire Water, SES and Portsmouth”. All “say they have taken steps to address Ofwat’s concerns”.
No easy solutions
Not only is it drowning in debt, but Thames Water is also not providing a decent service, says the Evening Standard. It “has been hit with tens of millions of pounds of fines in the past five years due to leaks of untreated sewage into rivers”. Rowers in the Boat Race were warned last month “not to enter the Thames due to the risk of E. coli”.
The “taps will not run dry”, but it remains to be determined who will pay for this mess, says Jonathan Prynn in the same paper. Thames Water’s shareholders wanted consumers to do so in the form of a 40% price increase. That idea is a political nonstarter, and Ofwat refused. Its “painfully stretched balance sheet” stops it tapping debt markets for help. That leaves the taxpayer to stump up, even if the “prospect will be going down like the proverbial cup of cold sick at the Treasury”.
“Some sort of bankruptcy is inevitable” for Thames Water, says The Times. UK water privatisation has been a “disaster”. Water compa
