OPINION
Thames Water must be told its time is up (Image: Getty)
Another day, another scandal for Thames Water, and once again, it seems the regulator, Ofwat, is letting the company and its rapacious private equity investors off the hook. The utility has been allowed to defer 80% of its ￡122million fine for up to five years. Ordinary people cannot negotiate away a court penalty, yet Thames Water has secured a deal that may let its current investors, who pocketed ￡170million in dividends in October 2023 and March 2024, off the hook – all while the company fails to maintain crumbling infrastructure and continues to breach environmental regulations.
The Government has said that Thames Water has a ‘regulatory capital value’ of ￡19billion, despite having a debt load of ￡20billion. To put that in perspective, imagine buying a million-pound house, leaving it to decay and then try flogging it with the roof caved in, the floorboards rotten, and sewage flooding the basement. Would that house still be worth a million pounds? Of course not.
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Yet this is exactly the situation Thames Water finds itself in, a utility whose value has been extracted by investors while its essential infrastructure has been allowed to decay.
So, saying Thames Water is worth about ￡20billion can’t be right and market estimates of its value now are much lower, reflecting the damage done.
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More alarming is the risk of international investors profiteering again from this vulnerable utility. Reports that CKI, a Chinese infrastructure giant, is now first in line to control the UK’s largest water utility are alarming.
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The UK’s freshwater is a national asset. Public safety, environmental protection, and national security should not be given to overseas interests, as decades of experience since Thatcher’s reckless experiment have shown.
The problem is a privatisation model that puts profit before people and the environment. Thames Water has paid massive dividends while neglecting vital infrastructure upgrades, breaching environmental laws, and risking health.
Rivers are polluted, wildlife harmed, and communities exposed to raw sewage, yet profiteers are still not facing the consequences. Instead, Thames Water must be urgently placed into special administration to reset its finances, rebuild infrastructure, and ensure its operations are owned and run for public benefit.
The Government is at a crossroads with Thames Water.
With the company repeatedly breaking its license conditions, Secretary of State Steve Reed has the legal power to apply to the High Court to place it into special administration – a form of temporary, public ownership – so that it can be reshaped into a sustainable utility company, without costing taxpayers billions.
Once in special administration, Thames Water’s current bad debts can be written off and new debt issued through government-backed bonds at less than half the cost of current debt, and will sell like hot cakes at about 4% interest, giving a fair and modest return to reflect the low risk, and providing plenty of investment to fix those leaking pipes and keep customer bills low.
Which begs the question, why is the Government telling the public misleading stories like fixing Thames Water will take money away from the NHS, and why is it failing to take bold action by putting Thames Water into special administration to save the Treasury and the public billions in the long run?
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Which then makes us wonder why do they persist in this reckless trajectory putting one in five people’s water supply, health, jobs, food, everything at risk? Is this Government concerned about public wellbeing, services and the lifeblood of our society, or is it just pandering to the pressures of international private investors and the corporate-controlled world we live in?
Thames Water’s current investors should be made to pay all the ￡122million fine by the end of September and the utility should be put into special administration and owned and operated for public benefit, without further delay.
Privatisation shares many of the unwelcome traits of a 1920s Ponzi scheme, masterminded to reward a few at the cost of the many, extracting not investing, and resulting in the unpleasant whiff of criminal gain. The Government must show leadership and finally admit that time is up for greedy profiteers.
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