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| Thames Water: Customers' bills will not be affected, says minister | |
| (32 minutes later) | |
| Health Minister Neil O'Brien has sought to reassure customers of Thames Water over their bills and water supply, amid fears the firm could collapse. | Health Minister Neil O'Brien has sought to reassure customers of Thames Water over their bills and water supply, amid fears the firm could collapse. |
| "Absolutely nothing is going to happen in terms of either their bills or their access to water," he told Sky News. | "Absolutely nothing is going to happen in terms of either their bills or their access to water," he told Sky News. |
| He added there were contingency plans "to manage any difficult situations". | He added there were contingency plans "to manage any difficult situations". |
| The UK's largest water company, which serves a quarter of the UK population, is in talks to secure extra funding as it struggles to pay its debts. | The UK's largest water company, which serves a quarter of the UK population, is in talks to secure extra funding as it struggles to pay its debts. |
| On Wednesday, the government said it was ready to act in a worst case scenario if Thames Water collapsed. | On Wednesday, the government said it was ready to act in a worst case scenario if Thames Water collapsed. |
| The company is understood to be struggling to raise the money it needs to service its substantial debt pile, which is around £14bn. Interest payments on more than half of its debt are linked to the rate of inflation, which has soared over the last year. | The company is understood to be struggling to raise the money it needs to service its substantial debt pile, which is around £14bn. Interest payments on more than half of its debt are linked to the rate of inflation, which has soared over the last year. |
| Water regulator Ofwat says that Thames Water has "significant issues to address" and needs to improve its "financial resilience". | |
| However, Ofwat also noted that the company still has access to funds. "It recently received an additional £500m from shareholders and has £4.4bn of cash and committed funding." | However, Ofwat also noted that the company still has access to funds. "It recently received an additional £500m from shareholders and has £4.4bn of cash and committed funding." |
| It added that it would continue to closely monitor UK water companies' financial resilience, to ensure "they have the financial backing to deliver for customers and the environment". | It added that it would continue to closely monitor UK water companies' financial resilience, to ensure "they have the financial backing to deliver for customers and the environment". |
| Thames Water in urgent talks amid collapse fears | Thames Water in urgent talks amid collapse fears |
| Lib Dems unveil plan to overhaul water industry | Lib Dems unveil plan to overhaul water industry |
| Other water firms are facing similar pressures due to higher interest payments on their debts and rising costs including higher energy and chemical prices. Ofwat said last year that it was concerned about the financial resilience of Yorkshire Water, SES, Southern and Portsmouth Water as well as Thames Water. | Other water firms are facing similar pressures due to higher interest payments on their debts and rising costs including higher energy and chemical prices. Ofwat said last year that it was concerned about the financial resilience of Yorkshire Water, SES, Southern and Portsmouth Water as well as Thames Water. |
| A Southern Water spokesperson told the BBC its shareholders "continue to be supportive of the business and its financial resilience". | A Southern Water spokesperson told the BBC its shareholders "continue to be supportive of the business and its financial resilience". |
| Thames Water has come in for strong criticism over its performance following a series of sewage discharges and leaks. The firm leaks more water than any other water company in UK, losing the equivalent of up to 250 Olympic size swimming pools every day from its pipes. | Thames Water has come in for strong criticism over its performance following a series of sewage discharges and leaks. The firm leaks more water than any other water company in UK, losing the equivalent of up to 250 Olympic size swimming pools every day from its pipes. |
| The company has said it is trying to raise the cash it needs to service its debts and is keeping Ofwat informed on progress. | The company has said it is trying to raise the cash it needs to service its debts and is keeping Ofwat informed on progress. |
| However, if the firm cannot secure additional funding, it could be temporarily taken over by the government until a new buyer is found, in a special administration regime (SAR). This happened with energy supplier Bulb in 2021 after the company ran into financial difficulties. | However, if the firm cannot secure additional funding, it could be temporarily taken over by the government until a new buyer is found, in a special administration regime (SAR). This happened with energy supplier Bulb in 2021 after the company ran into financial difficulties. |
| On Tuesday, Thames Water's chief executive Sarah Bentley quit the business after just two years in the job. It came weeks after she was asked to forgo her bonus over the company's handling of sewage spills. | On Tuesday, Thames Water's chief executive Sarah Bentley quit the business after just two years in the job. It came weeks after she was asked to forgo her bonus over the company's handling of sewage spills. |
| The firm did not give a reason for her departure. Earlier this year, Ms Bentley had blamed the firm's poor record on sewage management on failings at the company before she joined. | The firm did not give a reason for her departure. Earlier this year, Ms Bentley had blamed the firm's poor record on sewage management on failings at the company before she joined. |
| The Times reported that City veteran Sir Adrian Montague has been lined up as chairman for Thames Water, replacing Ian Marchant, who was appointed chairman in 2018. | |
| Sir Adrian has been called in to help out the government before. He was made chairman of British Energy, the operator of the UK's nuclear power plants, to find a solution when it ran into financial problems in 2002. | |
| 'Excessive payments' | 'Excessive payments' |
| Since the water companies were privatised there has been steady criticism of the amount of money paid to investors, through dividends, and to executives given the companies' records on leaks and sewage discharges | |
| Between 1991 and 2021 water companies have paid out £50.6bn in dividends. | |
| Speaking to the BBC's Today programme, Philip Dunne, Conservative MP and chair of the Environmental Audit Committee, said there was "no question there have been excessive payments to executives". | |
| "Remember water companies don't have to worry about their top line, their top line is provided day in, day out without having to do the work that normal companies have to do, which is management to focus on generating revenue. Revenue here arises as, of course, everybody turns on their taps and starts consuming water." | "Remember water companies don't have to worry about their top line, their top line is provided day in, day out without having to do the work that normal companies have to do, which is management to focus on generating revenue. Revenue here arises as, of course, everybody turns on their taps and starts consuming water." |
| Labour MP Darren Jones, the chair of the Business and Trade Committee, told BBC Breakfast that if the government was forced to take over the running of Thames Water, "taxpayers will be exposed to the debt and running costs of a very large company". | Labour MP Darren Jones, the chair of the Business and Trade Committee, told BBC Breakfast that if the government was forced to take over the running of Thames Water, "taxpayers will be exposed to the debt and running costs of a very large company". |
| However, Prof David Hall of the University of Greenwich said the cost to the taxpayer would not necessarily be much. | |
| "If you go through special administration the shareholders take the hit if the company is not financially viable, that's what shareholders are for," he told the Today programme. | |
| "Then the process needs to be not renationalisation but to set up regional local authority bodies to take over, and you transfer the company as a going concern to those regional local authorities... that's how the rest of the world runs water." | |
| The Consumer Council for Water (CCW), which represents water customers, said a "strong safety net" was needed to protect struggling households from any bill rises to fund investment. | The Consumer Council for Water (CCW), which represents water customers, said a "strong safety net" was needed to protect struggling households from any bill rises to fund investment. |
| "Nearly one in four households say they are currently struggling to pay their water bill amid the cost of living crisis and this will add to their worries," said senior director Mike Keil. | "Nearly one in four households say they are currently struggling to pay their water bill amid the cost of living crisis and this will add to their worries," said senior director Mike Keil. |
| Water bills have been on the rise, with the annual bill for an average household in England and Wales hitting £448 in April. | Water bills have been on the rise, with the annual bill for an average household in England and Wales hitting £448 in April. |
| Related Topics | Related Topics |
| Companies | Companies |
| Thames Water | Thames Water |