Struggling Thames Water could still be put into administration, a minister has signalled after reports that Andy Burnham had ditched the plan over cost concerns. Housing Minister Matthew Pennycook said on Tuesday that the Government was taking “no options off the table” when it came to Britain’s largest water firm and its failures.
Minister's warning on water industry failures
He told LBC: “I am very clear as a customer, as well as a minister, the water industry has been failing people for too long. We've seen rising bills while the number of serious pollution incidents are off the scale. We've got to do more.
“We've already done lots as a government to strengthen regulation, toughen enforcement, increase transparency around the industry. But Thames Water, all options on the table. I'm very clear that the former Defra Secretary, that the recapitalisation plans put to the government by Thames Water, we had serious concerns about.”
Debt and rescue plans
The utility, which supplies the homes of 16 million people in London, Kent, Essex and Gloucestershire, is struggling with £20 billion of debt and has been plagued by sewage and leak scandals. London and Valley Water (L&VW), a consortium attempting to take control of Thames Water and representing creditors holding £17 billion of the company’s debt, is trying to win Government approval for a bail out deal.
It has proposed a restructuring plan that would see around half of the firm’s debt written off and more than £3 billion of new equity injected. But former Environment Secretary Emma Reynolds effectively rejected the proposals in June.
Concerns over taxpayer costs
The Prime Minister has been highly critical of the firm and said during the Makerfield by-election that there was an “overwhelming case for public ownership”. However, in recent weeks it has been suggested that Mr Burnham’s Government could place the company into a special administration regime (SAR) that would allow services to keep running until a buyer was found.
No 10 officials have raised concerns that an emergency SAR could leave taxpayers with a £2 billion bill because Thames Water estimates that is how much cash it will need to keep running until the end of next year, the Times reported. There is also said to be unease about finding a buyer for the company if it is taken into administration.
A Whitehall source told the Times: “There is no quick or clean solution without an enormous price tag attached. It is very challenging and there are significant legal risks. It's not off the table, but further work is being done on potential solutions before a decision can be taken.”
