Consumers will not be hit with higher bills if the government takes Thames Water into temporary public ownership to tackle its rising debt, a government minister has said.
Health minister Neil O'Brien insisted contingency plans are in place to ensure people continue to have access to water and that bills won't change in the event the government steps in to bail out the debt-laden company.
Thames Water "are still in the process of finding further resources from their own shareholders and that's the first place they should look to, obviously," he said.
"Of course, the government does have contingency plans if this does become a problem.
"Absolutely nothing is going to happen in terms of either their bills or their access to water. We have contingency plans - like we do in all of these network utilities - to manage any difficult situations."
What's happened with Thames Water?
On Wednesday, it was reported the government has been drawing up emergency plans that could see the company be nationalised for a short time as it attempts to pay down its £14bn debt pile.
Thames Water has said it is working "constructively" to secure additional funding after receiving £500m from shareholders in March.
"Thames Water received the expected £500m 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," the company said in a statement.
"Ofwat is being kept fully informed on progress of the company's turnaround and engagement with shareholders."
Reaction to bailout plan
Reports of the potential government bailout were criticised by Labour, who said the public should not need be forced to “clean up the mess or pay the price for Tory failure” over the water industry.
A party spokesman said the government should be focusing on plans to restore industry resilience and protect customers, jobs and UK pensions which are “at risk given these latest revelations”.
Asked what Labour’s approach to such problems would be, the spokesman said: “Spending hundreds of billions of pounds and taking years to untangle the ownership of the water industry is not what we’re looking to do.
“But regardless of ownership status, the water industry requires a plan that delivers change and drives standards. It shouldn’t be left to the public to clean up the mess or pay the price of Tory failure.”
Other members of the opposition also made their opinions known.
"This is shocking!" Labour MP Dawn Butler tweeted. "How is this possible when they’re paying huge amounts to their shareholders? When companies are asked to invest in something for the public good they never find the money. Wake up people! Time to put the public before corporate greed."
"How some of the water companies have ended up in an over indebted, high dividend, high executive pay, high risk situation – with taxpayers underwriting their behaviour with a blank cheque – is beyond me. Why have Ministers only just woken up to this?" tweeted MP Darren Jones.
Others suggested the service should never have been in private hands, with journalist Paul Mason writing: "If Thames Water needs a bailout the shareholders should pay the price. They put money in a year ago. Forget 'temporary nationalisation' – if you can't service debts in a high-interest rate environment you don't have a business model. Nationalise it."
What does the public think?
The issue of how the country's utilities are run was in the spotlight last year, when Keir Starmer abandoned his pledge to renationalise rail, mail, water and energy.
A subsequent YouGov poll – from October 2022 – showed that the majority of Britons actually want to see a nationalised water industry, with 63% saying they thought it should be run in the private sector, 14% wanting a combination of public and private and 8% saying they thought it should be private.
With ministers discussing the possibility of taking Thames Water temporarily into public ownership to stave off collapse, our poll last year found 63% of Britons thought it should be run in the public sector when asked a 3-way public/private/both questionhttps://t.co/ureFTAPLNm pic.twitter.com/eB6M4qs6Tr
— YouGov (@YouGov) June 28, 2023
The survey also showed that even a majority of Conservative voters say that utilities like water and energy should be run in the public sector.
Who owns Thames Water?
The water company was privatised in 1989, and is owned by a number of shareholders made up of sovereign wealth funds and pension funds, with Canadian pension fund Ontario Municipal Employees Retirement System (Omers) being the biggest shareholder.
Other shareholders in the company include the largest private pension fund in the UK, the Universities Superannuation Scheme.
The concerns over Thames Water's debt pile follows the resignation this week of the firm's CEO Sarah Bentley, who agreed to step down after she said she would forfeit her bonus over sewage spills.
"Thames Water boss Sarah Bentley quits £1.6m a year job after giving up her bonus amid fury over sewage leaks."TW aren't the only water company in serious financial trouble which raises the question what the fu*k was @ofwat doing the last 30 years?" tweeted campaigner Feargal Sharkey.
Water minister Rebecca Pow on Wednesday told the Commons in response to an urgent question that she was confident Ofwat was "working closely with any company that would be facing financial stress".
She refused to comment on how much a potential bailout of Thames Water would cost.