The situation at Thames Water will be examined by the Environment
Food and Rural Affairs Committee when it questions the
responsible government minister, senior managers from the company
and the government’s water services regulator, Ofwat.
In late June both the Chair and the Chief Executive Officer of
Thames Water were replaced amid media reports that the company
faced a financial crisis and the government was contemplating
emergency measures. At the same time Thames Water has been
criticised for pumping sewage into rivers, failing to invest
enough in its infrastructure and making large dividend payments
to its shareholders. The company has also been criticised for
paying its executives salaries that have been described by the
Environmental Audit Committee as “excessive”.
The Committee’s evidence session is aimed at clarifying what is
going on. However, it appears that the financial crisis is
characterised by Thames Water having £14bn worth of debt. This
means it has one of the highest levels of debt, relative to its
assets, of any UK water company - a ratio much higher than the
regulator recommends. This debt is also set to increase because
much of it is inflation-linked.
It is not clear if the company has the cash to service its debts.
This is partly because the finances of Thames Water appear to
have been organised in such a way that its interest payments are
set to be paid through its own dividends – but these dividends
will not necessarily be forthcoming.
As well as seeking to clarify the situation at Thames Water, the
EFRA Committee will ask about the performance of the wider water
sector and its impact on consumers. Between 1991 – shortly after
water companies in the UK were privatised – and 2021, the 11
companies in England and Wales paid over £50bn in dividends to
their shareholders. Six of the 11 are owned or controlled by
overseas investors.
Two Chairs of other committees will be attending the session and
will be free to participate as they wish – MP, Chair of the Environmental
Audit Committee, and , Chair of the Business and
Trade Committee.
Witnesses:
Panel 1 (9.15am):
· Sir Adrian Montague, Chair,
Thames Water
· Alastair Cochran, joint
interim CEO, Thames Water
· Cathryn Ross, joint interim
CEO, Thames Water
Panel 2 (c. 10.00am):
· Iain Coucher, Chair, Water
Services Regulation Authority (Ofwat)
· , CEO, Ofwat
Panel 3 (c.10.45am):
· , Minister for Environmental
Quality and Resilience at the Department for Environment, Food
and Rural Affairs (Defra)
· David Hill,
Director-General, Environment Rural and Marine, Defra
