Thames Water boss refuses to apologise for putting taxpayers ‘on the hook’ to pay billions if firm collapses
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In an Environment, Food and Rural Affairs Committee on Wednesday (12 July), Labour MP Darren Jones demanded an apology from Cathryn Ross, the former CEO of water regulator Ofwat, for “facilitating” the crisis Thames Water faces and putting taxpayers “on the hook” to pay for its failures.
Ross now works for Thames Water in a newly-created role of strategy and regulatory affairs director following the resignation of former CEO Sarah Bentley.
She joined Thames Water after being responsible for BT’s global regulatory activities - and before that she was the CEO of Ofwat, where she was responsible for ensuring the industry delivered against the expectations of customers, wider society and the environment. Jones criticised Ross for “signing off business plans” of water companies in 2014 during her time as Ofwat CEO, which allowed firms to “increase their debts” at their own risk.
He said she allowed the Australian investment bank Macquarie to ramp up Thames Water’s debt “from three to ten billion pounds while taking out nearly three billion in dividends” which he said ultimately caused the crisis the company now faces.
The firm is currently facing fears of collapse as its debt pile has reached a mammoth £14 billion.
Jones questioned Ross on what would have happened if any of those companies went bust to which Ross replied that a special administration regime (SAR) would kick in.”
The Labour MP said: “That would have meant that it would have had to be nationalised and taxpayers would have had to pick up the bill?”
The interim CEO conceded that in the event that the company “couldn’t be sold as a going concern, yes there would be some liabilities that would have to be met and they could be met by the taxpayer or passed onto future customers depending on the regulatory regime at the time”.
Following her response, Jones accused Ross of putting Thames Water in the position it is in now because of her decisions to allow water companies to increase their debts at their own risk during her time as the CEO of Ofwat.
He said: “Thames Water which you now run is in a position where the government is having to plan to nationalise you because of the failure of your finances.
“The reason we are in this position and the reason taxpayers are now potentially on the hook for billions and billions of pounds of national borrowing is because you as the CEO of the regulator and the regulator failed in delivering your statutory duties. Do you want to apologise to the public Ms Ross?”
Ross responded that she didn’t “accept that characterisation of Ofwat’s price control in 2014” and Thames Water is “a long way off that insolvency trigger and conditions of a special administration regime (SAR) being made.”
Jones appeared shocked Ms Ross “didn’t accept that characterisation” as she had “just admitted to the committee that you’ve signed off business plans that allowed MacQuarrie to increase the debt which has got Thames Water into the position it’s been in.”
He added: “The regulator facilitated its problem didn’t it?”
Ross responded that “Ofwat policy at that time was that if a company made a profit it was up to the company to decide what it did with that” however she did note that such policy has now “moved on”.
She added that “everybody at Ofwat takes their statutory duties incredibly seriously.”
When asked by Jones if she “performed them”, Ross replied “we were exercising our functions in pursuit of our statutory duties, whether every decision made was perfect with the benefit of hindsight, possibly not.”
The Labour MP pressed Ross for an apology to the taxpayers “for potentially putting them in this position” exposing “taxpayers to billions of pounds” but Ross refused to apologise for her role.
Her refusal to apologise comes as sewage campaigners have criticised her for taking the new role as CEO of Thames Water after previously being the CEO of the water regulator.
Louise Reddy, policy officer at environment group Surfers Against Sewage, told NationalWorld that the group is “not surprised that the waters between Ofwat and water companies have been muddied.”
She added: “We need a robust and challenging regulator to get us out of this mess. Not one that can’t draw the line between regulator and regulated.”