Thames Water: 'Concerns' firm could run out of money - CEOs face return to Parliament to explain if they misled MPs
Thames Water’s parent company could run out of money by next April unless its shareholders invest more money, its auditors have warned. The group’s auditors, PricewaterhouseCoopers (PWC), said there is “material uncertainty” about its future because there are no firm arrangements in place to refinance a £190m loan held by one of the company’s subsidiary businesses.
Parliament’s Environment, Food and Rural Affairs Committee said on Friday (2 December) that “recent revelations of Thames Water’s financial situation” is raising “further concerns about the stability of the company’s finances.” The committee is considering calling the firm’s executives in to explain whether they misled MPs about the company’s financial situation when they gave evidence in the summer.
At the end of June, the government reportedly drew up contingency plans to temporarily bring Thames Water back into public hands as its debt pile reached £14 billion. Ministers were said to be in talks about the possibility of emergency nationalisation of the water company under a so-called special administration regime (SAR).
However, in July Thames Water investors agreed to provide £750m in funds over the next 18 months. Despite this the PWC has said that “the letter is not legally binding and there are no other firm commitments to refinance the £190m loan”.
In October, Ofwat said the firm had “significant issues” to address and that it fell into the lowest category of “lagging”. The regulator ordered the firm to pay back £101m to customers, the most out of all the water companies that were also found to be falling short.
The regulator has indicated that shareholders will need to put another £2.5bn into the business between 2025 and 2030. In early November Thames Water announced plans to lay off 140 of its workers despite £1.52m being paid to its chief executives last year. Around half went to Sarah Bentley who dramatically resigned this summer and the rest was divided between executive chairman Ian Marchant and Alastair Cochran, the former chief financial officer.
The GMB union said it had been told 140 people were at risk of redundancy, including 89 retail roles and 39 digital jobs. The union said the water firm has “danced with the devil and now workers are paying the price”.
On Tuesday (5 December) Thames Water is set to face scrutiny over its debt levels when its results are published. A Thames Water Utilities Limited spokesman said: “We are in a robust financial position and are extremely fortunate to have such supportive shareholders”.