ICSM Business News: Thames Water unlikely to be nationalised as utility giant plays ‘poker’ with the Government over whether it will go bust or get a bail out

By Harry Mottram: There’s a billion-pound game of poker going on between the new Government and Thames Water to see who will blink first. The privately owned utility is £19 billion in debt and says it will go bust in 10 month’s time, unless it can hike prices and gets an injection of cash. This despite its well-publicised failures to prevent pollution and dishing out a £195,000 bonus to its boss and asking Ofcom if it can hike prices by 59%. Going bust means the Government - or tax payer - would in effect have to bail out the company to the tune of billions of pounds. 

The new prime minister Kier Starmer’s business secretary Jonathan Reynolds said they didn’t want to nationalise the ailing utility. He said: “The cost of nationalisation to the taxpayer will not be consistent with our fiscal rules and we don’t think it’s the right course of action. Instead, the government is focused on holding these companies to account, ensuring they’re investing and improving systems, rather than rewarding themselves.”

Ian Carrotte of ICSM said: “A company as large as Thames Water will create uncertainty amongst contractors and suppliers by saying in effect it will go bust next year. Anyone thinking of doing business with them must ensure they are paid upfront for work or to stick rigidly to 30 days for payment on invoices – as I can hear in my mind their accounts department making excuses for not settling an account.”

Thames Water has said it hopes to raise cash from investors but its request to raise bills by 59% was rejected by Owat who reduced the planned increase to 21% which the utility said that was not enough to prevent potential insolvency. If that was to happen it would fall to the Government to put the utility into special administration – a process that hands control of the company to the Government or a Government appointed administration and that the service continues as normal as a solution is seeked.

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