The business secretary has said she is “concerned” amid fears that the UK’s largest water company could be on the verge of financial collapse.
Kemi Badenoch said the government was “looking at what we can do” amid reports that the government is considering temporarily nationalising the firm.
Contingency planning worked up by environment ministry Defra and regulator Ofwat includes the option of placing the company into a so-called “special administration regime”, according to the Financial Times.
This process, used to stop the collapse of energy supplier Bulb in 2021, would effectively mean Thames Water was taken into public ownership – 34 years after it was privatised.
But trade unions said the company should be taken into public ownership “permanently” and warned against a bail-out that would see the company’s debts “dumped” on the public.
It comes after the company’s boss Sarah Bentley stepped down with immediate effect on Tuesday amid increasing concerns about its financial stability.
Business secretary Ms Badenoch said: “I’m very concerned. Obviously this is commercially sensitive situation and I know that my colleagues across government are looking at what we can do.
“I don’t know too much about what the plans are going to be. I was concerned to hear that the CEO had resigned abruptly, but we need to make sure that Thames Water as an entity survives.”
She added: “There’s a lot of work that the government is trying to do on resolving sewage at the moment.
“Certainly up until now the regulator has been focused on keeping consumer bills down. But there’s a lot of infrastructure work that needs to take place and we need that entity to survive and continue going.”
Earlier in the Commons Defra minister Rebecca Pow said it was “not for me to comment on the individual financial position of a water company”.
The junior minister, who was answering an urgent question tabled by Labour, said the water sector as a whole was “financially resilient”.
But when pushed by MPs, Ms Pow said there is “a lot of work going on behind the scenes” to ensure customers “will not be impacted”.
The firm has taken on debt pile said to be worth £14 billion despite paying more than £37 million of “internal dividends” to its parent company in 2021-22 financial year. Private water companies across England paid dividends amounting to £57 billion between 1991 and 2019.
The company is reportedly pushing regulator Ofwat to allow bills to rise by 20 per cent to pay for the cost of dealing with the sewage crisis and climate adaption.
Warning against a bailout, TUC General Secretary Paul Nowak said: “UK families have been ripped off by greedy water companies for too long. These firms have taken billions in profits while destroying our rivers with raw sewage.
“Privatisation is the problem, and regulation won’t fix it. Thames Water should be taken into public ownership permanently. Billions in debt – taken out for the benefit of profiteers – should not be dumped on the public.
“The best way to keep water bills affordable, and to clean up our rivers, is to end the profiteering for good. Every penny from every bill should be invested back into our water supply. And every water firm should be taken back into public hands.”
