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Ministers are scrambling to avoid bailouts for Britain’s largest water company after reports say it is on the brink of bankruptcy.
The government is preparing a “contingency plan” to prevent millions of households from losing access to water if the Thames runs out of power, ministers acknowledged.
Meanwhile, the water industry plans to seek permission to raise household bills by up to 40% within 10 years to deal with rising costs.
Thames Water is reportedly struggling to finance its £14bn mound of debt following rising interest rates and tightening regulatory obligations, and is in discussions with the government and regulator Off Watts over whether relief is needed. Urgent talks are being held between them.
Ministers hope Thames Water can resolve the matter without the need for intervention and want to avoid destabilizing the company’s situation by publicly speculating about its future. I understand.
Labor and Pensions Secretary Mel Stride told the LBC: “As part of our mandate, Ofwatt has a duty to consider the resilience of this sector and we have looked very carefully at the River Thames. We will continue to consider it,” he said. Governments also have contingency plans in place to deal with all possible scenarios. ”
“No matter what the Thames scenario is, the water will continue to flow,” he added. Asked if that meant the government bailed out the company, he didn’t rule it out, but said, “I’m not going to speculate.” “I can reassure those of you who have heard that contingency plans are well underway,” Stride said.
Children’s Minister Claire Coutinho told Sky News: “I’m sure there are water companies like Thameswater in a difficult position, but I think our position as government is to make sure we have the right policies in place to ensure that consumers are protected. But we are working on something really important for our country, like dealing with sewage leaks.”
One possible option would be for the government to buy the company temporarily, as it did for energy company Valve in 2021, with a view to selling it in the future. This could expose taxpayers to significant economic losses.
The head of the National Infrastructure Commission warned that it is “probably not unrealistic” for household water bills to rise by up to 40% by the end of this decade.
Sir John Armitt told the BBC: “The Environment Agency and water companies believe we need to invest around £50 billion to reduce sewage overflow to acceptable levels by 2050. They estimated that £20 billion would be needed to secure it.
“As you can see, we are talking about the need for a very large amount of money to restore our water and sewer infrastructure and make it fit for purpose.”