The extent of issues faced by Thames Water has been revealed in a new investigation, prompting concern from industry officials and customers.
The beleagured water company has been marred by financial mismanagement for decades. It now faces collapse as it seeks to offset costs and secure extra investment.
It also has £23bn worth of assets in need of repair, The Guardian has reported, putting the water security of its 16 million customers in a perilous position.
It is alleged that Thames Water finances are even worse than previously admitted to, given the scale of vital repair work it needs to carry out. Serious safety concerns, outdated IT systems and a culture of intimidation are all raised as issues at the company.
A spokesperson for Thames Water said: “We take a rigorous approach to financial discipline throughout the company in order to operate within budget, as any business in turnaround would be expected to do.”
What could this mean for Thames Water and customers?
Bill rises for all companies until 2030 have already been announced by the regulator Ofwat, with Thames Water bills rising from an average £435.56 to £534.79 – a 22.8 per cent increase.
But given the continued revelations of mismanagement at Thames Water, it’s likely bosses will keep pushing to raise bills higher than this.
Thames Water has already called for permission to raise bills by 53 per cent, bringing them to an average of £667 a year by 2030.
The company said Ofwat’s proposals will render its five-year recovery plans “not deliverable” and “prevent the turnaround and recovery of the company.”
This puts the regulator and government in a difficult position. There are fears that if Thames Water collapses, Labour will have no choice but to step in and temporarily renationalise the company at an estimated cost of £38bn to the taxpayer.
This includes the £15bn worth of debt the company holds. However, a good deal of this would be wiped off in the event of renationalisation as creditors would be forced to shoulder some of the losses.
Thames Water is also in talks with creditors to secure an crucial £3bn lifeline before Christmas.
Responding to The Guardian’s claims, a Thames Water spokesperson said: “The wellbeing and safety of our colleagues and customers is our highest priority. We supply 2.6bn litres of water every day, rated among the highest quality of drinking water anywhere in the world.
“We’ve been very open about the ‘asset deficit’ we face, and the challenges we will have meeting future demand if it’s not addressed.
“That’s why we have set out an ambitious plan for 2025-30 which asks for £20.7bn of expenditure and investment with an additional £3bn through gated mechanisms, so that we can meet our customers’ expectations and environmental responsibilities.