Thames Water closer to nationalisation after government objects to rescue deal

Thames Water moves step closer to nationalisation after government objects to rescue deal 8 hours ago Share Save Add as preferred on Google Michael Race and Emer Moreau , Business reporters PA Media The government has objected to a proposed rescue deal for Thames Water, in a move which takes the UK's largest water company a step closer to a form of nationalisation. Environment Secretary Emma Reynolds wrote to the industry regulator on Monday to raise concerns over the £10bn package put forward by the firm's lenders. Fears the company could collapse first emerged three years ago. Reynolds said the deal does not do enough for consumers or the environment, but Thames's creditors said its plan was "the fastest route" to improving the firm's performance. If the company does go bust, households will still have drinking water and sewerage services. Thames Water, which serves the most customers — some 16 million — in the UK, has faced heavy criticism in recent years over its performance, sewage discharges, and pipe leaks. The company, which supplies water and wastewater services mostly across London and parts of southern England, was handed a was handed a £122.7m fine in May last year, the biggest ever issued by the industry regulator Ofwat, for breaching rules on sewage spills and shareholder payouts. A group of its existing lenders has offered to write off £9.4bn of its near £20bn debt pile and inject billions in new money, but want leniency from future pollution fines in return. London & Valley Water (L&VW), a consortium of large financial institutions and investors, said some £3.35bn of cash would be put into the company along with a new £6.55bn debt facility. It would be part of a £10bn business plan until 2030. Why is Thames Water in so much trouble? Reynolds said on Tuesday that she did not want a scenario where Thames Water customers had to "pick up the bill for the company's failures". She told reporters that the government "stands ready for all eventualities", including temporary nationalisation. Speaking in the House of Commons, Reynolds said she had "three particular concerns about the proposal: the unfair cost to customers, delays to vital infrastructure investments, and delays to environmental improvements". "There is an expectation in the proposal for customers to fund and therefore bear an undue cost for investment in the company," she said. "In addition, I'm not convinced about the proposal's request to reduce performance standards and about the significant delay to vital infrastructure investments needed." She added she was "concerned that the long-term resilience of the water and wastewater systems may not be adequately protected". However, a spokesperson for L&VW said the group was "confident that our plan is by far the fastest route to improve outcomes for customers and the environment, without any government funding or any cost to taxpayers". The proposed deal was a "long-term solution that recognises the full extent of Thames Water