Thames Water Could Be Nationalised Following Debt and Price Rises

The Thames Water logo on the back of a van
Author: Samuel Beckingham
Updated: Apr 24, 2024
4 minutes read

Perhaps one of the most controversial elements of the modern day, Thames Water is hoping to increase its water bills by more than 40% to help pay for network improvements whilst sitting on £16 billion of debt. With the threat of nationalisation looming ever closer, the future of the water company hangs in the balance.

Water Suppliers

Water companies were privatised in 1989. Under the Thatcher government, the network was sold off so consumers could receive fair and reasonable costs for high standards of service. Whether that has actually happened largely depends on your opinion of privatisation.

Unlike other utility providers, you cannot switch your water supplier. Instead, you’re lumped with whoever you get based on where you live. If they haven’t been properly investing in their infrastructure, there’s nothing you can do.

Similarly, if they’re responsible for any of the 4 million hours’ worth of raw sewage being discharged into UK rivers and seas last year, there’s nothing you can do about it.

Plagued by Debt

Britain’s biggest water company serves 16 million households in London and the south east. Being the largest, they also have the biggest amount of debt compared to any other water company. So much so that rising interest rates have ballooned their debt pile.

It has been revealed that £190 million is due to be repaid to Thames Water lenders by the end of April, but investors and shareholders are holding back. A promise of £750 million from its investors was refused.

£500 million was expected from shareholders by the end of last month, but this was dependent on Ofwat approving the hike to customer bills. However, the regulator refused the plans and refused to ease capital spending requirements.

This month alone, the holding company of Thames Water defaulted on £1.4 billion of debt. If the money can’t be found, nationalisation may be on the cards.

What Would Nationalisation Do?

If Thames Water were to be renationalised, the majority of its debt would be added to the public purse. For some lenders, this would mean they could lose up to 40% of their money. When the water company was taken out of public ownership, it didn’t have any debt. For some, the £16 billion debt is an indication of the failures of privatisation, especially when £45 million in dividends was paid in 2023 alone.

By being back under control of the government, there would be greater scrutiny of day-to-day operations, which would ultimately include quicker reform. Depending on how much control or influence the government wants over the renationalised company, the accounts might then show on official government balance sheets.

There will also be leniency for fines and missed targets if Thames Water is renationalised. It’s very hard, after all, to fine a state-owned body.

Thames Water Plans

Under new proposals put to Ofwat, Thames Water wants to increase bills by £19 a year. This would see a spending of £18.7 billion over the next five years. In that time, it wants to spend £1.1 billion on environmental projects, which the water company is hoping will help approve their proposal.

By 2030, Thames Water bills could rise to £627 a year. Providing these plans get the go-ahead and the company doesn’t go under, this will be a real blow to customers.

Beat Price Rises

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