Image description: The River Thames and parliament buildings. Image by SevenStorm JUHASZIMRUS / Pexels.
Thames Water faces MP select committee
Thames Water’s Chris Weston (CEO), Sir Adrian Montague (Chair), and Steve Buck (CFO) were questioned by MPs at a select committee hearing in parliament, amid public outrage over the costs and operation of water companies.
During the meeting, Mr Weston told MPs Thames Water’s survival as a private company depends on the industry regulator Ofwat being lenient over fines and penalties, as the firm would not get new investment if money leaked out of the business, leading to some form of nationalisation. Sir Montague told MPs the government could face £5bn of extra costs if Thames Water were to fall into the special administration regime (SAR), a form of temporary nationalisation. He told MPs that the UK’s biggest water company came within just five weeks of running out of money, which he described as “hair raising”.
The firm is in discussions with Ofwat to put in place a “turnaround regime” designed to let it escape a loop where fines lead to further fines because it has not got the money to improve. Thames has estimated it could be fined up to £900m over the next five years for leaks and sewage spills which would hinder efforts to attract new investment.
However, MPs were concerned that US private equity firm KKR are the only bidder remaining in the race to buy Thames, whereas industry regulator Ofwat had said it would prefer two companies to be in the final phase of checks before a bid was picked. Labour MP Clive Lewis wrote in an Op-ed for the Guardian that public ownership of water should be a priority for government.
Senior executives to receive bonuses out of £3bn emergency loan
Image description: Adrian Montague told the environment select committee that Thames came within five weeks of running out of money entirely. Photograph: House of Commons/PA
Thames Water currently has around £19 Billion in debt and received approval in February from the High Court to take out a high interest £3 Billion emergency loan to stave off imminent collapse.
Thames water’s chairman apologised to customers, but insisted Thames “is not a failing company”, defending taking on the extra debt and affirming hundreds of thousands of pounds worth of recent bonuses for bosses were justified. Montague said some executives at the water company were in line for payouts amounting to “50% of salary, very substantial bonuses”, which would be paid through the high-interest emergency debt package.
During the meeting, Thame’s CEO was asked to justify his bonus of £195,000 for three months of work after he joined the company in January 2024. Mr Weston told MPs he was confident the company was going through a process of making sure assets were available, reservoirs were as full as possible and critical maintenance was carried out and was confident water supplies were secure. However, he could not rule out water restrictions.